The Chinese Factor in Brazilian Investments
The trade relationship between China and Brazil is relatively young, but the rate of Chinese and Brazilian investments has grown exceptionally fast. Exports from Brazil to China multiplied by 18 between 2000 and 2009 when China became Brazil’s largest trading partner. In 2010, when China made the biggest single-nation direct investment in Brazil, trade grew by a massive 53%.
This rapid growth is attracting attention. In a recent article, the Financial Times states that “few doubt that the world is witnessing the birth of one of the great commercial relationships of the future”. And many analysts believe that the Brazil-China tandem will play a major role in foreign investment worldwide in the future.
For China, Brazil is a “one-stop shop” for commodities. Latin America’s largest country is hugely rich in resources and China snaps up Brazilian iron ore and agricultural produce. More recently, Brazil’s huge oil fields have caught the attention of many foreign investors with the Chinese at the top of the interested parties in this particular Brazilian investment.
The Way Forward
However, it isn’t all plain sailing in the China-Brazil investment relationship. The two giants are not only at opposite ends of the globe geographically – they are also a world apart when it comes to politics, culture and social structure. And these differences have led to some friction.
Cheap Chinese imports fuelled consumption among Brazil’s lower middle classes, contributing in part to recent economic growth in Brazil. However, the vast influx of Chinese goods means some Brazilian manufacturers are worried about the future of certain sectors of Brazilian industry.
To counteract this, the government is working hard to attract Chinese investment in Brazil. One of President Dilma’s first foreign trips was to China and as a result, China will be making investment in Brazilian aircraft as well as setting up manufacturing centres in Brazil.
China is set to become the world’s most important economic player in the near future and Brazil is well placed to become part and parcel of this success. With Brazilian investments high on its agenda, China will also contribute to Brazil’s rise on the global stage. At Obelisk International, we expect to see a marked increase in Chinese investments in Brazil over the next few years, particularly in investments related to infrastructure for the forthcoming sporting events and Brazilian real estate.
However, Brazil’s trading strength lies in diversity and unlike some countries, it isn’t heavily dependent on trade with China. Although China represents an important trading partner, it accounts for just 15% of all Brazil’s international trade. For Obelisk International, this balance guarantees varied opportunities for investors of any nationality.
About Obelisk International: Obelisk International offers select investment opportunities in Brazil in a range of sectors such as residential real estate, construction and social housing. Obelisk gives investors security, profitability and diversity thanks to a combination of close attention to our clients' investment requirements and high quality in-house research and analysis.
For more information on Brazilian investments and to find out about Obelisk International’s latest opportunities for investment in Brazil, contact us on 0034 952 820 319. Via email: email@example.com or visit our website: www.obeliskinternational.com. Follow us on Twitter – Obelisk International and Facebook.
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