President Jair Bolsonaro, Brazil's newly-elected president, is threatening to hijack some of China's plans in the energy sector. Several energy companies backed by the Chinese government are planning to invest billions of dollars in Brazil's power sector, but President Bolsonaro gave a stern warning to these Chinese investors.
Many analysts believe that companies like State Grid are bringing in massive amounts of investments and expertise for Brazil, resources Brazil is in dire needs of. However, populist suspicion hovering around the country's top officials and the majority of the populace might disrupt this commercial possibility.
China is widely known as one of the top buyers of Brazil's commodities. Moreover, the country is also a direct investor to the country's various sectors. Since 2013, China has showered more than $124 billion into various Latin American countries. Majority of these investments are geared toward the energy sector. Headlining this massive investment drive are two state-own companies, State Grid, and China Three Gorges, which have invested billions of dollars towards electricity generation and transmission.
Over the years, Chinese power companies have developed expertise in terms of operating dams and renewable energy projects. These companies are also adept when it comes to electricity transmission over vast distances.
Brazil is currently faced with geographic challenges, especially with regards to electricity generation and transmission. A challenge that the two Chinese companies would be happy to solve. According to Reuters, State Grid is willing to export the company's ultra-high voltage transmission technology. The company is planning to invest $38 billion or about 140 billion Brazilian reais into the country for the next five years.
While these investments could potentially convince another country to strike a deal with China, Brazil is taking a more cautious route. The country is still recovering from the massive corruption scandal that involved some of the country's top government officials and executives of the country's own petroleum company.
President-elect Bolsonaro won the election by riding the tide of the growing far-right sentiment. Majority of the country is in disdain of its government following the massive corruption scandal. The President's populist leaning politics might also steer the country away from outside and foreign investors, something that could spell trouble towards China's expansion and investment plans. However, some analysts have said that considering Brazil's current economic and political state, the next administration might be tempted to offload of its state assets to the highest bidder regardless of nationality, something that China could use as a leverage.
