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Watch out America! China invades South America with epic trade deal

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China expanding trade partnership with key exporter

China is expanding its trade partnership with Brazil, with a $7.5 billion financing agreement with Brazilian miner Vale, the purchase of 60 passenger jets from Brazilian plane maker Embraer, and renewed commitment to invest in Brazil's infrastructure.

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Highlights

By Catholic Online (NEWS CONSORTIUM)
Catholic Online (https://www.catholic.org)
7/18/2014 (9 years ago)

Published in Americas

Keywords: International, Finance, South America, China

LOS ANGELES, CA (Catholic Online) - Top among all these agreements, was the signing of an accord by Chinese President Xi Jinping and Brazilian President Dilma Rousseff in which the two nations agreed to team up to build railways to help Brazil reduce its infrastructure deficient and feed China's hunger for commodities.

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One potential project would be the building of a railway from Brazil's Atlantic coast through the Andes mountains to Peru and the Pacific, which could cut the cost of shipping Brazil's grain to China by $30 per ton, a senior Brazilian official said.

Trade between these two countries soared to $83.3 billion in 2013, up from just $3.2 billion in 2002. Iron ore, soy and oil make up the bulk of Brazil's exports, and China is that nation's biggest trade partner.

"China's two main strategic concerns are energy security and food security. Brazil is an ideal partner on both counts," said the Brazilian official.

This is part of a deepening financial network between China and Brazil. The China Construction Bank formalized the acquisition of 72% of Brazil's mid-size lender Banco Industrial e Comercial SA, a $1.62 billion deal agreed to back in October 2013.

Another Chinese company, Eximbank, extended a three-year, $5 billion credit line to Vale, to buy ships and equipment from Chinese companies. Vale is the world's largest exporter of iron ore and ships the vast majority of its production to China.

For years China has made promises to invest in Brazil, but delivered little on that promise until recently. But the pace of investment could pick up again with new Chinese focus on Brazil's deficient infrastructure.

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