Billions of dollars in trade deals expected
Chinese Premier Li Keqiang, whose visit to Brazil started on Monday, is expected to bring many important trade deals, amid increasingly closer ties between China and the Latin America. [Special coverage]
In his first visit to Latin America since taking office in 2013, the Chinese leader chose Brazil as the first stop of his tour, a move observers believe reflects the great strategic importance China attaches to the South American country.
The tour will also take him to Colombia, Peru and Chile.
A proposed agreement on a transcontinental South American railway linking Brazil's Atlantic coast to Peru's Pacific coast, known as the cross-Andes railway, is expected to be the highlight of this visit.
More than 20 cooperation agreements between China and Brazil are on the agenda, covering agriculture, finance, mining and the energy industry, Hong Kong-based Ta Kung Pao newspaper reported.
Li's visit is said to bring structural changes in bilateral trade between China and Brazil, the world's second and seventh largest economies.
"Brazil, which makes up half of Latin America's economy, spearheads its relations with China among the Latin American region. Both China and Brazil, part of the fast-growing BRICS group [which also includes Russia, India and South Africa], have a common role in contributing to the world economy and politics," Wu Baiyi, director of Latin American Studies with the Chinese Academy of Social Sciences (CASS), told the Global Times.
The two countries are expected to work on a joint study of the feasibility of building the cross-Andes railway, which observers believe will improve South America's transportation system and regional trade.
"This will be the land route alternative to the Panama Canal, bridging Asia's fast-growing economy with the Latin American region, and also brings economic benefits to countries like Brazil and Peru along the railway network," Wu said.
The railway deal comes at a time when Brazil's economy has witnessed only 0.1 percent growth in 2014, compared to 2.5 percent in 2013. Economists surveyed by the Central Bank of Brazil expect GDP to contract by more than 1 percent this year.
China, Brazil's largest trade partner, invested $18.94 billion in the Latin American country in 2014. Bilateral trade between China and Brazil increased 13-fold in value between 2001 and 2013, according to Brazilian statistics.
Brazil, China's largest trading partner in Latin America, is also trying to get a bigger share of China's dynamic emerging market, reported the Xinhua News Agency.
As China's economy enters a new normal, with a slower growth rate due to a restructuring of its economy in recent years, its demand for Brazil's natural resources, particularly minerals, has dropped.
But China's overall economic interest in the region has not diminished, in particular after Chinese President Xi Jinping in January pledged $250 billion of investment in Latin America over the next decade.
"A structural overhaul is needed in China's investment in Brazil amid China's economic slowdown and excess capacity. China's investment will no longer be limited to natural resources like oil and soybeans, but will expand to high value-added products like aircraft and transportation infrastructure," Xu Shicheng, a research fellow at CASS, told the Global Times.
Brazil is set to be the first South American country to host the Olympics in 2016. Xu said China is contributing to the construction of Brazil's subway network, a sign of China's experience in infrastructure construction.
Two Chinese companies, Tianjin Airlines and the Industrial and Commercial Bank of China (ICBC), last July signed a deal worth of $3.3 billion with Brazil's Embraer, a leading aircraft manufacturer, to purchase 60 more E190 planes from the Brazilian firm.
Chinese government statistics show that Beijing's direct investment in Latin America totaled $99 billion by the end of last year.
China's rising influence in the region once considered the "backyard" of the US has been regarded by some as a challenge to the world's biggest economy.
Chinese observers, however, hold a different stance. "China's investment in the region has been conducive to the region's economic recovery, which has been received warmly by both the US and Latin American countries," Wu said.
Such investment and cooperation is not exclusive, Wu said, adding that the world order should not be dominated by any one power and influence should be shared by different parties.
About 200 Chinese entrepreneurs will attend a summit with their Brazilian colleagues during the visit. Leading Chinese bankers, in particular, will work with Brazilian partners to expand bilateral financial cooperation, according to Xinhua.
