Spotlight: S. American transcontinental railway to benefit many

With Chinese Premier Li Keqiang and Brazilian President Dilma Rousseff as witnesses, representatives of China and Brazil signed cooperation documents on a feasibility study on a South American transcontinental railway here Tuesday.

In a joint statement issued by China and Brazil after visiting Premier Li held talks with President Rousseff, the two countries welcome the launch of a joint study on the feasibility of building a railway connecting the Brazilian Atlantic coast with the Peruvian Pacific coast.

The Brazilian government said in the statement that it welcomes China as a bidder for railway projects in Brazil, particularly those related to the proposed transcontinental railway linking the Atlantic and the Pacific coasts.

The mega project, which is still in its initial phases, came 10 months after China, Brazil and Peru pledged concerted efforts to build a railway that runs across the South American continent, during Chinese President Xi Jinping's visit to Brazil in July 2014.

The project is expected to improve transport infrastructure on this continent, facilitate regional economic integration and promote the economic connection between Latin America and China.

IMPROVE TRANSPORT INFRASTRUCTURE

The railway from Brazil to Peru, which would be the first one to link the Atlantic and Pacific oceans on the continent, is believed to boost railway infrastructure construction in the region.

The proposed route, which extends about 5,000 km, includes 2,000 km of existing railway and 3,000 km that needs to be constructed.

The transcontinental railway project will definitely boost the railway infrastructure construction in South America, especially Brazil, said Hsia Huasheng, an expert at Getulio Vargas Foundation, a top think tank in Latin America.

Brazil, the biggest economy in South America, has been relying on road networks for the transportation of agricultural products from its western part, which has increased the price of agricultural exports and affected its international competitiveness.

Railway networks, meanwhile, which are mainly in the south, southeast and northeast of Brazil, account for only 24 percent of the total capacity of the nation's current transportation system. About 35 percent of the railway system was built 60 years ago.

Li's visit is being seen as a major opportunity to drum up support for such projects. As Brazil's largest trade partner, China invested 18.94 billion U.S. dollars in the South American country in 2014.

Brazilians are betting Chinese investment will help accomplish infrastructure projects Brazil's government is too cash-strapped to take on, the regional daily O Estado de Sao Paulo said Tuesday.

For its part, China will win many opportunities in this region's coming infrastructure construction boom with its technology, capital advantages and rich global experiences, Hsia said.

Chinese railway technology has already entered this land and promoted the infrastructure development in the region.

In April 2014, the Tinaco-Anaco railway of Venezuela, the first high-speed railway in Latin America, entered the phase of laying tracks. The 462-km railway, designed to operate at the speed of 220 km per hour, is constructed by China Railway Engineering Corporation, with a total investment of 7.5 billion dollars.

In Argentina, China South Railway (CSR) has been one of the main equipment providers to its railway market since 2006. At the end of 2014, CSR won the order at a value of 274 million dollars to provide locomotives and freight trains to refurbish the Belgrano Cargas cargo rail network, which serves 17 of Argentina's 24 provinces.

BOOST ECONOMIC INTEGRATION OF S. AMERICA

The transcontinental railway project, which will cut across the Andes and connect port cities on the Pacific and Atlantic coasts of South America, is believed to boost the integration of this continent.

"Due to the barrier of the Andes, the Southern Common Market and the Pacific Alliance, two major regional trading zones, haven't been able to cooperate enough ... " said Marne Lieggio Junior, an official at Brazil's Ministry of Transport.

"The transcontinental railway will make a difference and establish closer links within the zones if completed," Lieggio said.

Bolivian President Evo Morales said that the railway will not only link the two oceans, but also connect the Paraguay River and the Parana River, two main water transportation systems in the region, benefiting most South American countries.

An official from Paraguay said Paraguay, Argentina and Uruguay will also benefit if this project is completed.

"Railway transportation would definitely save time and money compared with that of freighters," said Oscar Gonzalez Drakeford, president of the Industry, Trade, Tourism and Cooperative Commission at Paraguay's House of Representatives.

PROMOTE LAT-AM AND CHINA CONNECTION

Another direct impact of this project is that it will further promote the connection between Latin American and Asian markets by reducing the cost of exporting goods from Brazil to Asia and bringing more business to Peruvian ports.

This new railway will cut the cost as well as the time for the transportation of Brazil's exports to China, Hsia said, comparing it with the current shipping route that starts from the Brazilian Pacific coast, rounds the southern tip of Argentina, and then heads up to Asia.

The railway will go across the agricultural heartland of Mato Grosso State, Para State, which is rich in mining resources, and Amazonas State, which is famous because of its large tropical rain forests.

The transcontinental project will facilitate Brazil's exports of grain and meat to China, among other staple commodities, Hsia said.

Valdemar Carneiro Leao, Brazilian ambassador to China, said that this project will yield win-win results for all parties involved.

"It will boost Brazil's exports by connecting Brazil to the Asian market and cutting transportation costs. China can also get those products at lower prices," Leao said.

The railway will bring 21 million tons of cargos to Peruvian ports for the Asian market at its initial operation, and in the long run, the number is expected be more than 35 million tons, according to estimated data from Peru's government.

Bilateral trade between China and the Latin American and Caribbean countries in 2014 stood at 263.6 billion dollars, up 0.8 percent year on year, Ministry of Commerce data showed.

Both sides aim to double the annual trade volume to 500 billion dollars in ten years and China has promised to increase investment in the region to 250 billion dollars during the same period. Endi