Spotlight: The state of Chinese investment in Brazil

The volume of investments made by Chinese players in projects and acquisitions in Brazil increased significantly in 2021, surging back to the levels seen before the COVID-19 pandemic.

Chinese companies invested a total of US$5.9bn in Brazil last year, more than three times the US$1.9bn reported in 2020, according to figures compiled by the China-Brazil business council (CEBC).

"The reason for the expansion in the volume of investments made by China in Brazil last year is the low base of comparison, as the 2020 investments were impacted by the effects of the pandemic and also in light of the economic activity in Brazil," CEBC research director Tulio Cariello said during the webinar to present the report he authored in response to BNamericas. 

The full details of the CEBC study can be seen here.

The growth in Chinese investments in the country was higher than the total foreign investments made in Brazil, which rose 23% last year, according to central bank figures. 

A total of 28 projects and acquisitions made by Chinese companies were mapped by CEBC in Brazil last year.

In terms of value, 85% of the investments made by Chinese firms in the country were in the oil and gas sector, with two oil exploration projects negotiated between Brazilian state-run oil firm Petrobras and China National Oil and Gas Exploration and Development Company (CNODC) and China National Offshore Oil Corporation (CNOOC) in the pre-salt region of the Santos basin and in the Búzios field.

With respect to the number of deals, the electric energy sector hosted a total of 13 deals, nearly half of the entire volume recorded, while investment in the IT segment totaled 10 projects. 

"For me the technology sector was quite surprising, since if we look at the history between 2007 and 2020, there was a total of 12 deals with Chinese companies. The Brazilian technology sector is very open and friendly to foreign investments and I believe this is attracting Asian capital as well," added Cariello.

Among the biggest investments made last year were those made by Tencent in fintechs and startups such as Nubank, QuintoAndar and Cora and the purchase of the Mercedes-Benz plant in Iracemápolis by Great Wall Motors.

The recovery of Chinese investment in Brazil is taking place despite tensions in the relationship between President Jair Bolsonaro and China's government.

Since he took office in January 2019, Bolsonaro has lashed out several times against China, causing concerns among investors.

INVESTMENTS IN 2007-2021 

Between 2007 and 2021, Chinese players invested US$70.3bn in 202 projects in Brazil.

The main recipients of these investments are the electricity sector (45.5% of the total) and oil and gas (30.9%). 

"The Brazilian electricity sector has a history of respecting contracts, and we're very engaged in investing in renewable energy projects in the country," said José Renato Domingues, the corporate vice president at CTG Brasil, the local unit of China Three Gorges, during the webinar.