In recent years, China has announced massive investments in infrastructure for external partners, railways, ports, gas and oil pipelines, mainly in the continents of Asia, Africa and Europe, with its “One Belt, One Road” initiative (Belt and Road Initiative). Rota), the so-called New Silk Road, in allusion to the ancient trade route linking the ancient East with the West, taking the Chinese products of the time to the European market.
Until 2018, 173 cooperation documents were signed, with 125 countries and 29 international organizations, which have already moved more than US$ 6 trillion in products since its creation in 2013 [1]. According to MERICS (Mercator Institute for China Studies) it is estimated that China invested more than US$70 billion in infrastructure projects related to the Belt and Road Initiative in just the first 5 years of the initiative [2]. But the plan towards greater global integration of markets can go further than the initial Asian, European and African axis: in 2018, Chile has already shown interest in joining the initiative, as well as Colombia in July of this year [3] . In the case of Brazil, vice-president general Hamilton Mourão, through the reactivated Cosban (Sino-Brazilian High Level Coordination and Cooperation Commission), expressed the possibility of absorbing Chinese investments [4].
Figure 1 – Infrastructure of the Belt and Road Initiative – Source: Merics – Mercator Institute for China Studies
In the midst of the crisis in the Brazilian economy in recent years, such foreign investments could offset the drop in public investment in infrastructure works observed in recent years, as shown in the 2018 transport yearbook by the Ministry of Infrastructure: the federal public investment applied in the year 2018 amounted to a total of 13,9 billion reais, 10,2% less than what was invested in 2017. This portion must be complemented by the private sector, through the PPI (Investment Partnerships Program), a means through which Chinese contributions could arrive.
Similar attempts have already been made in the past, as an example we can mention the partnership initiative signed in 2015 for the construction of the Bioceânica railroad, which would connect the Atlantic and Pacific oceans, passing through Brazil and Peru, but which did not get off the ground. Another example is the 2016 experience in Bolivia, in which US$4,85 billion was announced for nine projects, of which only one was delivered. Among the main obstacles to implementation, one can mention the logistical complexities for Chinese companies in monitoring the works and the local rules of the various countries involved.
Despite the complexities and negotiations involved in the process, Brazil is faced with an opportunity for new sources of financing in its logistics network, notably necessary for the modernization and growth of the network, as well as for the promotion of foreign trade and increased competitiveness of the Brazilian products. All that remains is to wait for the new negotiations to be carried out at the next BRICS meeting in November in Brazil.
Sources:
[1] https://eng.yidaiyilu.gov.cn/qwyw/rdxw/86301.htm
[2] https://www.merics.org/en/bri-tracker/mapping-the-belt-and-road-initiative
[3] https://eng.yidaiyilu.gov.cn/qwyw/rdxw/98716.htm
Carlos Augusto Neto
ILOS consultant since 2018, a company specializing in the logistics and supply chain sector, carrying out projects, research, training and corporate events in the sector. He works on projects for large companies in different segments such as Pharmaceuticals, Clinical analysis, Oil and gas, Consumer goods and Logistics operators.
