China with “renewed” interest in Brazil

31 May 2010

Macau, China, 31 May – China is showing “renewed” interest in developing relations with Brazil and other South American countries, extending them from the energy and raw materials domain to other strategic areas, asserts Russell Hsiao of China Brief.

“Against the background of the global financial crisis, Chinese activities in Latin America have become notably more pronounced,” the editor of the bulletin published by the Jamestown Foundation states in an article published last week about various business deals closed in recent weeks, particularly in Brazil.

The biggest deal concerned Norwegian oil company Statoil’s sale of a 40 percent stake in Brazil’s Peregrino oil field to the Chinese Sinochem group for US$3.1 billion, announced on 21 May.

Brazil has been gaining importance as a supplier of oil to China. The president of the China Petroleum and Chemical Corporation (Sinopec), Shu Shulin, recently revealed that the company planned to buy 7 million tonnes of crude oil this year from Brazilian oil company Petrobras.

Similar deals have been closed in Argentina and Venezuela, other important partners in the region.

In November 2009 Petrobras contracted a 10-year US$10 billion loan with the China Development Bank. In exchange, the Brazilian company will give preference to Chinese companies in goods and services purchases and pay part of the credit with revenue from oil sales to China.

China is seeking to diversify its suppliers, as it depends on outside energy sources and is vulnerable to oil price variations, Hsiao stresses.

“While China’s energy imports from Latin America lag in comparison to such imports from other regions, China’s substantial commitments in Argentina, Brazil and other areas are strong indictors of the push to come,” the China Brief editor states in his article.

Russia and Central Asia, the Middle East and Africa are currently the most important regions for supplying the Chinese economy.

“China’s presence is not confined to only securing access to markets and sources of primary products,” Hsiao states, explaining that “it is also strategic”.

“Given Brazil’s and Argentina’s relatively sophisticated level of development in several high-technology sectors, it is not surprising to see Brasilia and Buenos Aries emerge as hubs of China’s push into the region,” he says, citing the cases of nuclear energy, the aerospace industry and telecommunications.

“The depth of China’s strategic partnership with countries in the region is becoming clear as China becomes more confident and assertive in conducting its foreign policy,” states Hsiao, adding that the closer relations will have implications for Washington, traditionally the region’s main partner.

China overtook the United States of America as Brazil’s main commercial partner in 2009 and kept that top position from January through April of this year, indicate figures from Brasilia. (macauhub)