1、1CHINESE INVESTMENTS IN BRAZIL:INVESTMENT DATA,PUBLIC POLICIES FOR INVESTMENT FACILITATION AND THE CASE OF THE MANAUS INDUSTRIAL POLE2AUTHORSANA GARCIAMARIA ELENA RODRIGUEZCLEITON MACIEL BRITO CNDIDO GRINSZTEJNRESARCH ASSISTANTSDANIEL LANNESVICTOR FERNANDESFELIPE QUEIROZREVISIONJSER ABILIOTRANSLATIO
2、N FROM PORTUGUESEKAREN LANGWITH THE SUPPORT OF THEKARIBU FOUNDATION AND FAPERJCHINESE INVESTMENTS IN BRAZIL:INVESTMENT DATA,PUBLIC POLICIES FOR INVESTMENT FACILITATION AND THE CASE OF THE MANAUS INDUSTRIAL POLE-ANA GARCIA,MARIA ELENA RODRIGUEZ,CLEITON MACIEL BRITO AND CNDIDO GRINSZTEJNCATALOG SHEET:
3、BPC POLICY BRIEF V.13 N.06JUNE/2023.RIO DE JANEIRO.PUC-BRICS POLICY CENTERISSN:2318-181876P;29,7 CMKEY WORDS:1.FOREIGN DIRECT INVESTMENT;2.PUBLIC POLICIES;3.BRAZIL;4.CHINA;5.MANAUS FREE TRADE ZONE3TABLE OF CONTENTSINTRODUCTION .41.CHINESE INVESTMENTS IN BRAZIL FROM 2010 TO 2021 .112.THE FLOW OF CRED
4、IT FROM CHINA TO BRAZIL .183.BRAZIL-CHINA BILATERAL TRADE .214.DIPLOMATIC RELATIONS AND AGREEMENTS SIGNED BETWEEN BRAZIL AND CHINA:AN OVERVIEW .255.PUBLIC POLICIES AND LAWS ON FOREIGN INVESTMENT IN BRAZIL:WHAT IMPACT HAVE THEY HAD ON INVESTMENT FROM CHINA?.306.THE DYNAMICS AND IMPACTS OF CHINESE INV
5、ESTMENTS IN THE TERRITORIES:THE CASE OF THE INDUSTRIAL PARK OF MANAUS .34APPENDIX .56REFERENCES.654INTRODUCTIONSince the late 1990s,China has been seeking to expand its capital in foreign markets and in-crease its geopolitical weight in the new world order.For 13 consecutive years,its investments in
6、 over 150 countries have grown at an average annual rate of 33.6%(Cariello,2021).In this phase of accelerated growth and its quest to gain power on the international scene,Chinese non-financial investments abroad hit an all-time record in 2016:a total of US$170.11 billion in projects linked to 7,961
7、 companies in 164 countries and regions(Cariello,2021).It was the first time the countrys total investments abroad exceeded the total foreign investments it received.China began supporting Chinese foreign direct investments by adopting its so-called“Going Global”strategy in 2001.This strategy aimed
8、to achieve the following objectives:a)obtain access to raw materials(oil,iron,steel and wood)needed to sustain its economic growth;b)guarantee the food supply for a population of over 1.4 billion people;c)enter other countries consumer markets through joint ventures or by acquiring other companies;d
9、)set up factories in their in-dustrial parks;e)geopolitically influence regions that are traditionally in the shadow of Western superpowers;f)export the surplus capacity of Chinese companies,and g)make profit.Chinas strategy became even clearer in 2013,when it launched the Belt and Road Initiative(B
10、RI).Under Beijings command and with the ambition of involving over 140 countries,this project aims to generate a new global flow of capital,services and communication in which Chinas economic structure and political influence are at the centre.5China-Brazil relations date to the 1970s.In 1974,the Br
11、azilian military government recognized the Peoples Republic of China as the sole representative of the Chinese people and severed its ties with Taiwan.The resumption of diplomatic relations between the countries led them to establish an important technological and scientific partnership for joint sa
12、tellite monitoring of earth resources and climate programme(CBERS)in the late 1980s.A fundamental milestone in the dialogue between China and Brazil was the visit of Chinese leaders to Brazil in 1993.This was the occasion of the signing of the bilateral agreement called the Sino-Brazilian Strategic
13、Partnership,which was to serve their common objective of joining forces to push open the gates of the international political-economic agenda,on one hand,and,on the other,Chinas interest in securing access to Brazilian agricultural products and raw materials for its rapid expansion.Brazil,for its pa
14、rt,aimed to preserve and strengthen the bi-lateral space cooperation efforts and use the deficiencies in Chinas infrastructure as a spring-board for Brazilian service exports to that country(Leo,2011).During the second phase of the partnership,which lasted until 1999,Brazils main interest was the En
15、ergy Cooperation Project,as it attempted to secure important contracts for Bra-zilian construction companies to build dams in China.However,China was more interested in increasing the supply of iron ore from the Companhia Vale do Rio Doce(Vale)than in hiring Brazilian companies to build hydroelectri
