Beyond Carnaval: China’s Strategic Bet on Brazil
Beyond Carnaval: China’s Strategic Bet on Brazil
Concise reflections, digests, and highlights of the week's significant news within Brazil's investment and innovation landscape.
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IN TODAY'S BEYOND CARNAVAL:
Historical Milestones in Sino-Brazilian Relations
A Win-Win Scenario?
Why Brazil is a Strategic Partner for China
Apparently, Brazil Offers More Than Just Raw Materials
Although Brazil is often seen as a challenging market for investments and business, the world still seems to have its eyes firmly set on the country. Recently, driven by our curiosity, we’ve been investigating why different regions and countries continue to express interest in Brazil. After all, there must be good opportunities here if bilateral partnerships and investments are still thriving, right?
That's why we created pieces like Why is Europe Looking to Brazil? and Is Latam Cooperation a Real Thing?.
To continue the discussions we've been having in these recent editions of Beyond Carnaval, in this one, we’ll dive into Brazil’s relationship with one of the current global powerhouse: China.
In recent decades, China's interest in doing business with Brazil has evolved into one of the most critical economic relationships in the global economy - this is not only me saying. What started as modest diplomatic exchanges has transformed into a robust economic alliance that influences international trade, investment, and geopolitical strategy.
As China's influence on the global stage expands, Brazil has become a key partner, offering an abundance of natural resources, agricultural output, and growing consumer markets.
Historical Milestones in Sino-Brazilian Relations
The formal relationship between China and Brazil began in 1974, during Brazil’s military dictatorship and amid China's push to open up to the world under the leadership of Deng Xiaoping. Although initially limited in scope, these diplomatic ties laid the groundwork for future cooperation we still see nowadays. Over the next few decades, China’s rapid industrialization increased its demand for commodities, and Brazil, with its wealth of natural resources, emerged as an essential partner.
A key moment came in 1993, when China granted Brazil “strategic partner” status, highlighting the growing importance of the relationship. This partnership deepened after Brazil’s inclusion in the BRIC (Brazil, Russia, India, China) coalition in 2006, designed to strengthen cooperation among emerging economies. Brazil's presence in what is nowadays called BRICS (with South Africa being part of the group) solidified China’s interest in its economy and positioned the two countries as significant players in global trade discussions.
In 2009, China overtook the United States to become Brazil’s largest trading partner, marking a historic shift in global trade dynamics. This milestone solidified China’s growing economic presence in Latin America
In 2010, the two countries signed a comprehensive long-term Strategic Partnership Agreement, which aimed to foster cooperation across several sectors, including agriculture, energy, and infrastructure. This agreement has continued to shape the trade and investment flows between the two nations, particularly as China expanded its global economic outreach through initiatives like the Belt and Road Initiative (BRI), that aims to improve trade routes and infrastructure to facilitate China's international business.
A Win-Win Scenario?
China’s interest in Brazil stems from both immediate economic benefits and their own long-term strategic goals. Brazil is a major supplier of raw materials that fuel China’s industrial machine, while China provides Brazil with affordable manufactured goods, investments, and access to advanced technology. This complementary economic relationship has made the two countries highly interdependent.
Trade data from 2022 illustrates the magnitude of this relationship. Brazilian exports to China exceeding $90 billion. The largest components of these exports were soybeans, iron ore, and petroleum, which together account for nearly 75% of Brazil’s total shipments to China. Meanwhile, Chinese exports to Brazil—largely electronics, machinery, and chemicals—have also been rising, demonstrating a symbiotic exchange.
Source: https://oec.world/en/profile/bilateral-country/chn/partner/bra#bi-balance
Moreover, China has invested significantly in Brazil, particularly in infrastructure and energy. Chinese companies, both state-owned and private, have acquired stakes in Brazil’s electricity grid, ports, and oil fields. The China Three Gorges Corporation, for example, has made substantial investments in Brazil’s energy sector, contributing to the country's renewable energy expansion.
These investments are part of China’s broader Belt and Road Initiative (BRI).
Between 2007 and 2022, Chinese companies invested in various sectors of the Brazilian economy, from energy and infrastructure to technology and manufacturing. Major investments include:
Energy: Chinese companies like State Grid Corporation and China Three Gorges have taken controlling stakes in several Brazilian electricity transmission and generation projects, contributing significantly to Brazil’s energy infrastructure.
Infrastructure: Brazil’s transportation infrastructure, including ports, railways, and airports, has attracted Chinese investment to facilitate the flow of goods. This includes investments in railroads to transport soybeans and minerals from inland Brazil to the coast for export.
