China's Outbound Investment and Investment Cooperation with Brazil: Current Status and Several Thoughts

26 November 2012

China and Brazil are BRIC countries and world powers. As China and Brazil are highly complementary in resources, capital, demand and other aspects, the two countries have cooperated in many areas including trade and project contracting.

The China-Brazil investment cooperation is facing significant opportunities, as shown in the following three main aspects:

First, as the current international political situation is relatively complex, it has become a primary concern for Chinese enterprises as how to avoid political risks during their outbound investment activities. For Brazil, this is undoubtedly a good time to accelerate investment from China, as it is a country with rich natural resources and a huge market and has a stable political environment and sound economic and financial management system, which are all strongly attractive to the Chinese investors.

Second, as the current sovereign debt crisis in occidental countries is intensifying, China, as a country holding a foreign exchange reserve of as much as USD 3.2 trillion and has bought a large number of U.S. Treasury bonds, has to consider the issue of how to diversify its foreign exchange reserve. This will urge the Chinese government to ease the pressure caused from foreign reserves through reinforcing outbound investment. The continuing appreciation of the Renminbi, in addition, is another major cause for the acceleration of the implementation of the “going abroad” strategy of China.

Third, the Chinese government has significantly streamlined the administrative examination and approval procedures for outbound investment, indicating that Chinese enterprises will further accelerate their investment pace.

Therefore, Brazil should seize the current favorable opportunities of the changing international political and economic situation to attract more Chinese enterprises to invest in Brazil. In this regard, Brazil may learn from China's successful experience.

For outbound investment, mere opportunity is not enough. Many cases have shown that outbound investment is much more than a simple economic activity; ethnic, cultural, political, environmental and other issues should also be paid attention to.

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