China's Planned Investment in Latin America to Improve Ag Trade Flows

Chinese premier, Li Keqiang, has made his first official visit to Latin America, forging deals that will see over $50 billion invested over the next decade into a broad range of commercial and infrastructure deals in the region. The first two deals announced are a pair of cooperation and finance deals carrying a value of $7 billion for Brazil’s state owned oil company, Petrobras, which has been embroiled in a graft scandal over the past year.

Aside from these two, other deals developed to deepen ties in agriculture, energy, transportation, investment and trade were signed, including talks regarding China lifting an import ban on Brazilian beef in place since 2012, and the construction of a 2,200 mile railway from Brazil’s Atlantic seaboard to the Peruvian Pacific port of Ilo. Brazil’s agriculture ministry said it expects the opening of China’s market to Brazilian beef will increase shipments by $520 million, and stated that the country is on pace to have 26 plants ready to resume meat exports to China by June. And the planned $10 billion railway, which will either span across Brazil into Peru, or into Peru via Bolivia, demonstrates China’s interest and goal of facilitating the transportation of shipments both from and into Brazil. Although some see the cost of such a project as prohibitive, other see the possibility of what such a railroad from the Amazon to the Andes could mean – transporting vast cargoes of grains and oilseeds from one of the world’s top producing inland regions to one of the world’s biggest markets.

China has demonstrated that it is increasingly looking overseas for commodity origination and food security. The agreed-upon $50 billion in investments, whether directly into agriculture or other sectors, such as infrastructure that can aid agricultural growth, will play a key role in increasing trade flow and facilitating more exchange between China and Latin America.

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