China and Brazil have agreed to set up a $20 billion joint fund to bolster cooperative projects in boosting production capacity in China and Brazil.
The fund was another sign of China’s growing engagement with Latin America, a region that used to be dominated by the United States.
The agreement was one of the outcomes of an annual inter-governmental meet co-chaired by visiting Chinese Vice Premier Wang Yang and Brazilian Vice President Michel Temer on Friday.
“The two sides also agreed to match up their lists of priority areas and specific projects in bilateral production capacity cooperation and hammer out a list of early harvest projects,” Wang was quoted by Chinese state agency Xinhua.
The Chinese Vice Premier also met Brazilian President Dilma Rousseff in Brasilia. Rousseff is slated to meet US President Obama in Washington on Monday.
The injection of capital from China could not come at a better time for Brazil, which is struggling to avoid sliding into recession.
Earlier in May, Chinese Premier Li Keqiang had said Chinese construction and steel companies were ready to help Brazil overhaul its infrastructure and reduce transport costs for the export of Brazilian commodities.
Li and Rousseff have already announced that the Industrial and Commercial Bank of China Ltd (ICBC), the world’s largest bank by assets, will set up a $50 billion fund with Caixa Econômica Federal, Brazil’s largest mortgage lender, to invest in Brazilian infrastructure projects.
China has been Brazil’s biggest trading partner for six years in a row while Brazil has been among China’s top 10 for five consecutive years.
China is willing to import more of Brazil’s competitive products, including manufactured goods, and get more qualified Brazilian meat enterprises registered in China, said Wang in Brasilia on Friday.
China is currently the largest importer of agricultural products of Brazil, representing 22 per cent of the South American nation’s total agricultural exports in 2014 and more than the total amount of its second to fifth largest export destinations, namely the United States, The Netherlands, Russia and Germany.
Officials from both the countries also discussed the ‘work plan’ for building a transcontinental railway.
Peru, Brazil and China are eyeing a planned railway crisscrossing the South American continent.
Amongst the deals inked in July last year between Rousseff and Xi was, most significantly, a railway spanning the continent from Brazil’s Atlantic coast to Peru’s pacific ports, which woud significantly reduce the costs and time required for Brazil to ship raw commodities to China.