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China to invest billions in Brazil's economy, Chinese premier says

Today Chinese Premier Li Keqiang makes his first official trip to Latin America, stopping in Brazil to present an economic plan that includes investing billions of dollars in the Brazilian railway system. 

Ng Han Guan/AP/file
In this March 2015, file photo, Chinese Premier Li Keqiang waves as he arrives for a press conference.

Chinese Premier Li Keqiang will push trade, finance and investment deals worth tens of billion of dollars on Tuesday to help Brazil upgrade its dilapidated infrastructure and boost a slumping economy.

On his first official trip to Latin America, Li will meet President Dilma Rousseff and attend the signing of a raft of agreements ranging from a $1 billion purchase of passenger jets made by Brazil's Embraer to the lifting of an import ban on Brazilian beef and a long-discussed plan to build a railway over the Andes to the Pacific.

While China has failed to deliver on many past investment promises, Brazilian government officials said they are hoping for agreements worth 53 billion reais ($17.6 billion) with the Chinese.

However, China's ambassador to Brazil, Li Jinzhang, told Brazilian newspaper Valor Economico the deals to be inked during the premier's visit would total about 26 billion reais.

An injection of capital from China could not come at a better time for Brazil, which is sliding into recession following the end of a commodity boom that was fueled by voracious Chinese demand for its main exports, iron ore and soybeans.

As China's economy slows, Chinese companies are also looking abroad for new opportunities to invest.

Chinese companies with technology and experience are ready to build factories in Brazil to produce materials and equipment needed for large-scale infrastructure projects, premier Li said in a column published on Monday by Valor Economico.

"China wants to get involved in Brazil's large plans to build freight railroads, electricity and telecommunications networks," wrote the Chinese premier, who arrived on Monday night before beginning his official round of meetings on Tuesday.

Rousseff, who has been forced to cut spending on public works to put government finances in order, is preparing a package of concessions to attract private investors to build or modernize Brazil's railways, roads, ports and airports. It will be announced in early June.

Brazil is hoping for Chinese investment in a 900 km (560 mile) section of railway to be built through the soy producing state of Mato Grosso, which could speed up the transport of grains and other goods to ports on the Atlantic.

The rail section would become part of a transcontinental railway link to Peru's Pacific coast planned when President Xi Jinping visited Brasilia a year ago, allowing Brazil to ship raw materials to China without going through the Panama Canal.

China's Tianjin Airlines is expected to confirm a previously announced purchase of a first batch of 22 E-190 passenger jets made by Embraer, including two second generation E-190-E2 models that enter service in 2018, a foreign ministry official said. China committed to buy 60 planes when Xi visited in 2014.

Beef exporters expect China to formally lift a 2012 mad cow-related ban and allow eight Brazilian meat processing plants to re-enter the Chinese market, potentially a $1 billion trade deal.

Before the visit, Brazilian officials told Reuters that the Industrial and Commercial Bank of China Ltd (ICBC), the world's largest bank by assets, will agree to set up a fund with Caixa Econômica Federal, Brazil's largest mortgage lender, to invest in infrastructure in Brazil.

($1 = 3.01 reais)

(Editing by Todd Benson and W Simon)

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