Address by Premier Li Keqiang
At the Closing Ceremony of the China-Brazil Business Summit

Brasilia, 19 May 2015

Your Excellency President Dilma Rousseff,
Members of the Business Communities,
Friends,
Ladies and Gentlemen,

Good morning! It is a great pleasure for me to meet so many friends from the business communities. I last visited Brazil 12 years ago. Now back in this country after a decade or so, I am deeply impressed by the enormous achievements in Brazil's economic and social development. Before landing in Brasilia, I had a bird's eye view from the air of the vast forests, wide rivers and fertile fields of this fascinating country and was amazed by its vibrant and growing vitality.

Brazil is one of the world's principal emerging economies and the true leader in the economic development and regional integration of Latin America. Since the beginning of the 21st century, Brazil has made remarkable achievements in development, with its GDP now ranking the seventh place in the world and its people's income rising steadily. The international community has high expectations for Brazil's development prospects.

China-Brazil relations have made much headway in recent years. During President Xi Jinping's successful visit to Brazil last July, the two sides agreed to advance their comprehensive strategic partnership to a higher level, which would cover wider areas and stand on a larger stage. Our two countries now enjoy deeper political trust, frequent cultural and people-to-people exchanges and rapidly expanding trade and economic ties. Brazil is China's largest trading partner in Latin America and China Brazil's largest trading partner for six consecutive years. By the end of last year, the number of Chinese companies operating in Brazil had totalled over 100. Brazilian businesses are also making more investment in China. The two countries conduct effective strategic coordination on international and multilateral affairs. Our relations have gone beyond the bilateral context and assumed an increasing global dimension.

China and Brazil are both developing countries. Yet our economies have deeply integrated into the world economy. With global economic recovery remaining weak under mounting downward pressure, both China and Brazil are confronted with challenges. To grow the economy and improve the quality of people's life is an urgent task for both of us that requires greater development through structural reform and further opening-up. The Chinese economy is under considerable downward pressure, but the targeted measures of macro-regulation introduced late last year have produced initial results and the economy is growing within a proper range in the first four months of this year. Our target for 2015 is a growth rate of around 7% for an economy of a US$10 trillion, with the increment outpacing any of the previous years. We have the capability and confidence to achieve this target so as to maintain the medium-high growth rate of the economy. China cannot achieve economic development in isolation from the rest of the world and we will therefore open ourselves still wider to the world. We hope that Brazil will continue to made steady progress while braving economic headwinds. As two major emerging economies, China and Brazil have a shared responsibility to deepen their mutually beneficial cooperation and make greater contribution to global recovery while effectively taking on their respective challenges.

We need to deepen production capacity cooperation. To get the world economy out of its current difficulties, we must identify areas for new breakthroughs. With the developed countries pushing for re-industrialization and the developing countries speeding up their industrialization and urbanization, development of the real economy has become the imperative. Mutual complementarity of the industries is needed not only between the developing and developed countries but also among developing countries. China and Brazil may well establish a model of such mutual complementarity in the area of production capacity cooperation. Continued industrialization and infrastructure development in Brazil require raw materials and equipment. In both areas, China is known to have abundant and high-quality production capacities. If our enterprises can strengthen cooperation and relocate superior Chinese capacities to Brazil by setting up factories turning out steel, building materials and relevant equipment, it will help Brazil cut the building cost of infrastructure development, curb inflation, boost domestic demand, increase employment and upgrade its industrialization, thus bringing benefit to both sides. If more Chinese equipment goes overseas, it will help China to adjust its economic structure, upgrade its industries, and improve its import and export mix, while addressing the existing imbalances in global economic development. China and Brazil are both of the view that a railway connecting the Pacific and the Atlantic should become the model project for production capacity cooperation between the two sides. What is more, China will cooperate with Brazil to add 28 large transportation vessels to its fleet in favor of greater oceangoing capacity and efficiency. China is ready to provide Brazil with pre-salt oil exploration and extraction services and marine engineering equipment to improve its energy development. Our enterprises can also work together in the development of nuclear power, hydro-power, photovoltaic power and other forms of clean energy in favor of sustainable development.

