Alongside their military deals, the People's Republic of China and the South American nations of Venezuela and Brazil have been cooperating extensively in the oil industry.

In May 2008 the Venezuelan News Press reported that China Petrochemical Corp., or Sinopec, was signing a billion-dollar contract with Venezuela's state-owned Petroleos de Venezuela -- PDVSA. The contract provides for the joint establishment of a large refinery in China's southern province of Guangdong.

In 2007 Sinopec and Petroleos de Venezuela announced they would jointly invest $10 billion to develop Venezuela's Orinoco oil field. During his visit to China in 2006, Venezuelan President Hugo Chavez already signed an oil contract worth $11 billion with the Beijing government. It was after this visit that Chavez made the surprise announcement that he wanted to import J-10A fighters from China.

In 2007 China imported from Venezuela around 4 million tons of crude oil. Though this is not a huge quantity, it is part of China's strategy to increase cooperation with Latin American countries and diversify its sources of crude oil. China already has obtained the rights to develop 15 oil fields in Venezuela.

Another South American country with which China has extensive dealings is Brazil. In fact, Brazil is China's key supplier of remote-control satellites and digital photographic satellite technologies.

The Brazilian aircraft manufacturer Embraer and China's Harbin Aircraft Co. have a joint venture to manufacture ERJ-145 feeder passenger aircraft, with Brazil owning a 51 percent share in the company. The plane incorporates Brazilian technologies, some of which are being applied in the research and development of the Chinese People's Liberation Army air force's airborne early warning and control platform.

In return, the Brazilian navy hopes to obtain the technology to build conventional and nuclear submarines. Brazil is currently discussing this with China.

The two countries have been cooperating in the space industry for 20 years. In 1988 they began joint development of an Earth surveillance satellite; to date they have launched three such satellites. In September 2007 China and Brazil launched the 02B high-resolution Earth resources satellite.

Brazil has provided China with technology obtained from Western countries, especially French digital image transmission technology, which is responsible for the greatly improved resolution of the 02B satellite. On the other hand, Brazil has obtained from China certain satellite and rocket technologies.

In 2004 China began angling for Brazil's oil and gas resources; Sinopec signed a memorandum of understanding with Brazil to build the country's longest natural gas pipeline. In 2004 Brazil exported to China only 1 million tons of crude oil, but in 2007 the total increased abruptly to 2.3 million tons.

An internal Chinese government document on the country's energy plans discusses the strategic importance of Brazil for China, since it is the 15th largest oil-producing country in the world.

(Andrei Chang is editor in chief of Kanwa Defense Review Monthly, registered in Toronto.)