16、c dams.It also focused its attention on Brazils poten-tial to supply food to China,especially soy(Biato Junior,2010).The third phase of the strategic partnership has lasted from the early 2000s,the time of Chinas accession to the World Trade Organization,up until now.During this period,Brazilian exp
17、orts to China grew over 500%,as it took Japans place as Brazils leading trade partner and priority market in the Asian region.In 2000,Brazil exported a total of US$1 billion to China.By 2014,this amount had climbed to US$40 billion and in 2021,to approximately US$70 billion.As a result,China is now
18、the main destination for Brazilian exports,absorbing more than a third of the total.The Joint Action Plan 2010-2014 and the Ten-Year Plan 2012-2021(signed in 2010 and 2012,respectively),the volume of Chinese capital already invested in Brazil and the announcement of new investments all confirm both
19、countries interest in pursuing the path of cooperation further.Also during this recent phase,the flow of Chinese capital into Brazil has increased rapidly.Data indicate that between 2007 and 2020,Chinese companies implemented 176 projects that total US$66.1 billion in investment.Brazil was the recip
20、ient of almost 50%of Chinese invest-ments in South America(Cariello,2021).As we will show in this report,the majority of these investments are channeled into the energy sector(fossil and renewable),followed by mining,manufacturing,agriculture,and financial services.In terms of investment volumes,Chi
21、nese in-vestments in Brazil are mainly led by state-owned enterprises(SOEs).This report is part of the project“The political economy of South-South relations:a com-parative analysis of Chinas investments in Brazil and South Africa”,which is based on the col-laboration of researchers from the BRICS P
22、olicy Center at the Pontifical Catholic University of Rio de Janeiro and the School of Government at the University of the Western Cape,with the 6support of the Karibu Foundation.We aim to investigate and compare Chinese investments in two other BRICS countries:South Africa and Brazil.The questions
23、that guide this research are:to what extent can South-South investments generate new potential for regional and national development based on fairer and more sustainable social and environmental grounds?Or,on the contrary,to what extent do South-South investments reproduce the traditional internatio
24、n-al division of labour and practices of natural resource and labour exploitation,while generating new asymmetries?We aim to identify the main characteristics of Chinese investments in the two countries;the specific government public policies and state institutions that sustain and facilitate them,a
25、nd the socioenvironmental and labour dynamics that were generated in terri-tories where Chinese projects have been or are being implemented.The focus of this report is Chinese investments in Brazil.We begin by presenting data on the evolution and main characteristics of Chinese investments from 2010
26、 to the present day,fol-lowed by our findings on financing,credit and trade.Next,we discuss political-diplomatic rela-tions between China and Brazil and the main public policies designed to facilitate and promote foreign direct investment in the country from the time of the Dilma Rousseff administra
27、tion(2011-2016)to the governments of Michel Temer(2016-2018)and Jair Bolsonaro(2019-2022).We have crossed information to assess the extent to which,if any,diplomatic visits and public policies have facilitated the entrance of Chinese investors in each sector.Finally,we examine a case study on the fa
28、ctories of Chinese manufacturing companies in the Special Economic Zone of Manaus,specifically in the Manaus Industrial Pole,located in the Amazon region.The main results are organized as follows.Section 1 provides quantitative data on investment volumes,number of projects,and the main sectors and c
29、ompanies involved.We mapped out 138 projects1 that received an approx-imate total of US$72.253 billion2 in investments from China between 2010 and 2021.China is one of the biggest investors in Brazil,alternating with the United States in first and second place throughout most of the period analysed.