Technology: Chinese companies such as Huawei and BYD have established a strong presence in Brazil’s technology and electric vehicle (EV) markets. Huawei remains one of the leading providers of telecommunications infrastructure in Brazil, while BYD is making strides in Brazil’s push for electric buses and clean energy.
Why Brazil is a Strategic Partner for China
Several factors explain why Brazil holds such strategic importance for China.
Abundant Natural Resources: As China’s industrial and urban growth continues, its need for raw materials like iron ore, oil, and agricultural products is insatiable. Brazil, with its vast natural resources, is one of the few countries capable of consistently meeting this demand. Brazil is the second-largest producer of iron ore globally, a crucial input for China’s manufacturing and construction industries.
Geopolitical Influence in Latin America: Brazil’s position as the largest economy in Latin America provides China with a gateway to the region. Through its partnership with Brazil, China can extend its influence across the continent. As part of its broader Belt and Road Initiative, China has been expanding its investments and partnerships across Latin America. While Brazil has not officially joined the BRI, its infrastructure projects and economic alignment with China make it a key player in China’s Latin American strategy.
Market Access: With a population of over 200 million, Brazil offers a significant market for Chinese goods and services. Chinese consumer electronics, particularly smartphones from companies like Huawei and Xiaomi, are popular in Brazil, and Chinese manufacturers are exploring opportunities in Brazil’s growing automotive market, especially in electric vehicles.
Diversification of Trade Partners: China’s strategy of diversifying its trade partners is crucial to reducing reliance on any one region or country. Brazil, as a stable and resource-rich country, complements China’s efforts to secure diverse supply chains, especially for critical commodities.
More Than Just Raw Materials
On the other hand, China and Brazil have increasingly sought collaboration in innovation and technology, recognizing the need to move beyond raw materials and foster technological development. One of the most prominent areas of cooperation has been in satellite technology. Since the 1980s, the two countries have collaborated on the China-Brazil Earth Resources Satellite Program (CBERS). The program, launched in 1988, aims to develop and operate remote sensing satellites that provide valuable data for environmental monitoring, urban planning, and disaster management. The latest satellite, CBERS-4A, was launched in December 2019, continuing this long-standing partnership.
In the field of renewable energy, China’s State Grid has been involved in the construction of transmission lines to carry power from Brazil’s wind farms in the Northeast to other regions of the country.
Furthermore, Chinese firms like BYD, a leading electric vehicle (EV) manufacturer, have set up operations in Brazil in 2015 to produce batteries and electric buses, contributing to the country’s shift toward green energy and transportation solutions.
In 2021, Brazil also joined the Chinese-led New Development Bank (NDB), which finances infrastructure and sustainable development projects across BRICS countries. The NDB has committed funds to various projects in Brazil, including clean energy initiatives, further aligning with China's global push for green investments. This not only boosts Brazil's capacity for innovation but also reinforces China's role as a leading financier of global development.
China’s interest in Brazil is rooted in both countries' complementary economic needs and strategic ambitions. Brazil provides the natural resources and agricultural products that are critical to China’s continued growth, while China offers Brazil an enormous market for its exports, as well as investment in key sectors like energy and infrastructure.
As China continues to solidify its position as one of the most important economies in the world, its partnership with Brazil will likely deepen. Brazil’s vast natural resources, growing consumer market, and strategic position in Latin America make it a vital player in China’s long-term economic and geopolitical strategy.
I’ve got to be honest, as a Brazilian, I have mixed feelings about this whole "bilateral partnership" thing. With China’s big ambitions, I sometimes wonder if we’re just a piece in their larger game. While there’s no clear answer, working on this edition has definitely given me a better sense of how, arguably, the most powerful country in the world sees Brazil—not just as a partner, but as a place full of opportunity.
Talking about BRICS: The group has approved the entry of Cuba, Nigeria, Vietnam, and ten other countries as partners. This expansion aims to enhance cooperation and influence in global governance, reflecting a shift towards a more multipolar world order. Source
Brazil Launches Green Investment Platform: Brazil has launched a platform to attract investment in green projects from the United States. This initiative aims to promote sustainable development and strengthen economic ties between the two countries, focusing on environmentally friendly ventures. Source
CrewAI Raises $18M, Backed by Insight Partners and Sam Altman: CrewAI, founded by Brazilian João Moura, has raised $18 million, including $12.5 million in Series A funding led by Insight Partners. The startup focuses on autonomous agents for automating workflows and has attracted notable investors, including Sam Altman's family fund. Source
Biotech and Agritech Poised for Growth in Brazil’s Deep Tech: A study by KPMG and Distrito suggests that biotech and agritech are promising sectors for deep tech development in Brazil. The report highlights the country's potential in these areas, emphasizing the need for increased investment and collaboration to drive innovation. Source
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