Investment by Chinese companies in Brazil more than tripled in 2021, returning to pre-Covid pandemic levels and making the country the main destination for Chinese capital last year.
After a lukewarm performance in 2020, operations such as Tencent’s investments in fintechs and startups such as Nubank, QuintoAndar and Cora, as well as billionaire investments by Chinese oil companies in the Santos Basin have increased.
Also noteworthy was the purchasing of the power transmission company in Rio Grande do Sul by State Grid and of the Mercedes-Benz plant in Iracemápolis (SP) by Great Wall Motors.
According to a report by the Brazil-China Business Council released last week (31 Aug 22), investment from China has jumped by 208% in nominal terms (disregarding inflation), to US$ 5.9 billion, the peak in four years.
Brazil is not a member of the Belt & Road Initiative, but China’s presence has become one of the topics of the Brazilian presidential campaign. However, countries that have so far not signed up to China’s Belt and Road Initiative but are in need of development capital are increasingly turning to China for finance and development. Brazil is one such country – while not officially a BRI member country, it is a BRICS country and has become nevertheless the largest recipient of Chinese infrastructure funding in South America. Those economic ties appear to be getting stronger.
Brazil, as the largest economy in Latin America, has a solid foundation and great potential for cooperation with China, and therefore has every reason to be an important player in the Belt and Road Initiative (BRI).
In 2021 Chinese companies made large investments in the electricity sector (48% of the total) followed by oil extraction (28%), and mining (7%). When analyzing investments by the number of projects, not by value, although the electricity sector is still on top of the ranking, with 31% of the total, the manufacturing sector takes second place, with 28%, followed by information technology and agriculture with 7% each, and financial services, with 6%.
Folha de S. Paulo (Brazil), 30 Aug 2022. https://www1.folha.uol.com.br/internacional/en/
Silk Road Briefing, Nov 08, 2021. https://www.silkroadbriefing.com/news/2021/11/08/brazil-south-americas-largest-recipient-of-bri-infrastructure-financing-projects/