We need to jointly promote a diversified trade structure. With falling commodity prices being the main feature of the volatile international market, the volume of China's import has not dropped significantly. As the largest buyer of Brazil's soybean, iron ore, crude oil and other commodities, China is ready to build a long-term and stable trade relationship with Brazil by concluding a bilateral cooperation package. China will resume importing Brazilian beef, and Brazil will buy Chinese vehicles in building the Olympic facilities. This will benefit Brazilian farmers, Chinese consumers and business firms of both countries, as it serves to improve the quality of the respective imports and exports and lead to a diversified structure in the two-way trade.

We need to actively promote science, technology and education exchanges and cooperation. Science and technology should figure more prominently in our cooperation. We need to make good use of our high-level dialogue mechanisms in science, technology and innovation, advance our R&D and launch cooperation under the China-Brazil Earth Resources Satellite program and explore the establishment of joint labs, science and technology parks, and business R&D centers. China would like to see more Brazilian young people to study in China through the "Science Knows No Border" program and encourage more Chinese university students to study Portuguese in Brazil.

Ladies and Gentlemen,

Brazil is the first leg of my visit to Latin America. After Brazil, I will visit Colombia, Peru and Chile. With a high concentration of developing countries and emerging economies, Latin America wields an important political, economic and cultural influence internationally. We are of the view that Latin America is a key cornerstone for international peace and stability. Free from large-scale wars for more than 100 years, the continent has made steady progress in regional integration and got the "Latin American voice" heard loud and clear in major international affairs. Latin America is an emerging source of global prosperity and growth. Since the turn of the century, it has maintained an annual growth rate of over 4%, achieved a per capita GDP of US$10,000 and made a 14% contribution to global economic growth. Latin America is also an outstanding example of inter-civilization inclusiveness, where harmonious co-existence of diverse cultures has made the continent all the more charming and colorful.

China and Latin America enjoy a profound traditional friendship and ever closer cooperation in all areas. During his visit to Latin America last year, President Xi Jinping met with Latin American leaders and proposed a five-dimensional relationship between the two sides. The first ministerial meeting of the China-CELAC Forum was held last January, which adopted a five-year plan for China-Latin America cooperation and brought bilateral relations to a new historical starting point. My current visit will focus on consolidating our traditional friendship, and deepening our practical cooperation in the context of enhanced global cooperation with priority given to breakthroughs in production capacity cooperation, transformation of China-Latin America trade and economic relations, and upgrading of China-Latin America cooperation.

First, global economic recovery hinges on international production capacity cooperation. At present, the global economy is in a period of profound adjustment. To jumpstart the sluggish economy, countries need to promote structural reform and adjustment at home and step up cooperation internationally. We can create new growth drivers for global economy and national development if we succeed in international production capacity cooperation beginning in the infrastructure sector. Developing countries need more infrastructure and developed ones also need to upgrade their infrastructure, which requires various kinds of equipment, ranging from engineering machinery, transport vehicles to metal processing, construction materials and manufacturing facilities. China is in the position to provide cost-effective equipment in these areas. Strengthening infrastructure and production capacity cooperation will be an effective way for China and Latin America to overcome the downward pressure, in the interest of rolling back trade protectionism, promoting world economic transformation and advancing peaceful development.

Second, economic transformation and upgrading in China and Latin America requires support from bilateral production capacity cooperation. From a long-term point of view, Latin America should not limit itself to being a "global supplier" of primary products, nor China being a "world factory" of cheap products forever. The existing trade pattern characterized by exchange of general manufacturing items for energy and mineral products is not sustainable, as both sides need to go for industrial upgrading, adjustment and transformation. If Latin America develops a resource-based processing industry, it will help change its single-product economy. And China has worked to build a strong equipment industry that competes internationally as the direction of its industrial upgrading. China buys quality industrial and agricultural products from Brazil, while Brazil imports power generation equipment, subway trains and other products from China. Such exchanges of competitive products can lead to added value for their trade. China is ready to sign more FTA agreements with Latin American countries with a view to advancing trade liberalization and facilitation and injecting fresh impetus into bilateral production capacity cooperation.

