Tuesday, July 05, 2011
China stepped up its investments in Brazil in a big way with fresh investment of about USD 9 billion, taking its overall foreign direct investment in that country to USD 12. 67 billion as the two countries warmed up under the BRICS alliance.
China will invest USD 4.5 billion in Brazil's technology sector this year shifting its investment in the Latin American country from agriculture and mining.
With this, the Chinese investment is expected to hit USD 9 billion this year, with half of it going into high-tech industries Alessandro Teixeira, deputy minister of Brazil's Ministry of Development, Industry and Foreign Trade, told state run China Daily.
The two countries were part of Brazil, Russia, India, China and South Africa, (BRICS) which held its third summit in Sanya in China recently. China has been Brazil's biggest trading partner since 2009, a position previously held by the United States. Cumulative foreign direct investment (FDI) from China to Brazil reached USD 12.67 by the end of 2009, according to Banco Bradesco SA, one of Brazil's biggest banks.
Agriculture and mining each received about 20% investment. Brazil has been urging Chinese companies to invest in non-raw material sectors to help balance its economy. Teixeira said that Brazil has banned farming businesses established solely through foreign investment.
The government in Brazil welcomes Chinese companies cooperating with Brazilian partners in producing agricultural products, such as soybean oil, he said. "That is the kind of partnership that China and Brazil are looking forward to," he said. China, Brazil regard each other as key partners in their global strategy.
Brazil accounts for 40 per cent of Latin America's economy. Teixeira predicted that this will rise to 50 per cent in the next 10 years. Trade between the two countries has increased dramatically during the last decade, surging 16-fold between 2001 to 2010.
"Seventy per cent of the trade between Brazil and China is basically commodities," Teixeira said. "But we are keen to improve commercial relations in medium and high-end technology. "China's investment in Brazil was less than USD 300 million in 2009, but skyrocketed to USD 17 billion in 2010, making China the largest foreign investor in Brazil.
"The trend is that China will invest more in the technology sector," Marcos Almeida, a partner at Ernst & Young Terco said.
