China Premier Li Unveils Billions of Dollars in Financing, Trade Pacts in Brazil

Asian nation seeks to deepen ties with Latin America despite economic slowdown.

Chinese Premier Li Keqiang kicked off a tour of South America on Tuesday by unveiling billions of dollars in financing and trade agreements for Brazil’s biggest companies, part of a broader effort to deepen ties with the region despite an economic slowdown.

The investments are largely aimed at strengthening Brazil’s aging infrastructure and at helping the commodity-dependent nation weather lower prices for metals, crude oil and other commodities. After riding the coattails of China’s breakneck growth in the last decade, Latin America’s largest economy is widely expected to fall into recession this year—partly due to softening demand from China.

Ceremonious announcements of big Chinese investments have become more frequent in Latin America during recent years as the Asian nation sought to secure access to the raw materials needed to expand its economy.

But often, the plans don’t pan out. A study by the Brazil-China Business Council, a local think tank, found that little more than a one-third of the $68.5 billion in Chinese investments announced between 2007 and 2012 were actually realized.

The latest recipients of Chinese largess included Brazilian mining giant Vale SA and state-controlled oil company Petróleo Brasileiro SA . Officials also confirmed an agreement between Industrial & Commercial Bank of China Ltd. , or ICBC, and Brazilian state-run bank Caixa Econômica Federal to create a fund of up to $50 billion for infrastructure projects.

Brazilian President Dilma Rousseff said Chinese state banks offered some $10 billion in financing to Petrobras as well, as the oil company struggles to fund major investments amid an uncertain outlook in oil markets and a major corruption scandal. Details of those agreements weren’t immediately disclosed, and it wasn’t clear whether the total included a $3.5 billion financing deal announced in April.

Vale, meanwhile, accounted for the biggest chunk of Brazil’s nearly $41 billion in exports to China last year. A key supplier to China’s steel industry, the company has suffered more than most from the hangover that followed an infrastructure and housing boom in the Asian country. ale’s earnings have plummeted alongside iron-ore prices, leaving it strapped for cash to complete a $16 billion expansion of mines and infrastructure that was largely inspired by Chinese demand.

That made Vale an ideal example for Mr. Li’s efforts to calm the nerves of China’s Latin American partners.

“China will be a long-term buyer of Brazilian minerals…and also of farm products,” Mr. Li said in a speech alongside Ms. Rousseff in Brasília.

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