Growing business brings Brazil and China closer

The Brazilian ambassador to Beijing, Marcos Caramuru, refers to the bilateral relationship between Brazil and China as “dynamic” and points out trade and investment between the two countries “are rising.”

“In the first four months of the year, the surplus with China accounted for more than 40% of our trade surplus. We are one of the few countries that have a surplus with China. Trade has benefited from China's increasing proneness to buy, and from the fact that prices of agricultural and mineral commodities have increased greatly,” the diplomat said.

With its over 1.3-billion consumer market, China will increasingly demand Brazilian products, because it is improving the living conditions of the population and experiencing an increase in per capita income, according to the ambassador.

Brazil's exports to the Chinese market consist mainly of animal protein, grain, iron ore, pulp, and cellulose. “China is not a competitor, it's our big buyer,” Caramuru said. “Last year, Brazil exported 80% of China's chicken imports, and was by far the largest beef exporter. It also exported around 60% of the soy imported by China.”

Since 2009, China has been Brazil's main trading partner. According to the Brazilian Ministry of Industry, Foreign Trade and Services, trade between the two countries last year amounted to $58.49 billion. Brazil's exports to China totaled $35.13 billion, with a $11.76 billion surplus for Brazil.

Investment

The Latin America and the Caribbean region is one of the most important destinations for Chinese investments, second only to Asia. In Brazil, the investments totalled $10 billion last year, and the cumulative investment stock reached $30 billion, according to the Chinese Foreign Ministry.

Investments from Chinese state-owned corporations in Brazil are mostly concentrated in infrastructure (especially energy and transport) and in the agricultural sector. The Brazilian ambassador highlighted the presence of China Three Gorges and State Grid Brazil Holding S.A. in the energy sector. Last year, China Three Gorges took over the operation of Jupiá and Ilha Solteira hydropower dams on Paraná river.

State Grid is responsible for a transmission line project that will take the electricity produced at Belo Monte hydropower dam in Pará, North Brazil, to the Southeast region.

For Caramuru, Brazil's infrastructure projects will continue to attract Chinese companies. “Chinese bidders are in a very good position to bid for Brazilian contracts because they have access to funding and huge infrastructure expertise.”

Joint ventures

The ambassador went on to highlight the deepening relations with Chinese-Brazilian joint ventures in the financial sector. He instanced recent cases like Haitong, an investment house from Shanghai that set a foot in Brazil by buying Banco do Espírito Santo in Portugal. Banco do Espírito Santo has strong operations in São Paulo, according to the ambassador.

Another example is Fosum, an investment fund from Shanghai that bought Rio Bravo, and the Bank of Communications, which bought Banco da Bahia. “In the case of Rio Bravo and Banco da Bahia, they [the Chinese] bought 80% of the shares, but kept management local.”

The diplomat also noted that when financial institutions from China came to Brazil, they used to bring their staff and management model with them, but this began to change as they began to operate jointly with Brazilian administrators. “The dynamics of relationships is quite buoyant, and that's a very significant point. It suggests that the Chinese [businesses'] understanding of Brazil's reality is improving. This is a very clear sign of maturity,” he concluded.

*The reporter was invited by the China-Latin America and the Caribbean Press Center.

Translated by Mayra Borges