Chinese Premier Li Keqiang began a three-day visit to Brazil on Monday armed with a promise of some $50 billion in infrastructure investments as his hosts finalize preparations for next year’s Rio Olympics.
Li will hold talks Tuesday with President Dilma Rousseff, for whom the investment bonanza will be a major boon as Brazil battles a fifth straight year of poor growth and spiraling inflation.
The Chinese leader will then head for Rio to see some of China’s investment in the city, due to host South America’s first ever Olympic Games in August 2016.
On Thursday, Li will continue a Latin American swing designed to increase Chinese influence in the region, heading to Colombia before visiting Peru and Chile.
His tour comes days after Beijing signed accords worth $25 billion with Russia and $22 billion with India.
Chinese trade with Brazil has grown exponentially over the past decade, with the Asian giant becoming Brazil’s main trading partner in 2009.
Trade between China and Latin America as a whole exploded from barely $10 billion in 2000 to $255.5 billion to 2012.
– Boom in Sino-Brazilian trade –
Sino-Brazilian trade mushroomed from $6.5 billion in 2003 to $83.3 billion in 2012, though China is just the 12th largest investor in Brazil.
“The trade agenda is very important — but at the moment the investment agenda is to a degree more important still,” Trade Minister Armando Monteiro told AFP.
Jose Graca Lima, head of Asian affairs in the Brazilian foreign ministry, said that a “second generation” of Chinese investment is under way.
The first involved trade in raw materials and the focus now is on heavy industry and infrastructure.
Brazilian growth rose prior to the current slowdown amid high Chinese commodity demand that has since dropped off.
But Brazilian financial daily Valor quoted Chinese ambassador and former vice-foreign affairs minister Li Jinzhang as saying that the “overdependence on commodity trade could not continue and needed to be transformed” on a wider scale.
Despite that comment, Li Keqiang earlier told Valor in an interview that, despite commodity price volatility, “healthy Chinese demand for these products will hold up long term.”
One major mooted long-term infrastructure project is a proposed Chinese-financed $10 billion rail link stretching some 3,500 kilometers (2,175 miles) from the key Brazilian port of Santos to the Peruvian Pacific port of Ilo via Amazonia.
Brazil has seen its reputation hit by a huge graft scandal at oil giant Petrobras. But the firm received a boost earlier this year when it signed a $3.5 billion financing deal with the China Investment Bank.
“China is fulfilling a desperately-needed role of investor in Latin America and the Caribbean -– Brazil desperately needs investment,” said Charles Tang, chairman of the Rio-based Brazil-China Chamber of Commerce and Industry.
“The US back yard is growing a Chinese back garden – not just in Brazil but all over Latin America.
“We believe in the fundamentals of Brazil,” Tang said in an interview.
Monteiro said Brazil hoped China would see it as “an important production platform for industrial goods” in the region and beyond, using Brazil as a fulcrum for serving wider markets.
“Extending exports to China is something we want — but I do not know if we shall be able obtain significant results short term,” Monteiro said.
“It would be a better strategy for China to produce in Brazil a range of goods that today we import and China exports — such as electronics.”
Li Keqiang’s visit will feature trade delegations some 130-strong from both countries during his Brasilia stay.
In Rio, he will attend the unveiling of Chinese-made trains for a new subway line to bolster public transport in time for the Olympics.