China throws Brazil multi-billion dollar lifeline for jets, oil
BRASILIA, Brazil — China extended billions of dollars in loans and investment to Brazil as the South American nation reels from a slowing economy and a corruption scandal engulfing its largest oil producer.
China Development Bank and the Asian country’s export credit financing agency agreed to provide a total of $7 billion in financing for Brazil’s state-run energy company Petroleo Brasileiro. And Tianjin Airlines signed a contract to buy 22 jets from São Paulo-based Embraer.
Deals signed during the visit of Premier Li Keqiang coincide with Brazilian President Dilma Rousseff’s efforts to kick-start an economy that is forecast to contract 1.2 percent this year, its worst performance in a quarter-century. China also said it will study investments to expand and modernize Brazil’s bottlenecked roads, ports and railways.
“Investment between China and Brazil can and will mean an improvement of our economic situation,” Rousseff told a group of entrepreneurs from both countries on Tuesday.
One of the biggest projects Chinese companies are eyeing is the construction of a railway that would link the Atlantic and Pacific Oceans via Peru.
China Three Gorges Corp. is interested in the construction of the Tapajos hydroelectric generator in the Amazon rain forest, which would be Brazil’s fourth-largest dam and cost at least 18 billion reais ($6 billion), according to a government official who asked not to be named.
The two countries also signed an agreement to allow the export of beef from Brazil to China, which had been banned since 2012.
Brazil is the first stop on Li’s Latin American visit that also includes Colombia, Chile and Peru.
Exports to China, Brazil’s largest trade partner, fell 12 percent in 2014 as demand for commodities including iron ore and soy beans eased.
The 22 jets Embraer will sell to Tianjin Airlines, a subsidiary of the HNA Group, are part of a previously-announced commitment to supply 40 aircraft. The deal is valued at $1.1 billion at current list prices. Airlines typically receive a discount on those prices. Chinese authorities later should approve the other planes, Embraer said in a statement.
China is forecast to need 900 aircraft with 70-130 seats in the next 20 years, Paulo Cesar Silva, head of Embraer’s commercial jet business, said in a May 11 interview with Bloomberg Television in Singapore.
The China Development Bank last month extended a $3.5 billion loan to Petroleo Brasileiro, just as the embattled oil company was struggling to quantify operating losses due to corruption and mismanagement. More than half of the suppliers investigated for paying bribes also will close deals with Chinese banks and companies, according to Charles Tang, chairman of Brazil-China Chamber of Commerce & Industry.
© 2015, Bloomberg News
You may be interested
Pic of the Day: The works of Costa Rican artist Jorge Jiménez DerediaAFP and The Tico Times - July 16, 2019
Today's featured photo shows the sculpture "Genesis de Huevo" by Italy-based Costa Rican artist Jorge Jiménez Deredia as it appeared…
Costa Rican students continue protests over public education programsMonserrat Cordero Parra and Rita Valverde / Semanario Universidad - July 15, 2019
Costa Rican high school students demonstrated Monday in front of the Rofas Building in San José and closed educational centers…
Central American countries raise alert about banana wiltAFP and The Tico Times - July 14, 2019
The International Regional Organization for Agricultural Health (Oirsa) issued an alert on Sunday to prevent the advance of the destructive…