China expanded its trade partnership with Brazil with 7.5 billion dollars in financing for Brazilian miner Vale, the purchase of 60 passenger jets from plane-maker Embraer and renewed commitment to invest in infrastructure.
In a raft of energy, finance and industry accords signed before Presidents Xi Jinping and Dilma Rousseff, the two nations agreed to team up to build railways to help Brazil reduce its infrastructure deficit and feed China’s hunger for commodities.
One project under study is building a railway from Brazil’s Atlantic coast through the Andes to Peru on the Pacific that could cut the cost of shipping Brazil’s grain to China by 30 dollars per ton, a senior Brazilian official said.
Trade between China and Brazil soared to 83.3bn last year from 3.2bn in 2002, with iron ore, soy and oil making up the bulk of Brazilian exports, making China the country's biggest trade partner.
“China’s two main strategic concerns are energy security and food security. Brazil is an ideal partner on both counts,” said the official, a cabinet member who asked not to be named.
Xi visited Brasilia after a BRICs summit that set up a new 100 billion development bank, to be based in Shanghai that will fund infrastructure projects, providing developing nations with an alternative source of funding to Western-dominated multilateral financial institutions.
In a sign of deepening financial ties between the two members of the BRIC bloc of emerging nations, the China Construction Bank formalized acquisition of 72% of Brazilian mid-size lender Banco Industrial e Comercial SA, a 1.62-billion Real deal agreed in October.
China’s Eximbank extended a three-year 5bn credit line to Vale to buy ships and equipment from Chinese companies, but there was no mention of a solution to an impasse over China’s refusal to allow giant, bulk iron ore carriers used by Vale SA to dock at Chinese ports.
Vale, the world’s largest exporter of iron ore, ships the vast majority of its production to China. The Bank of China opened a second 2.5bn credit line for Vale to buy Chinese equipment and services.
Embraer, the world’s third largest commercial plane maker, will sell 40 of its E-190 planes to China’s Tianjin Airlines, its biggest client in Asia. The Industrial and Commercial Bank of China Ltd will buy up to 20 planes under an agreement to provide leasing for Embraer.
State Grid Corporation of China signed an agreement with Brazil’s Eletrobras utility to build high-voltage transmission lines for the 11,233 megawatt Belo Monte hydroelectric dam under construction on the Xingu River in the lower Amazon. China Three Gorges Corporation also signed a partnership with Brazilian utilities to bid for a new dam project on the Tapajos River.