Brazil railway for China exports halted amid economic pressure

By Huang Ge Source:Global Times Published: 2018/2/11 20:33:40

Brazil's reported decision to drop its plans for a railway link to the Pacific to transport exports bound for China is largely due to the country's ongoing economic difficulties, while other challenges such as environmental protection also played a part, experts said on Sunday.

A Brazilian official said that the country has dropped a planned railway to ship commodities destined for China through Peru as it was too costly and faced "absurd" engineering challenges, according to a Reuters report.

China Railway Corp did not comment when reached by the Global Times on Sunday.

In July 2014, China, Brazil and Peru pledged concerted efforts to build a railway running across the South American continent, after a meeting of President Xi Jinping and his Brazilian and Peruvian counterparts in Brazil, according to the Xinhua News Agency.

The 5,000-kilometer railway over the Andes to the Pacific coast was expected to facilitate soybean and iron ore exports to China by bypassing the Panama Canal, media reports said.

But at an estimated cost of $80 billion, the railway would not be commercially viable if it transported just commodities and not more valuable goods, Jorge Arbache, Brazil's vice planning minister for international affairs, was quoted as saying by Reuters.

"The project has stopped, because it was extremely costly and the feasibility study was very unsatisfactory. At this time, the railway is not on the government's agenda," Reuters quoted Arbache as saying.

The railway would not only help promote regional trade, but would also boost the trade and economic cooperation between China and Latin American countries, Jiang Shixue, director of the Center for Latin American Studies at Shanghai University, told the Global Times on Sunday.

But there are still many challenges in the project that need to be addressed by Brazil and Peru, such as high costs, environmental protection issues and displacement of residents, Jiang said.

Although Brazil's economic situation warmed in 2017, the country's sluggish economy makes it hard to afford such a railway, according to Jiang.

Zhao Jian, a professor at Beijing Jiaotong University, agreed, saying that "economic factors, rather than technological challenges, are the major reason why Brazil is dropping the plan."

Zhao also noted that cargo volume on the route may not be that large, which would dampen potential profits.

Posted in: ECONOMY

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