* China says sees big potential to broaden investments
* Says Brazil needs investment to diversify economy
* Brazil sees exports to China rising 20 pct this year
By Stuart Grudgings
BRASILIA, May 16 China moved to smooth its
lopsided economic relations with Brazil on Monday, saying it
was open to more Brazilian exports and that Chinese firms will
broaden their investments in Latin America's largest economy.
A rapid expansion in trade and investment ties between the
two emerging market giants has brought tensions, especially
from Brazilian manufacturers who complain that cheap Chinese
imports are destroying their competitiveness.
China surged to become the biggest direct investor in
Brazil last year but its targets have been concentrated in
commodities rather than in infrastructure or high-tech areas
that create the higher-value "smart jobs" Brazil wants.
Chinese Trade Minister Chen Deming, who is leading a
delegation of more than 40 companies in Brasilia, said his
country's firms were eager to tap booming consumer demand in
"We have the intention and the will to broaden our
investments, in infrastructure, green technology,
high-technology and tourism. We had deeper discussions," he
told a news conference.
He said Chinese firms were in talks for about $1 billion in
new investments, including a $200 million plan by Sany Heavy
Equipment International (0631.HK) to set up local production.
Growth in Brazil-China trade: r.reuters.com/puw77r
Brazilian exports to China : r.reuters.com/kuw77r
Facts on Brazil-China trade: [ID:nN02239851]
Brazil industry struggles with China: [ID:nN18117624]
Brazilian executives who met members of the Chinese
business delegation said there was a major interest in
investing in Brazil's overloaded port and grain-storage
infrastructure to reduce the cost of Chinese imports.
Chen's visit is a follow-up to Brazilian President Dilma
Rousseff's trip to Beijing last month in which she secured
concrete promises that China would seek to buy more from Brazil
than just raw materials such as iron ore and oil.
EXPORTS TO CHINA SEEN RISING
The countries signed deals in areas ranging from defense to
agriculture, as well as plans for developing infrastructure as
Brazil prepares to host the 2014 World Cup and the 2016
Rousseff returned with pledges of investment, including a
plan by Taiwanese electronics giant Foxconn (2038.HK) to invest
up to $12 billion to dramatically ramp up its production of
Apple Inc's products in Brazil. Brazilian business also want to
open up Chinese markets for value-added exports.
Brazil runs a trade surplus with China -- but only because
of its huge exports of commodities, which made up 83 percent of
Brazil's exports last year.
Brazilian Trade Minister Fernando Pimentel told the news
conference that Brazil expected to expand its exports to China
by about 20 percent this year, up from $30.8 billion in 2010.
He estimated Chinese investments in Brazil this year would
total $8 billion, down from around $17 billion last year.
Chen said that Brazil's exports to China "should be
diversified" and that China would welcome an increase. But, in
a veiled criticism, he added that Brazil needed to open up and
diversify its own economy in order to expand its export base.
"There is a big interest among Chinese executives in
investing more in Brazil. There has to be an environment
favorable for foreign investment ... that way we can create
more jobs in Brazil," he said.
High labor costs, taxes, and heavy bureaucracy have long
been a barrier to investment in Brazil. Foxconn is still
seeking tax breaks and other concessions from Brazil's
government before committing to its expansion plan.
(Additional reporting by Leornardo Goy and Isabel Versiani;
Editing by Leslie Adler)