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China's ICBC, Brazil's Caixa to start US$50 billion fund
[BRASILIA] Caixa Econômica Federal, Brazil's top mortgage lender, and the Industrial and Commercial Bank of China Ltd (ICBC) will create a US$50 billion fund for Brazilian infrastructure investments, two government sources with knowledge of the plans said on Wednesday.
The fund will be financed entirely by the ICBC, but both banks need to set up the regulatory framework to decide on the projects, said the Brazilian sources, who requested anonymity because the plan remains private. The plan will be formally announced when Chinese Premier Li Keqiang visits Brazil next week, they added.
Caixa and ICBC will sign a memorandum of understanding during Li's visit in which the main terms for the fund will be outlined, the sources said.
The governments agreed the fund will finance a railway link from Brazil's Atlantic coast to the Pacific Ocean in Peru as a way to reduce the cost of exports to China, said one of the sources. The fund will also finance a joint-venture to produce steel in Brazil.
In January, Chinese President Xi Jinping pledged US$250 billion in investment in Latin America over the next 10 years as part of a drive to boost resource-hungry China's influence in a region long dominated by the United States.
Last year, China and Brazil agreed US$7.5 billion in financing for Brazilian miner Vale SA, and the purchase of 60 passenger jets from planemaker Embraer SA.
Caixa declined to comment. Efforts to obtain immediate comment from Brazil's Foreign Ministry were unsuccessful.