In the case of Brazil, the investing decrease and the deceleration of the internal consumption, has caused a recession that threatens to prolongate. In annual terms, the economy has dropped to 0.81% in the first quarter of 2015, therefore it has been in continuous fall for six months. This has been its worst performance in the last two decades, according to the data published by the central bank [of Brazil].
Under the same perspective, monetary resources allocated by China (almost 4 trillion US dollars) represent an economic release for South American governments for boosting productive investments, establishing lines of credit in preferential conditions, increasing commercial exchanges, etc.
On his visit in the third week of May, China’s Prime Minister, Li Keqiang, approved the purchase of 40 airplanes from Embraer, the construction of a automobile business park in São Paulo and a 4 billion US dollars credit extension to the Vale mining company, he also committed 7 billion US dollars for financing Petrobras, this represents a rest for the Workers Party (Partido dos Trabalhadores, PT) which had been suffering turbulences after corruption scandals in which various members were involved.
After its launch, the “Silk Road” will allow Brazilian entrepreneur to bring down costs for exporting grain to China in approximately 30 US dollars per ton. In the first phase, the interoceanic train will be able to transport 21 million tons between the Ilo Port (Peru) and the Açu Port (Brazil). In the second phase, its capacity is expected to be up to 35 million tons.
Now, the question is: what type of economic integration will be predominant between China and Latin America in the long run? With the exception of high benefits for a small bunch of “Trans-Latin-American” corporations under Brazil’s leadership, up until now, there is no evidence that would allow us to conclude that the cash flow from China (linked in its majority to infrastructure and exploitation of commodities) has privileged the massive construction of productive linkages in the region.
In a time of panic in the periphery and rentability crisis in the core of the system (United States of America, Euro Zone, Great Britain, Japan, etc.) it’s important to stress that China enriches its geopolitical influence in a global scale always looking forward to ensuring its food and energy security.