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A US$100 billion Chinese project in South America promises to attract companies, generate new jobs and bring major investments to Brazil.
Although South America is thousands of miles away from China, ties between these regions are rapidly growing closer thanks to a new and ambitious agreement between Brazil, Peru and China. This revolutionary project promises to forever transform the way South American countries do business with the Asian giant. With a value of billions, the Chinese project will not only bring direct benefits to Brazil and Peru, but will also have a positive impact on the entire South American continent. Discover how this partnership could reshape the region's economic landscape in the coming years.
Understand the relationship between Brazil and China
Before we see how this will happen, we have to understand some hidden clauses in the contract for the Chinese project in South America.
During the 21st century, China expanded its influence around the world in search of resources and partners to fuel its rapidly growing economy. This began with investments in neighboring Asian countries, but quickly spread to other parts of the world.
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However, in recent decades, Chinese expansion has advanced exponentially, especially here in South America, and a trade agreement between China and Brazil proves this. In 2002, the trade flow between the two regions was around 12,2 billion dollars.
This number has increased to approximately 180 Billion Dollars in 2010 and currently, trade between China and Latin America has already surpassed the incredible mark 450 Billion Dollars, that is, 30 times greater than it was in 2002.
The importance of Brazilian industry for China
South America has shown itself to be extremely important to China, since it is from here that the Chinese buy a large part of their soybeans, iron, copper and oil, which is what your economy needs. This is one of the main reasons for the Chinese project in South America, including the oil extraction project in Venezuela and the iron and copper mining in Chile.
However, the main focus of Chinese investments is actually Brazil and analyzing the numbers it makes total sense, as around 35% of the country's exports go to China and, based on these and other numbers, the Chinese decided to invest in a mega project to connect South America with the Asian giant.
To carry out this Chinese project in South America, where China would be buying Brazil, state-owned companies such as China Railway Construction and China Communication play a fundamental role in connecting Brazil to the Pacific Ocean and allowing our country to both import and export through the two oceans closest to its borders, the Atlantic and the Pacific.
Chinese project in South America is essential and brings several benefits
China's mega project on the South American continent is essential, with our country being a key trading partner for supplying the Chinese economy due to its high production of commodities such as sodium, iron ore and soybeans.
Soybeans are especially important to China as they help meet demand for pig feed, with more than 90% of soybeans exported from Brazil going directly to China.
Furthermore, the iron ore extracted in Minas Gerais and Pará supplies giant Chinese steel factories and, by establishing a direct route between these continents, the so-called transoceanic route, logistical costs and transportation time are drastically reduced, making trade between these countries more efficient and advantageous for all involved.
