Spotlight: Chinese projects and investments in Brazil

Chinese companies started 32 previously announced projects in Brazil last year, an increase of 14%, but investments fell 78% to US$1.3bn, the lowest level since 2009.

Of the  projects, 50% were in the electric power sector, information technology accounted for 25%, car manufacturing, infrastructure and agriculture 6% each, and textiles and production of medical devices 3% each, according to the latest study by the China-Brazil business council (CEBC).

Regarding investments, 45% went to the electric power sector, 28% to car manufacturing, 11% textiles, 8% agriculture, 4% information technology and 3% infrastructure. 

Brazil was ninth place for Chinese investments and Argentina eighth, with US$1.34bn.

But the falling volume of announced investments, or the difference between announced and confirmed projects do not necessarily reflect disinterest.

"The difference in value between announced and confirmed projects is explained by the fact that some particularly capital-intensive investments require a series of licenses for the start of operations, which may eventually lead to postponed execution," CEBC said.

The October elections, in which Luiz Inácio Lula da Silva defeated Jair Bolsonaro, also caused some reduction in announced investments.

"It is historically normal for companies and investors to wait for election results before deciding to move forward with their investment plans. This applies to [the period] before the election and the first months of a new administration, since investors want to better understand the directions of a new government," KPMG partner Paulo Guilherme Coimbra told BNamericas. 

According to CBEC, Chinese companies announced 310 projects in Brazil between 2007 and 2022, involving potential investments of US$120bn. Of this total, 235 projects started operations, for an effectiveness rate of 76% and investment stock of US$71.6bn, equivalent to 59% of the total announced.