Chinese share of Brazil foreign direct investment wanes to 7-year low in 2023
US FDI in Brazil surged 56% in 2023 from previous year
China's FDI share in Brazil fell to 4.28%
Lula seeks investment from both US and China
By Marcela Ayres
BRASILIA, Nov 28 (Reuters) -China last year contributed its smallest share of Brazil's foreign direct investment in seven years, according to new central-bank data, while the United States expanded its leading share to the highest on record in the first year of President Luiz Inacio Lula da Silva's administration.
China, which is Brazil's largest trading partner, accounted for $44.9 billion of its FDI, or just 4.28%, according to an annual report from the Brazilian central bank this week.
That made the Asian nation Brazil's seventh-largest source of FDI last year, slipping from fifth place a year earlier to China's lowest position since 2016, when it ranked 12th and contributed 2.87% of FDI.
The data underscores that even as China has become the dominant buyer of Brazil's farming, mining and energy exports, its companies' weight as investors still pales compared to U.S. and European firms with longstanding operations in the country.
By contrast, U.S. FDI in Brazil surged 56% in 2023 from the year before to $357.8 billion, driven primarily by higher investments in financial, insurance, and related services.
As a result, the United States contributed 34% of Brazilian FDI stock last year - its highest share ever recorded.
The data focuses exclusively on equity participation, which constitutes about 80% of total FDI, representing new investments and excluding intercompany operations such as loans.
"We believe Brazil and the U.S. will continue to foster a strong political relationship, as has typically been the case amid each new political cycle," said Abrao Neto, CEO of the American Chamber of Commerce in Brazil, emphasizing that the U.S. figures reflect 200 years of diplomatic ties.
Lula has been courting investment from both the U.S. and China to drive economic growth in Latin America's largest economy.
Although Lula expressed support for Democrat Kamala Harris in the U.S. presidential race, he quickly congratulated Republican Donald Trump - known for his ties to Lula's rival, former right-wing President Jair Bolsonaro - on his victory.
Despite securing agreements on infrastructure, energy, and agribusiness during a recent visit by China's President Xi Jinping to Brasilia, Lula's administration stopped short of formally joining China's global infrastructure strategy, the Belt and Road Initiative.
Welber Barral, a former foreign trade secretary and partner at consultancy BMJ, noted that the agreements with China could improve its FDI ranking in the coming years, as such accords often take time to materialize into investments.
On the other hand, Trump policies aimed at fostering U.S. jobs could reduce the volume of FDI from his country, Barral said, though less so than in Mexico and Canada, which heavily depend on the U.S. economy.
Reporting by Marcela Ayres
Editing by Brad Haynes and Rod Nickel
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