30、Chinese state-owned enterprises(SOEs)ac-count for a larger share of the total invested than private companies,but support roughly the same number of projects as private firms do.Brownfield investments account for most of the total invested,mainly because of the numerous high-value acquisitions,gener
31、ally by SOEs.The energy sector received the largest portion of the amount invested and stands out in relation to the scale of assets,especially in the transmission subsector.The manufacturing industry,for its part,had the highest number of projects.Investments in the power generation subsector went
32、almost entirely into hydropower plants and renewable energy sources such as solar and wind power.However,in 2020,investment levels declined considerably.This can be explained by the 1.The set of projects analysed in this paper is the result of a study on Chinese investments in Brazil.More detailed d
33、ata from this research has been compiled and posted on the China Panel platform.To access more detailed information about each project,consult the platform at:2.Only confirmed projects(not those announced or planned)were included in the study in order to rule out“ghost”investments.Projects with no a
34、vailable information on the amount invested were only included in the figures on the number of projects.Repairs,works to modernize infrastructure,service provision and acquisitions of the assets of Brazilian companies outside of Brazil were not taken into consideration.The study is based on informat
35、ion from news-papers and the websites of municipalities,Chinese corporations,regulatory agencies,etc.7uncertainties generated by the Covid-19 pandemic and the fact that the privatization program and infrastructure concessions of great interest to Chinese investors were put on hold for several months
36、.However,in 2021,investment flows resumed and the number of projects rose again,mostly in the services sector.Section 2 analyses Chinese financial flows and loans to Brazil.Chinas main financial insti-tution is the China Development Bank(CDB),which has been an important source of funding for Brazili
37、an and Chinese corporations over the past 15 years.It has offered credit in the form of project financing,lines of credit to Chinese corporations for the expansion of their opera-tions and loans,mainly for Petrobras.In the mid 2000s,CDB financed projects in the oil and gas and electricity sectors(ga
38、s pipelines and coal-fired thermal power),but in the 2010s,it turned to projects in renewable energy and electric mobility tied to the promotion of Chinese technologies(hydroelectric plants and an electric vehicle plant).However,the biggest loans were granted to the Brazilian oil company,Petrobras.B
39、etween 2009 and 2017,CDB awarded six loans with a combined value of US$25 billion to Petrobras.These loans were partially based on“loans for oil”,as they came with the condition that Petrobras prioritize the supply of oil to certain Chinese companies and,in some cases,use these loans to acquire the
40、goods and services of these companies.CDB loans helped Petrobras finance the exploration of the pre-salt oilfields in the adverse context of the 2008 global financial crisis.Furthermore,these loans were particularly important after the results of the Lava Jato anti-corruption investigations revealed
41、 the involvement of Petrobras,which led to a drop in its market value and difficulties in obtaining funds from other creditors.Section 3 focuses on Brazil-China trade relations.Since 2009,the Asian country has been Brazils main trading partner,accounting for more than 25%of Brazilian exports.Brazil-
42、China trade relations resemble the traditional division of labour:Brazilian exports to China are con-centrated in three primary products-iron ore,soy and crude oil which accounted for 80%of Brazils annual total exports to China between 2010 and 2022;Brazil,on the other hand,mostly imports a wide ran
43、ge of manufactured products from China.This asymmetric economic inter-dependence tends to fuel the deindustrialization of the Brazilian economy in the medium term,as China has taken Brazils place as the main exporter of manufactured goods to other South American countries.Section 4 discusses politic
44、al-diplomatic relations that accompanied and,at times,favoured the entry of Chinese investments in Brazil.Since the 1970s,there have been over 90 meetings of heads of state and state representatives from both countries,of which more than 60 have taken place from 2010 onwards.During the Lula da Silva
