Brazil and China signed 35 agreements with emphasis on infrastructure

In a fuss, the president Dilma Rousseff and the prime-minister Li Keqiang signed yesterday 35 bilateral agreements with strong political impact, yet without clearly stating how China will effectively invest in Brazil throughout the next years. A great part of the announcements symbolizes even the intentions of the investments, which depend on studies and biddings. Even with those conditions, the US$ 53 billion package brought by the Chinese and previously informed by Valor has been celebrated as a triumph by the Brazilian government, which is trying to reverse the pessimistic environment towards the economy.

“We want to consolidate our relations with China, based not only on our comparative advantages with commodities, but also on new areas”, said Dilma. She mentioned, in all the events that she joined, the construction of a transoceanic railway connecting Brazil to Peru, a 4.7 thousand kilometres length enterprise. A viability study of the project, funded by Chine, is expected to be delivered in May 2016.

Immediately, the reopening of the cattle beef market and the final confirmation of the sale of 22 jet airplanes from the family E¬Jets of Embraer to the airline company Tianjin Airlines came out. The business, which had already been announced last year, depended on the approval of Chinese authorities. Accordingly to list prices, the contract is worth US$ 1.1 billion and might be extended to 18 more airplanes, which were part of the original order.

Other agreements, such as the one signed between the state-owned companies Eletrobras and the Chinese Three Gorges Corporation, point out the intention to negotiate partnerships in a future auction ¬ in the case, the one concerning the mega hydroelectric power plant of São Luiz do Tapajós (State of Pará), which still needs to be approved by Ibama (Brazilian Institute of Environment and Renewable Natural Resources). In the electric sector, another project has demonstrated how the need of strong gestures was in front of unavoidable procedures. In a ceremony in the Palácio do Planalto, Dilma and Li laid the cornerstone of the transmission lines to be constructed by the Chinese company State Grid and the Brazilian companies Furnas and Eletronorte, which will distribute the energy of the power plant of Belo Monte to consuming centres of the south-eastern region of the country.

Yet, during the ceremony, the “linhão” (big line, in Portuguese) did not possess the previous environmental license that states the viability of the enterprise and that might be granted within the next days. It also didn’t bear the installation license, the document necessary for the effective beginning of any construction in the country.

Thus, even if it is robust, the number of US$ 53 billion must still be read as an intention of investments, as it has been highlighted by the ambassador José Alfredo Graça Lima, subsecretary of Politics II of the Ministry of Foreign Affairs and one of the main organizers of the visit. “Those are projects that have already begun, that are being matured and that may be funded in the future.”

Beyond the investments, Chinese came to Brazil with other promises. The greatest of them involves the funding of US$ 50 billion from the state-owned bank ICBC in a list of priority sectors: railways, roads, ports, airports, renewable energies and habitation.

It has been defined that the Caixa Econômica Federal (CEF) will work as the structure and manager of the resources. It is yet not known whether this money will come in the way of a funding or as a bilateral loan. “We have 60 days to make a work development proposal”, said CEF’s financial and control vice-president, Márcio Percival. One point still needs more details: whether the money will be available even for future infrastructure projects where Chinese are not the bidding winners, nor the equipments’ suppliers.

For last minute, Li made an unexpected suggestion to Dilma: the creation of a bilateral fund for productive cooperation estimated on US$ 20 billion, also focused on productive and infrastructure investments. The topic had not been previously discussed by government technicians and no one dared to detail it.

For the international affairs secretary of the Ministry of Planning, Budget and Management, Cláudio Puty, all the money announced by the Chinese delegation signals that there are profitable opportunities in Brazil. “It is something that can be bounded to the concessions package that we will announce in June”, he observed.

In the closing speech of the Brazil-China corporate council meeting, the prime-minister tried to ward off fears concerning the Chinese offensive and said he will not “impose any political condition” in the approximation with South-American countries. He had already sent a calming message after the signature of the acts in the Palácio do Planalto, together with Dilma. “We’d like to cooperate in order to reduce the infrastructure costs in Brazil and generate local employees”, Li said during a conference interpreted by diplomats as a response to insinuations that China would like to ease labour legislations in order to export labourers to countries receiving investments.