By Manuela Andreoni and Luciana Magalhaes
SAO PAULO (Reuters) -Brazil has emerged as the third-biggest destination for Chinese investments in the world, a study showed, with dozens of projects across several sectors attracting $4.2 billion last year, as the two countries tightened diplomatic ties.
The study by the Brazil-China Business Council (CEBC), a think tank, showed Chinese direct investment in Brazil more than doubled in 2024 from 2023, as companies continued to pour money into energy projects and entered new areas, such as electric cars and food delivery.
“China’s arrival is excellent, it will trigger a competitive shock to other companies in Brazil’s industrial sector,” said Uallace Moreira, Brazil´s Secretary of Industrial Development, Innovation, Trade and Services, adding, “We need these investments to develop supply chains here in Brazil.”
However, many Chinese factories in the country still import parts made in China for final assembly in Brazil, including some electric car makers. This type of investment generates fewer jobs and spurs fewer new factories across supply chains that are key to economic growth, Moreira said.
Brazilian President Luiz Inacio Lula da Silva and China’s Xi Jinping met twice in the past year, announcing partnerships in several sectors as U.S. President Donald Trump has ramped up a trade war putting stiff tariffs on products from both nations.
Chinese firms have looked to expand in Brazil and other developing economies as they retreat from the United States, said Tulio Cariello, the CEBC study’s lead author, flagging a low ebb of $2.2 billion worth of Chinese investments in the U.S. last year.
“It’s a trend because of these geopolitical tensions,” he said.
While Chinese investment in Brazil is growing, it is down from levels that averaged $6.6 billion a year between 2015 and 2019, when it was focused on a handful of huge energy projects, such as transmission lines and offshore oil fields, he said.
Now, Chinese firms are investing in a record 39 projects in Brazil across a more diverse array of industries, putting the Latin American nation behind just Britain and Hungary among global destinations for Chinese capital, CEBC found in the study, released on Thursday.
For example, tech companies Meituan and Didi entered the food delivery business this year, Cariello said.
Brazil had ranked ninth among global destinations in 2023 and 2022, according to the study.
The United States remains the biggest source of Brazil’s foreign direct investment, sending $8.5 billion last year, according to government figures.
Moreira, from Brazil’s Trade Ministry, said many Chinese companies still struggle in Brazil with more expensive supply chains, a complex tax system and more rigorous labor laws.
This year, prosecutors sued Chinese car manufacturer BYD after authorities rescued 163 workers who were allegedly submitted to slavery-like conditions at a factory the company is building in Brazil. The company denied wrongdoing.
“The law is different in China,” Moreira said. “Very different.”
(Reporting by Manuela Andreoni and Luciana Novaes Magalhaes; Editing by Brad Haynes and Sonali Paul)
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