When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Li Keqiang in Rio De Janeiro on May 21
Li Keqiang in Rio De Janeiro on May 21
Wu Haishan

BEIJING — China's Prime Minister, Li Keqiang, completed a tour last week of four South American countries — Brazil, Colombia, Peru and Chile — that marks a turning point between the Asian power and the Latin American region.

With his arrival in Brazil on the second day, May 19, Li unveiled a major achievement: a Chinese-Brazilian agreement that includes 35 separate projects amounting to a total of $53 billion. The deals include building infrastructure, finance, aviation, agriculture, renewable energy, telecommunication, and other high-tech sectors, among which are the much talked about "Two-Oceans railway" and the "Belo Monte hydroelectric dam." It is in such deals that we see a shift in China's way of working in Latin America.

Linking the Atlantic Ocean on the Brazilian coast to the Pacific Ocean on Peru's coast, the Two-Ocean Railway will be 5,000 kilometers long, with a total investment of over $10 billion and five years of construction time. Unlike previous Chinese companies' foreign cooperation programs, this project not only involves engineering contracting, but also the post-construction operation.

The two countries' joint statement stressed the crucial importance of the railway project for South America's goal of creating an integrated infrastructure network across the continent.

Peruvian newspaper El Comercio called the railway linking the two oceans "the new Silk Road to Latin America." Peru's Ambassador to China, Juan Carlos Capuñay, pointed out this railway's importance to the country for helping to facilitate trade between Peru's coastal region and inland areas, as well as promoting trade with the Asia-Pacific region.

As for China, once the railway is built, it will no longer need to send ships through the Panama Canal to import bulk commodities such as soybeans and iron ore from Brazil and Argentina.

Ultra high voltage

Currently under construction, the Belo Monte hydroelectric dam will be Brazil's second largest hydroelectric dam complex, and marks the first time that China exports an ultra-high-voltage transmission project. In February 2014, China's State Grid Corp and Brazil's Eletrobras formed a 51% to 49% consortium and successfully won a bid to build and operate a 30-year franchise on a transmission line running from the Belo Monte Amazon dam in northern Brazil to the southeast of the country. This is the first ultra-high-voltage transmission line on the American continent; and the 2,084-kilometer transmission line is estimated to be ready in 2017.

As Renato Baumann, a Brazilian international affairs expert, put it, Brazil would have preferred developing its own large projects, unfortunately it has been "out of breath" in recent years, and funding from China is essential.

Currently in preparation for the 2016 Olympics, Brazil's economy is predicted to shrink one percent this year. Not only will the $50 plus billion of investments promised by Prime Minister Li provide immediate support to the country's shrinking economy, but it will also upgrade China's investment in Latin America.

Compared with China's so-called "first-generation investment," which mainly involved trading raw materials, China is now focusing on heavy industries and deals to build infrastructure.

Such a transition is prompted in part by the decline in commodity prices in the past two years. Latin America was once one of China's raw materials bases. In addition, taking on project contracting and operations help China achieve its goal of expanding globally. Investing farther along on the industrial chain not only reduces risks and increases profits, but it can also upgrade China's industry back at home.

The four countries on Prime Minister Li's tour makes up 57% of the continent's trade volume with China. Meanwhile China has a growing interest in increasing its direct investments in the region and, in particular, in construction projects such as roads, bridges and railways.

As Chinese government data shows, at the end of 2014, China's direct investment in Latin America totaled around $99 billion.

For the first time, in January this year, leaders from Latin America and the Caribbean gathered in Beijing to attend the first Latin America Forum. Chinese President Xi Jinping announced that in the next 10 years China will invest $250 billion in Latin America.

You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Insights from the widest range of perspectives, languages and countries
  • $2.90/month or $19.90/year. No hidden charges. Cancel anytime.
Already a subscriber? Log in

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
Ideas

Draft Dodging And Cannon Fodder: How Mobilization Has Exposed Putin's Big Lie

As much as he tried to, Vladimir Putin could no longer avoid the nationwide mobilization of new recruits. But now he can no longer hide from a war he chose for his nation — and more than ever, his own destiny is riding on the result.

Who's ready for the front line?

Ivan Vysochinsky/ZUMA
Anna Akage

-Analysis-

Besides all the chest-thumping, Vladimir Putin has been busy this week moving around his administrative chess pieces.

Wednesday’s announcement of the “partial” mobilization of military recruits was preceded by a flurry of legislative activity in the Kremlin: first, coordinating with the pro-Russian authorities in several of the occupied territories of Ukraine, binding referendums were pushed through to officially make conquered land part of Russia. The next day, amendments to the Criminal Code on mobilization and martial law were unanimously adopted in two readings. And immediately after Putin's speech, penalties were increased for acts of desertion and refusal to serve in the military.

Checkmate.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

Sign up to our free daily newsletter.

The pieces are in place to escalate the war dramatically, allowing Moscow the pretext that Ukraine’s efforts to take back its land is now an attack on Russian territory.


Keep reading...Show less

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Insights from the widest range of perspectives, languages and countries
  • $2.90/month or $19.90/year. No hidden charges. Cancel anytime.
Already a subscriber? Log in
Writing contest - My pandemic story
THE LATEST
FOCUS
TRENDING TOPICS

Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.

Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.

Watch VideoShow less
MOST READ