Strengthening ties between Brazil and China

By - CEM Team

Ties between Brazil and China seem to becoming stronger with huge investments flowing across sectors from world’s 2^nd largest economy.
Below is a summary of few recent sectoral investment information:

Power and banking: In 2015, China revealed a flood of investment projects in Brazil during Chinese premier Le Keqiang’s recent visit. These investments ranged from a 2800 km power line across Brazil to investments in the Brazilian banking system. Collectively, a $53 billion investment agreement was announced during this visit.

On the transportation front: China plans to invest in a bi-oceanic railway connecting Brazil’s Atlantic coast to Peru’s Pacific Rim, allowing faster transport of Brazilian exports to China. Trade between Brazil and China was worth $80 billion in 2014.

Oil sector: China contributed $7 billion in credit for Brazil’s embattled state-run oil company, Petrobas.

Development in iron ore sector and steel development: Vale, a Brazilian iron ore exporter and Cosco, a Chinese company make a deal for the sale of bulk iron ore carriers. Chinese investments will also include Steel production joint ventures as well as investing in car parts, ports and hydroelectric power. This only goes to show how visible efforts are being made towards deepening the relationship between these two geographically distant countries beyond one simply about imports and exports.

Manufacturing of metro rails: Most of the metro rails in Brazil are made in China. However, China and Brazil have now reached an agreement to set up a factory in Brazil to manufacture these trains. The two countries have agreed on building factories in Rio De Janerio which will promote local employment and improve services for the local population.

Brazil has also shown willingness to join Asian Infrastructure Investment Bank headed by China. This  is an indication of how Brazil wants to further strengthen its ties with China, their biggest trade partner, which is already growing exponentially.

Chinese investment in Brazil is a huge boon for the world’s 7^th largest economy as it endures a 5^th straight year of low growth after a period of rapid expansion fuelled by an Asian demand for commodities that has since slowed. It is expected to also help Brazil overhaul its infrastructure as the county’s tourist magnet, Rio De Janerio prepares to host South America’s first ever Olympics in 2016.