45、(2002-2010)and the Dilma Rous-seff(2011-2016)administrations,relations between Brazil and China intensified significantly.In 2004,the Sino-Brazil High-level Commission for Coordination and Cooperation(COSBAN)was created.The countries also adopted the Brazil-China Joint Action Plan for 2010-2014 and
46、one for the 2015-2021,as well as the Ten-Year Cooperation Plan 2012-2021.In 2012,bilateral rela-tions were raised to the“Global Strategic Partnership”level.At the multilateral level,Brazil and China participate in the G20,the BRICS and the BASIC blocs and regionally,in 2014,the Chi-na-CELAC Forum wa
47、s created.All these initiatives and mutual visits have been accompanied 8by business interests,resulting in memoranda of understanding(MoUs)for specific sectors(mining,oil,energy,agriculture,etc.)and deals for Chinese and Brazilian companies.After the parliamentary coup that led to the impeachment o
48、f President Rousseff in 2016,the new Michel Temer administration(2016-2018)redirected the focus of Brazils foreign pol-icy towards building closer ties with its traditional partners,such as the US and the European Union and a more pragmatic relationship with China.Even so,Temer visited China two yea
49、rs in a row,with several Brazilian CEOs and business associations in tow.The outcomes of these visits were the signing of an agreement with State Grid for the licensing of phase 2 of the Belo Monte hydropower plant transmission line and a US$700 million financing contract with CCCC for investment in
50、 the construction of a terminal in the Port of So Luis.In 2018,however,the number of agreements between Brazil and China began to decline,as elections in Brazil that year were marked by uncertainties about relations with China,which stemmed mainly from the hostile stances of then-candidate Jair Bols
51、onaro.Despite the Jair Bolsonaro administrations inimical rhetoric towards China,in his first year in office,in 2019,several high-level visits took place,namely on the occasions of the 5th COSBAN Meeting,the 3rd Global Strategic Dialogue Meeting,and the 11th BRICS Summit.Several cooperation agreemen
52、ts and sectorial MoUs were signed,resulting in the expansion of Chinese business operations in Brazil.In this section,we highlight the operating license agreement authorizing State Grid to operate the Belo Mon-te-Rio de Janeiro transmission line,as well as financing agreements between Petrobras,CDB,
53、China Eximbank and ICBC Leasing.Section 5 and the appendix of this report provides an overview of public policies,programs and legislation on foreign investment in Brazil and assess if and to what extent they facilitated the entry of Chinese investments.We took policy measures identified in the Inve
54、stment Poli-cy Hub platform of the United Nations Conference on Trade and Development(UNCTAD)as a basis and analysed the laws and programs of the Dilma Rousseff(2011-2016),Michel Temer(2016-2018)and Jair Bolsonaro(2019-2022)administrations.We found that Rousseff adopted investment-related public pol
55、icies and legislation focused on stimulating industrial activities,which ranged from tax cuts and loan programs for car or ethanol production to incentives for the exploration and production of oil in the pre-salt fields.One key policy was the establish-ment of a production-sharing model that guaran
56、teed a minimum share in the pre-salt opera-tions for Petrobras.The Temer and Bolsonaro governments,on the other hand,both favoured market liberalization and privatization,leading to the denationalization of certain sectors such as oil and infrastructure.We also identified,however,certain continuitie
57、s throughout the Rous-seff,Temer and Bolsonaro administrations,such as the ongoing privatization of airports and the gradual opening of airline companies to foreign capital.Our findings show that some public policies during the Dilma Rousseff and Michel Temer administrations did,in fact,facilitate t
58、he entry of Chinese companies,particularly in the health,automotive,airport and oil industries.In the Bolsonaro government,however,policies aimed at promoting privatizations and conces-sions in the areas of infrastructure and energy,which had been important sectors for Chinese investors,did not end
59、up attracting investments from the Asian country.9Section 6 discusses the dynamics and impacts of Chinese investments in the territories,in-cluding labour issues,based on the results of a case study on the Industrial Park of Manaus in the Amazon region.There are two ways in which Chinese interests a
60、re played out in the Am-azon.One is through Chinas advances in the areas of infrastructure,food and raw materials:for instance,the implementation of a logistics corridor for grain and mineral exports;mineral prospecting operations,many of which are located in indigenous territories or environmental
