China stokes plans for railway in S America

Chinese President Xi Jinping (L) and his Brazilian counterpart Dilma Rousseff shake hands during their meeting in Brasilia, Brazil, July 17, 2014. (Xinhua/Lan Hongguang)

Workers assemble subway trains at a factory of CNR Changchun Railway Vehicles Co in Changchun, Jilin province, last week. The trains will be delivered to Brazil and Argentina as China boosts cooperation with Latin America in the railway sectors.[Photo/Xinhua]

Transnational project to be major contributor to regional integration

China is laying the tracks for the further development of Latin America and boosting relations with the region following President Xi Jinping's proposal for a Peru-Brazil transcontinental railway and the signing of a China-Brazil rail agreement.[Special coverage]

Observers said these rail initiatives would be a major contributor to regional integration and give Latin American economies greater diversity for their exports, with the burgeoning Asian market being added to the traditional European one.

The attractiveness of Chinese investment is not just a question of cash or exports, but the ability to bring major upgrades in infrastructure and to open up areas of the continent's interior, a key goal for Brazil and other countries, observers added.

China and Brazil sealed a long-awaited memorandum of understanding on railway construction on Thursday, among a raft of agreements including the educational and manufacturing sectors.

The 1,630-km railway project is located in the central part of Brazil, linking Lucas do Rio Verde and Campinorte, according to the Ministry of External Relations of Brazil. It will be crucial for the transportation of soybean from the middle west of the country.

Two Chinese companies also signed deals to buy and rent 60 regional aircraft from Brazil.

Brazilian officials have long expressed their wish to see Chinese rail companies get more involved in the nation's infrastructure program, highlighting the competitiveness and experience of China, home of the world's largest rail network.

The signing of the agreements came on the heels of Xi's proposal to form a trilateral working group to guide plans to build a railway across the continent from Peru's Pacific coast to Brazil's Atlantic coast.

The working group should consider all aspects of the transcontinental railway proposal, including planning, design, construction and the operation of the service, Xi told Peruvian President Ollanta Humala in Brazil's capital, Brasilia, on Wednesday.

Shen Yun'ao, former Chinese ambassador to Brazil and Argentina, said Latin America would continue to be one of world's top suppliers of raw materials such as ore, grain and meat, and improving the rail network will see exports soar.

The planned Peru-Brazil line, for instance, will reduce the cost of exports to China and cut delivery time by utilizing ports on the Pacific coast rather than the Atlantic, Shen said.

Stressing the importance of the line's contribution to South America's regional integration, Shen also cautioned that it would be a huge project that would face a number of geographical challenges.

According to the National Association of Rail Transporters in Brazil, the country's railroad system transported 490,000 tons of materials in 2013. Coal and iron ore accounted for 75 percent of total goods.

Ken Goldstein, an economist with the Conference Board, a business research group in New York, said China's support for infrastructure development in Latin America will create a "win-win" model for all.

"It's similar to what China is doing in Africa," he said. "Helping to improve the infrastructure of the domestic economies in Latin America increases the potential market for goods and services coming out of China."

Trade volume between China and Latin America reached a record $261 billion last year, almost 21 times the figure for 2000.

In less than two decades, China has emerged as the biggest trade partner for Brazil, Chile and Peru, and is set to overtake the European Union as the region's second-largest trade partner in 2016, according to United Nation's figures.

On Thursday, Brazilian President Dilma Rousseff gave Xi a red-carpet reception for his first state visit before the signing of agreements and a summit with a group of Latin American and Caribbean states known by the Spanish acronym CELAC. Xi launched the China-Latin America Forum with CELAC, a 33-nation grouping that was represented Thursday by Cuba, Ecuador, Costa Rica and Antigua and Barbuda.