This year, China overtook the United States to become Brazil’s largest investor. In the first six months of 2010, FDI flows reached an estimated $10 billion, up from just $83 million in the same period last year.
The surge is hardly surprising given that China became Brazil’s largest trade partner in 2008. But it has sparked a public debate in Brazil. Does China’s state-led capitalism, driven by a hunger for resources and a need to export low-cost production, pose a “neocolonial” threat? Or are Chinese investors a boon to Brazil’s thriving economy?
Brazil has been here before: 40 years ago it experienced a boom in Japanese investment. That experience suggests Brasilia has to do much more to manage the Chinese investment tide.