61、protection areas,as well as the construction of hydroelectric power plants and dams.Our report focuses on the second way,which has not yet been adequately discussed in Brazil:through investments in the manufacturing sector,which serve the interests of both state-owned and private enterprises that pr
62、oduce durable consumer goods.The city of Manaus has re-emerged as an important space to host a free-trade zone because of its special taxation system and industrial park,where the factories of most of the companies that build motor-cycles,televisions,laptops and air conditioners,among other items,in
63、 Brazil are located.Manaus is also home to a specialized workforce that has decades of experience in manufac-turing these products at a lower cost.This section shares the results of field research on four Chinese factories in the Manaus In-dustrial Park:ChinaBoard,TVChina,MotorChina and ArconChina.T
64、he methodology consisted of factory visits and interviews with managers,Chinese expatriates,factory workers and ad-ministrators,employees of the labour court system and trade union leaders,as well as docu-ment analysis and literature review.The main findings are:Workers and employees report a declin
65、e in work conditions,as Chinese com-panies offer lower wages and less benefits and incentives than other major global players in the manufacturing sector in Manaus,especially Japanese,South Korean and some European firms.The Chinese offer strictly the legal minimum.The companies policy is to pay the
66、 employees of their subsidiaries a wage that is close to the average amount paid by the parent company in China.Despite this,no data were found to indicate non-compliance with la-bour laws.In fact,Chinese companies tend to adjust to Brazilian legislation,but they do not offer any more than what the
67、law stipulates.Human resources practices or policies of“Chinese enclaves”are fully controlled by headquarters in China;local factory managers in Brazil have no say in human resources(HR)matters.As a“global Chinese territory”,the local HR depart-ment is part of the way China coordinates and controls
68、production.Placing the decision-making power in the hands of the board of directors in China is one way of avoiding having to deal with local pressure directly.This can be exem-plified in the case of labour disputes,as head office in China is the one to make decisions on compliance with the labour a
69、greements negotiated in Manaus.Chinese companies give priority to the more technical side of work,which is coordinated by a management team composed of expats.They have general-ly given preference to workers with experience in the Manaus Industrial Park,10which has to do with the Chinese firms goal
70、of reducing the cost of training employees.This reveals an attempt to transfer the responsibility for training and“recycling in the market”to workers.In Manaus,both the state and the market evade responsibility for providing training.In regards to factory control and supervision,workers have little
71、autonomy to make decisions.Chinese companies are reported to show little appreciation for workers creative capacity.According to the employees we interviewed,the Chinese do not create space for dialogue in the factory or accept sugges-tions and they weave a very hierarchical web of relations.In the
72、correlation of forces between capital and labour,state public policies have benefitted capital more than the citys entire labour force.Advances of the working population of Manaus are the result of the working class struggle against the forces of capital,and not the actions of the state.Workers in t
73、he capital of Amazonas are at the mercy of the comings and goings of manufac-turing firms,on one hand,and must overcome the lack of educational courses,housing and sanitation policies and professional/technical training programs on their own,on the other.Contrary to the African context,little value
74、is given to political or diplomatic capital or strategic interests linked to the centre of Chinese power.In a place where international companies dominate production and sales,Chinese in-vestors merely go with the flow.They play the game within the possibilities that are offered by cutting costs and
75、 adopting strategies that allow them to survive or get ahead of their competitors,such as paying lower wages and benefits to Chinese managers and supervisors working in Brazil than the ones back in China.111.CHINESE INVESTMENTS IN BRAZIL FROM 2010 TO 20211.1 Annual changes:mapping the trendsFigure 1
