Brazilian and Chinese officials launched a joint Brazil-China investment promotion fund here on Tuesday to increase productive capacity.
The fund, now in operation, will have an initial sum of 20 billion U.S. dollars to finance investment projects in Brazil that are of interest to both countries.
The fund is to serve as a mechanism to promote investment by bringing the public and private sectors of the countries together to invest in projects in infrastructure, manufacturing, agribusiness and technology.
Representatives from Brazil's Ministry of Planning and the China Latin American Industrial Cooperation Investment Fund (Claifund) made the announcement at the 2017 Brazil Investment Forum (FIB 2017) in Sao Paulo.
At the signing ceremony, Chinese Ambassador to Brazil Li Jinzhang said the China-Brazil Fund is the result of a long-running joint effort and reaffirms the countries' strategic bilateral ties.
"With our comprehensive strategic partnership, Brazil is a priority country for China's strategy of expanding productive capacity. The China-Brazil Fund guarantees the financial mechanism to expand cooperation," he said.
"The fund reflects a higher level of cooperation for both countries, and will create a new model of financial cooperation," said Li.
Brazilian Planning Minister Dyogo Oliveira said the fund is going into operation at the right moment, given that Brazil's two-year economic recession, the longest in its history, is showing signs of coming to an end.
"This launch is marked by particular importance, as it confirms the confidence between Brazil and China," said Oliveira. "It is taking place at a time when we and our international partners are seeking support for projects in infrastructure, energy and technology."
The innovative mechanism is the first of its type in Latin America, the minister noted, as Brazil becomes the first country in the region to participate in a fund that is jointly governed by China.
Projects approved by the fund's board of directors will receive financing from Claifund, the Brazilian Development Bank (BNDES) and Caixa Economica Federal, Brazil's federal savings bank.
Priority sectors for investment include logistics and infrastructure, energy and mineral resources, high technology, agriculture, agribusiness and agricultural warehousing, manufacturing, and digital services, among others.
According to the agreement, for every dollar put up by Brazil's financing sources, China will put up three, with the initial 20 billion U.S. dollars including 5 billion from Brazil and 15 billion from China.
Both sides have said they are willing to provide more financing, if projects call for it.
Brazil's Agriculture Minister Blairo Maggi hailed the creation of the China-Brazil Fund.
"China's trust toward Brazil is ever greater. Brazil is a great supplier of raw materials, trade is always growing. The fund is very important and goes in this direction," he said.
He also called for new Chinese investments into Brazil and reiterated that his country is a safe place to do business and that contracts would be honored, despite an ongoing political crisis.
China and Brazil established a comprehensive strategic partnership in 2012, three years after China became Brazil's leading trade partner.