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Brazil secures Chinese pledge for heavy investment

April 16, 2010 at 10:15 AM   |   Comments

RIO DE JANEIRO, April 16 (UPI) -- Brazil secured Chinese pledges to investment heavily in and buy more from Brazil as the summit of BRIC countries -- Brazil, Russia, India and China -- opened a day early to allow for President Hu Jintao to return to China to oversee earthquake relief.

More than 800 people died in an earthquake in western China as Hu embarked on his Latin America visit, which was to have taken him to Venezuela and Chile as well.

The Brazil deal became the highlight of Hu's visit as he cut short his tour.

The wide range of economic collaboration agreed between Brazil and China gives Beijing a much vaunted foothold in Latin America, opening possibilities for business and export expansion, investment in joint projects and military sales.

Analysts said neither of the other two BRIC nations at the summit, India and Russia, could match Beijing in terms of access to cash and extent of business opportunities in a growing consumer market, as in China.

The BRIC summit, the second since last year, looked at alternatives to the U.S. dollar as the world's reserve currency and ways of engineering economic and political shifts to achieve its avowed goal of a multipolar world order -- a system independent of Western pre-eminence.

Agreements reached Thursday between Brazil and China include a plan to study the use of the Brazilian real and the Chinese yuan, instead of the U.S. dollar, in bilateral trade.

BRIC countries account for about 40 percent of the world's population.

Analysts said Hu's visit differed from initiatives taken by Russia to boost Latin American trade, including arms sales, because of China's ability to deploy its cash reserves into new acquisitions, investment deals and marketing for a greater share of the region's consumer markets.

Russia has focused on arms sales and technology transfers to increase its cash revenues. Russian deals with Argentina to boost nuclear collaboration will give Moscow a welcome entry into a market that U.S. manufacturers once dominated.

Brazilian Presidents Luiz Inacio Lula da Silva and Hu signed several trade and investment agreements that will see large inflows of Chinese cash into the Brazilian economy.

Lula said a Chinese pledge to build a steel plant in Brazil port would be China's biggest investment ever in Latin America's largest economy.

China may also bid to construct a high-speed train line that will connect Rio de Janeiro with Sao Paulo, he said.

"The possibility for Chinese companies to participate in the modernization of Brazil's infrastructure is exceptional," Lula said, citing the 2014 soccer World Cup and the 2016 Olympics and Beijing's experience as host of the 2008 Olympics.

Details of China's involvement with Brazil's oil industry weren't mentioned but a greater Chinese role in that sector is in the cards because of China's declared strategy of securing energy sources for future growth in its oil demand.

Last year, China agreed on a $10 billion loan facility for Petrobras and more financing for the state-manged oil giant isn't ruled out.

A joint statement said, "The two sides will deepen the bilateral partnership in the oil sector, with the participation of Brazilian companies in development and production in China and the participation of Chinese companies in development and production in Brazil."

Lula and Hu also discussed Iran nuclear issues, on which Lula has frequently expressed support for Tehran. He is due to visit Iran next month.

Topics: Hu Jintao
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