Third, all-win outcome should be the booster to drive China-Latin America production capacity cooperation forward. Such cooperation aims not only to increase mutual benefit but to stay open and inclusive. Chinese companies are ready to join companies from developed countries in conducting trilateral cooperation in Latin America. In terms of technological sophistication and international division of labor, developed countries generally tend to be at the medium-to-higher end of the industrial chain while China and Latin America are generally at the medium-to-lower end. By working together, we can move our economies up the value chain, which is consistent with the law of industrial relocation. China's equipment industry is strong in its integration capability that has assimilated many advanced technologies from developed countries. Working together can help us scale new heights in our openness and cooperation.

Fourth, delivering benefits of development to our people is the ultimate purpose of China-Latin America production capacity cooperation. Chinese companies investing and operating in Latin American countries must respect laws, regulations, cultures and customs of the land, create more jobs for local communities, pay adequate attention to environmental protection, do a good job in personnel training and technological transfer, and act enthusiastically to meet their social responsibilities. Chinese investment and financing is not attached with any political condition. China and Latin America both stand opposed to such short-term behaviors as putting profits before principles and are both committed to inclusive growth.

Here, I would like to propose a "3x3" model for China-Latin America production capacity cooperation:

― Build three channels of logistics, electric power and IT in response to the needs of Latin American countries. Infrastructure connectivity in South America is a common goal of all Latin American countries. Chinese companies are ready to work with their counterparts in Latin America to jointly build a railway-based logistics channel that spans South America and the Caribbean, an electric power transmission channel that connects all countries and regions in Latin America complete with efficient power transmission and smart grid technologies, and an IT channel backed by Internet technologies, new-generation mobile communications technologies and integrated big data and cloud computing.

― Put in place a new model of cooperation consistent with market economy laws featuring sound interactions among the three actors of company, society and the government. As China and Latin America all practise market economy, their production capacity cooperation should be market-oriented. Companies of the two sides can carry out project cooperation by way of joint venture, PPP and franchising while following the principle of "company-led, commercially-based operation, public participation and government support" to implement the relevant projects in an expeditious way. China will encourage its companies to localize their operation and to heed the opinions of the local trade unions and communities. Governments of the two sides need to speed up their conclusion of an investment treaty, update their agreement on avoidance of double taxation, improve service efficiency, bring down business cost and create an enabling business environment for companies.

― Expand three financing channels of funds, credit and insurance in support of bilateral cooperation projects. I wish to announce here that China will set up a special fund for China-Latin America production capacity cooperation complete with US$30 billion in support of relevant projects. China is ready to set up a financial leasing company to help meet the equipment needs of Latin America such as large oil tankers, liquefied natural gas carriers and off-shore oil rigs. China will also improve its mid-to-long-term export credit insurance mechanism to help Chinese companies doing export business in Latin America. China is ready to expand cooperation with Latin American countries in the areas of currency swap and local currency settlement so as to promote the development of the real economy and jointly maintain the stability of regional and global financial markets.

Ladies and Gentlemen,

This morning, President Rousseff and I had a productive meeting, during which we had an in-depth discussion and reached broad consensus on China-Brazil cooperation in all areas, and signed or witnessed the signing of a number of cooperation agreements. Today's business summit has been a great success, evidenced by the strong turnout of entrepreneurs from both sides and the fruitful results it has achieved. I wish to express my sincere congratulations on that.

As a Latin American proverb goes, "When people join hands, they will be invincible." We also have an old Chinese saying that goes, "People of one mind can remove Mount Tai." As two giants on the shores of the Pacific and Atlantic, China and Brazil can accomplish anything and overcome any difficulty, as long as they go forward hand in hand with one heart and one mind. I hope our entrepreneurs from both sides will display the best of their talent, seize the opportunities to take our all-round cooperation to a new high and keep on working hard for the development of the respective countries and regions, thus ushering in a better future of China-Latin America friendship.

Thank you.