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World

The 2016 Olympics in Brazil - Chinese to the core

The countdown has begun: In advance of Brazil's hosting the 2016 Olympics, Rio is building for gold. And as DW columnist Frank Sieren writes from Beijing, the lion's share of funding is coming from China.

Brazil, in the past, had already received large loans from China - bigger than Argentina, Ecuador or Peru. Yet now, prior to the 2016 Olympics, Brazil is slated to receive even more. Planned are investments, credit and trade agreements to the tune of $53 billion. The agreement hs stood firm since the visit by Chinese Prime Minister Li Keqiang.

Venezuela led Brazil, looking back over the last eleven years of accumulated investments. But now? Brazil hasn't just made up the difference; it's sitting on the top of the heap.

Beijing aims to expand still further, politically and economically, into Latin America. Premier Li is the third high-ranking visitor from China since the middle of last year. At the beginning of 2014, China's foreign minister, Wang Yi, paved the way for Chinese President Xi Jinping, who visited Rio that July. This January at CELAC, at a conference comprising 33 Latin American and Caribbean countries held in Beijing, Xi promised investments to the tune of 250 billion over the next decade.

A win-win situation

Chinese infrastructure projects are meant not only to aid Brazil, but also solidify Chinese business agreements. Given slower growth at the present time, such aid is all the more important.

In order to further boost infrastructure at home, China is investing more and more in overseas infrastructures. Roads, railways, airports and harbors are the focus of Chinese investors. One hundred fifty entrepreneurs are now accompanying Premier Li's delegation visiting Latin America. Even the heads of Chinese banks are along for the ride.

For China, the rate of return on Latin American infrastructure projects is higher than the yield from US government bonds; and the political benefits it gains are not to be underestimated either. Those thankful nations accepting funds are loyal political allies.

For Brazilian President Dilma Rousseff, this is a happy circumstance. Re-elected in 2014, she not only neglected to fix the country's aging infrastructure, but her reputation among the populace continues to suffer from the stagnating economy and rampant corruption.

Not least the state-controlled oil concern, Petrobras, which for years misappropriated funds totalling 3.8 billion dollars for bribes and price-fixing schemes. Long the pride of Brazilian industry, the concern is by far the largest Brazilian company and one of the world's largest oil companies with annual sales exceeding $120 billion.

Waning US influence

The corruption scandal has handicapped the country even further. Half a million Brazilians took to the streets in March, protesting against corruption and belt-tightening by the government. Inflation was last pegged at 7 percent.

Since 2009, China has been the most important trading partner for Brazil - ahead of the US. Since the start of the year, however, the trade volume between the two countries has fallen, due to China's cooling economy and the sharp drop in crude oil prices.

Most recently, China's economic growth rate has hovered around 7 percent, the lowest since the global financial crisis in 2009. But Beijing is still plugging away and China's role in determining the fortunes of the 2016 Olympic Games in Rio is more important than ever.

At stake for the Chinese in their new cooperation with South America is a shift in the world order and a further weakening of America's position. That's why Li's delegation is also visiting Colombia, Peru and Chile this week.

It's also a useful opportunity to unload an unwieldy amount of overproduction by Chinese industries. In future, a train route of 3,500 kilometers (2,200 miles), running from Brazil through the Andes to Peru, will carry sides of beef to the Peruvian port of Pisco faster, so that they reach China even more quickly. In turn, the costs of those imports from Brazil and its neighbors will drop, so that China's investments already carry the glimmer of Olympic gold.

DW Columnist Frank Sieren has lived in Beijing for 20 years.

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