China and Brazil Confirm Trade and Investment Deals Worth Billions

China and Brazil have together announced a series of investment and trade deals between the two countries as China seeks to invest $50 billion in Brazil’s economy. Trade between China and Brazil skyrocketed from approximately $6.5 billion in 2003 to $83.3 billion in 2012, and despite China becoming Brazil’s number one trade partner in 2009, China ranks only 12^th as an investing country in Brazil. A study conducted by the Brazil-China Business Council think tank, found that only slightly more than one third of the $68.5 billion in Chinese investments announced between 2007 and 2012 were realized.

The agreements will be of particular benefit to Brazil, which is experiencing its fifth year of low economic growth, and which will need to build and restore aging and inadequate infrastructure before hosting South America’s first Olympics next year.

After Chinese premier, Li’s first official visit to Latin America, the first two deals announced are a pair of cooperation and finance deals carrying a value of $7 billion for Brazil’s state owned oil company, Petrobras, which has been embroiled in a graft scandal over the past year.

Aside from these two, other deals developed to deepen ties in agriculture, energy, transportation, investment and trade were signed, including talks regarding China lifting an import ban on Brazilian beef in place since 2012, and the construction of a 2,200 mile railway from the port of Santos to the Peruvian Pacific port of Ilo. Brazil’s agriculture ministry said it expects the opening of China’s market to Brazilian beef will increase shipments by $520 million, and stated that the country is on pace to have 26 plants ready resume meat exports to China by June. And the planned $10 billion railway, which will either span across Brazil into Peru, or into Peru via Bolivia, demonstrates China’s interest and goal of facilitating the transportation of shipments both from and into Brazil.

China has demonstrated that it is increasingly looking overseas for commodity origination and food security. The agreed-upon $50 billion in investments, whether directly into agriculture or other sectors such as infrastructure that can aid agricultural growth, will play a key role in increasing trade flow and facilitating more exchange between the two BRIC nations.