Chinese Investment in Brazil Plummets 78% in 2022, Reaches Lowest Level Since 2009

By Bernardo Caram

BRASILIA (Reuters) – Chinese investments in Brazil plummeted by 78% in 2022 compared to the previous year, reaching their lowest level in 13 years amid a significant decline in funds dedicated to resource projects, as reported by the Brazil-China Business Council (CEBC).

As Brazil’s largest trading partner, China contributed $1.3 billion in direct investments to the country last year, marking the lowest investment level since 2009, according to a CEBC study. In contrast, overall foreign direct investment (FDI) in Brazil surged by 95% to $90.6 billion in 2022, the highest figure seen in a decade.

The CEBC noted that only 28% of announced Chinese projects, which were valued at $4.7 billion, moved forward last year. This performance stands in stark contrast to 2021, when all pledged investments totaling $5.9 billion were realized, supported by two major oil projects nearing $5 billion.

Tulio Cariello, the head of research at CEBC, suggested that the 2021 figures created a challenging benchmark for comparison. He mentioned that some projects might have been delayed due to pending license approvals, which could ultimately postpone their execution. For instance, Chinese mining company Honbridge announced intentions to invest $2.1 billion, but its plans were hindered by a delayed environmental license.

While Chinese investments in Brazil have sharply declined, global Chinese investments saw a modest increase of 2.8% over the past year, reaching $116.8 billion.

Other variables impacting Chinese investments include the conflict in Ukraine and the competitive dynamics between the U.S. and China in the Asia-Pacific region. These issues have led Beijing to focus on its "Belt and Road Initiative," which may exclude Brazil, according to Hsia Hua Sheng, an economist from the Sao Paulo Business Administration School of the Getulio Vargas Foundation (FGV-EAESP).

Leftist President Luiz Inacio Lula da Silva, who visited China in April, has been making efforts to strengthen ties with Beijing. However, recent economic indicators from China have raised concerns about the country’s capacity to maintain strong growth.