A joint fund of $20 billion is agreed between China and Brazil to finance building infrastructures in the South American country and to bid for auctions of road, port, airport and logistics operating licenses that are sponsored by the government.

According to WN News, both countries are expected to benefit the project as it would ease the exports and imports of products. China has been the large buyer of Brazilian grains. Jorge Arbache, Brazil Planning Ministy's foreign affairs secretary said that the countries would use the fund for the construction of railroads linking Brazilian soy-and corn-producing belts to ports.

Arbache added that railways will be one of the focuses as both countries are eyeing that sector with much interest. But financing decisions are different from other Chinese funds because those will be made depending on both governments' strategic priorities.

Brazil has been in a massive budget deficit, companies are now struggling to find fresh capital and the government is now on ongoing corruption investigation that has targeted Brazil's largest construction companies. The project is Brazil's strategy to recover from worst recession on record so that it would not stretch farther. It would also help Brazilian President Michel Temer bolster infrastructure investment, Gold-Eagle Cooperative reported.

Once the project has been operational next focus is on analyzing financing request for mining, oil, and agriculture. Arbache said the fund is expected to be fully operational by March.

If the business model will be proven effective the total amount of the fund could increase in next years. Both countries will give its shares, China for $15 billion and Brazilian state-run banks BNDES and Caixa Economical Federal for the rest.

Companies interested in bidding for projects are considered by authorities in both countries to create a guarantee fund that could help them. Negotiations are still in progress.

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