Premier Li Keqiang addresses a business summit between China and Brazil in Brasilia, capital of the Latin American country on May 19.(Photo/english.gov.cn)
Premier Li Keqiang pledged on Tuesday to set up a $30 billion fund to finance industrial cooperation between China and Latin American countries.[Special coverage]
The fund would be used to help upgrade local logistics, power supplies and information infrastructure, a cooperative approach that he said would advance industrialization on both sides. The fund also will be used to encourage Chinese companies to take part in the construction of logistics networks, focusing on railroads and highways in Latin America; an efficient power transmission network linking different Latin America countries; and an information technology network with cloud computing and big data technology. Li detailed the fund in an address to Chinese and Brazilian corporate leaders.
The projects will be launched according to market demand, he said, in either a public-private-partnership or a franchising pattern, to encourage input from local labor unions.
Li's pledge to invest more in transportation infrastructure, electricity and information technology comes as Brazil and other Latin American economies are feeling the pinch of a global recession and decreasing demand for commodities.
ADVERTISING3 3 Experts said the fund could ease lending difficulties in Brazil, as a scandal involving state-run oil company Petrobras has implicated the country's largest construction and engineering firms in alleged bribes, freezing them out of credit markets and hamstringing their ability to complete infrastructure projects or start new ones that Brazil badly needs to streamline its exports of soy, iron ore and other goods.
"I believe that the recovery of the world economy lies in global industrial cooperation," Li said. "A deep restructuring of the global economy will not be made possible with merely the quantitative easing policies without the push of the real economy. Industrialization and global industrial cooperation are the fundamental force of the world's economy.
"Latin America cannot always be an exporter of raw materials, like China can no longer be a global supplier of cheap products," Li said. Sino-Brazilian trade mushroomed from $6.5 billion in 2003 to $83.3 billion in 2012, and trade between China and Brazil reached $86.9 billion in 2014, about 3.3 percent lower year-over-year. Brazil exported goods worth $52 billion to China, 3.2 percent less than the previous year. It imported $35 billion from China, nearly 3.5 percent down.
Ignacio De Moraes Jr, manager of Nutriplus, a Brazilian company with an office in Shanghai, said he was encouraged by Li's address, and he believes Li's proposal to fund local infrastructure construction is "mature".
Jose Graca Lima, head of Asian affairs in the Brazilian Foreign Ministry, told AFP that another generation of Chinese investment is under way. After the first wave involving trade in raw materials, the focus now is on heavy industry and infrastructure.
Xu Shicheng, a research fellow in Latin American studies at the Chinese Academy of Social Sciences, said Li's proposal to get more involved in local infrastructure construction has created more business opportunities for Chinese and Brazilian corporate leaders. Xu said that compared with Africa, Latin America is more predictable in terms of government polices and business environment. In Central and Eastern Europe, where the demand for infrastructure construction and industrial capacity is also high, the need for Chinese funding is not as strong as it is in Latin America.
"Despite the current economic slowdown, I believe the fundamentals in Latin America are still good, and opportunities (outnumber) challenges for Chinese investors on the continent," he said.