LATIN AMERICA

China signs US$27 billion oil, trade deals with Brazil

Agreements come on the first full day of Premier Li Keqiang’s visit to Latin American nation

PUBLISHED : Wednesday, 20 May, 2015, 11:30am
UPDATED : Wednesday, 20 May, 2015, 11:51am

China’s Premier Li Keqiang lifted the wraps on a multibillion-dollar series of trade and investment deals with Brazil, as Beijing looks to invest tens of billions in South America’s largest economy.

The news unveiled at the start of Li’s first official visit to Latin America is a huge boon for Brazil as it endures a fifth straight year of low growth after a period of rapid expansion fuelled by Asian demand for commodities that has since slowed.

Li’s host, President Dilma Rousseff, hopes Brazil can direct Chinese cash to overhaul decaying infrastructure as the country’s tourist magnet Rio de Janeiro prepares to host South America’s first ever Olympics next year.

Headlining 35 deals on Li’s first official visit to Latin America were a pair of finance and cooperation agreements worth US$7 billion for Brazil’s state-owned oil firm Petrobras.

Li put the total value of Tuesday’s agreements at US$27 billion, while Rousseff said they totaled US$53 billion, a ballpark figure that aides said included past and future funding.

Aside from the Petrobras agreements, Rousseff and Li also signed a range of deals designed to further cooperation on trade, investment, agriculture, energy and transport.

READ MORE: China pushes Brazil to speed up investment and infrastructure deals

Brazil and China agreed to study the feasibility of a rail link over the Andes to the Pacific that would allow Brazilian exports to avoid the Panama Canal.

"A new road to Asia will open for Brasil, reducing distances and costs, a road that will take us directly to the ports of Peru and, across the Pacific Ocean, China," President Dilma Rousseff said, inviting Chinese companies to build it.

Brasilia and Beijing also finalized a US$1.3 billion accord to sell 22 Brazilian Embraer commercial jets to China’s Tianjin Airlines.

Brazil’s Vale, the world’s biggest iron producer, announced a range of deals including extended cooperation with China on the maritime transport of iron ore.

The Bank of Communications Co, China’s fifth-biggest lender, said it had bought 80 per cent of Brazilian lender Banco BBM for about US$174 million, the Chinese bank’s first overseas acquisition.

WATCH: China and Brazil unveil multibillion trade and investment deals

China also vowed to lift an import ban on Brazilian beef.

Trade between the developing states has mushroomed 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 US$10 billion in 2000 to $255.5 billion in 2012.

Sino-Brazilian trade mushroomed from US$6.5 billion in 2003 to US$83.3 billion in 2012.

Rousseff, who will make a state visit next year to China, spoke of a “new intensity in our relations”.

“China and Brazil are playing a leading role in the construction of a new global order,” she said.

Reuters, Agence France-Presse