It has recently been reported that China is planning to invest up to $50bn (£32bn) in Brazil to help with developing new infrastructure projects.
This deal is due to be signed by banks from both China and Brazil whilst the Chinese Prime Minister Li Keqiang is visiting Brazil next week. Some of the money that China then provides as investment will go towards the building of a railway link from Brazil’s Atlantic coast to Peru’s Pacific Coast. Having a direct route to use in the future will mean that this will help to reduce the costs involved of exporting goods to China.
It has also been stated that the fund being made available will provide financing for a joint venture between the two countries for the production of steel. Currently most of the iron ore Brazil produces is exported to China.
Brazil’s Undersecretary of State, Jose Graca Lima who has special responsibility for Asia and Oceania, stated that “we shall have to await the end of the visit to expand on which projects.”
Along with the money being invested by China being used for the giant railway project, some of this is expected to be invested other industries to help buoy Brazil’s economy. The kinds of areas where investment is predicted to be carried out includes car parts, energy, hydro electric power facilities and its ports along with the rest of the Brazil’s railways.
Brazil’s economy, which was amongst the fastest growing in the world, has begun to flag in the last five years.
The corruption scandal that shook the state owned oil giant Petrobas, which involved a number of high profile figures. It is alleged that some politicians were paid for contracts using money that had been skimmed off of the company’s profits.
During his visit to South America, China’s prime minister will also spend time visiting Peru, Chile and Colombia.
In January of this year China’s President Xi Jinping pledged that they would provide a total of $250bn in investment to Latin America over the coming 10 years.
Certainly through such investment it is hoped that we begin to see Brazil emerging as a dominant force in Latin America. It should also help to ensure that everything runs smoothly when the Olympics take place in Rio next year.