Brazil-China fund to invest $20 billion in Brazilian infrastructure

Brazil will invest one-third of the money, and China two-thirds

Brazil Business By plus55 on May 16, 2017

A binational Brazil-China fund will invest $20 billion in infrastructure projects. Chinese President Xi Jinping announced the investment project on his visit to Brazil two years ago. The fund originally promised $50 billion in investments, but has since scaled back.

The fund launches May 30th during the Brazil Investment Forum, which brings together CEOs from large international companies. The event will announce the list of 30 projects that will receive backing from the fund.

One such project is the Ferrogrão, or “Grain railway”. The rail will connect the grain production region of Sinop, Mato Grosso to the port of Miritituba, Paraná. In addition to infrastructure, the project will invest in agribusiness, technology, and manufacturing.

For every Brazilian dollar invested, China will put up three dollars. Operating China’s side of the money is Claifund, a fund for investment in Latin America.

China also pressured Brazil into including the Bi-Oceanic Railway, which would connect Brazil to Peruvian ports. However, Brazil has resisted, claiming that the project is expensive and its viability uncertain. Connecting the Atlantic to the Pacific would cost up to an estimated $80 billion.

No public resources

The fund will not include public resources. Brazil will have its financing from the federal Caixa bank, using money from the National Economic Development Bank (BNDES) and the FGTS. The Banco do Brasil has also expressed interest in participating in the fund.

China will bring in money through Claifund, using 85 percent international funds and 15 percent from the Chinese Development Bank. Three advisors from each side will council the fund to select the participating projects and banks. While China has many international investments, this will be the first one in which joint decisions regarding the funds will be made.


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