76、.12The years 2010 and 2011 marked the consolidation of the entry of Chinese foreign direct in-vestment(FDI)in Brazil due to the major acquisitions by Chinese corporations primarily in the extractive industry3,but also in the power transmission segment4.A significant portion of the proj-ects and the
77、volume invested were concentrated in the three-year period from 2015 to 2017.This volume is the result of the intensification of diplomatic relations between Brazil and China in 2014 and 2015,when President Xi Jinping(2014)and Premier Li Keqiang(2015)visited Brazil and the countries signed 35 bilate
78、ral agreements for a total of US$53 billion in investment(Matoso,2015).In the said three-year period,the energy sector received the highest volume of investments,mainly due to State Grids acquisition of a majority stake in CPFL in 2017 for a total of US$12.5 billion.This deal marked State Grids entr
79、y into new segments of the Brazilian electricity sector outside the transmission subsector(Barbosa,2020;Pereira,2018).Other important projects worth highlighting are the installation of the Xingu-Rio transmission line by State Grid and the acquisition of the Jupi and Ilha Solteira hydropower plants
80、and the assets of Duke Energy and Triunfo Participaes by China Three Gorges(CTG).Numerous projects were also implemented in the manufacturing industry,namely in the technology,automotive and industrial machinery subsectors(Alvarenga,2015;Gandra,2017).The period that followed was marred by the anti-C
81、hina rhetoric adopted by Jair Bolsonaro during his election campaign in 2018.Although this did not affect bilateral trade relations,it did put a chill on political ties between Brazil and China.The growing diplomatic tension be-tween the two countries could be one of the factors that led to the decr
82、ease in the volume of investments in 2018.In 2019,however,pragmatism prevailed and major projects in the energy,extractive(oil)and infrastructure sectors began moving forward again.In 2020,very few projects were implemented due to the Covid-19 pandemic.Investment re-sumed in 2021,mainly in the servi
83、ce sector,especially those linked to information technology.1.2 Sectoral analysisIn relation to the number of projects,the manufacturing industry5 emerges as the leading sector,accounting for 54 of the 138 projects,primarily in the technology6 and automotive sub-sectors.The electricity sector comes
84、in second,responsible for 30 projects,followed by the extractive industry,with 17 projects,including several high-value projects in 2010 and 2011.3.Includes investments in mining and its subsectors,oil and gas.4.This sector includes the segments of generation,transmission,distribution and commercial
85、ization as subsectors.5.Generally,the activities in this category are carried out in industrial plants or factories.It includes subsectors such as technology,industrial machinery,automotive,home appliances,etc.6.Includes investment in telecommunications,information technology and also ones related t
86、o the energy transition,such as smart meters,parts and batteries for electric vehicles,solar panels,etc.13Figure 2.Figure 3.14Figure 4.In terms of the amount invested,the energy sector came in first,capturing 45.1%of the funds invested,which together totalled US$32.3 billion.In addition to the acqui
87、sition of CPFL men-tioned earlier,the biggest investments were the acquisition of the Jupi and Ilha Solteira hy-dropower dams by China Three Gorges,the construction of the Xingu-Rio transmission line by State Grid and the acquisition of the So Simo hydropower plant(Ribeiro,2018)by the Chinese consor
88、tium led by the State Power Investment Company(SPIC)7.The extractive industry comes in second,with a total US$25.98 billion in investments,representing 36.2%of the total.Here,we highlight the three acquisitions of the operations of European corporations Repsol,Statoil and Petrogal(Cardoso,2011)in 20
89、10 and 2011 by SINOPEC and Sinochem,for a total of approximate-ly US$15 billion.It is also worth noting the stakes that Chinese consortium formed by CNPC and CNODC won the bid for the Bzios oil field(Cardoso,2010;2011;Petrobrs,2020;Veja,2010).7.Besides the State Power Investment Company(SPIC),the co
90、nsortium includes Zhejiang Energy International Limit-ed and the Chinese funds ZLCFB-Hong Kong and CPD Energy.15Figure 5.When we analyse the evolution of annual investments by sector,we see that the extractive industry stands out because of the acquisitions in 2010 and 2011 in the oil sector and in
91、iron ore(Reuters,2010)and niobium(Baosteel,2011)mining.In 2013,Chinese companies began participating in and winning the bids for the pre-salt and post-salt blocks organized by the National Oil,Natural Gas and Biofuels Agency(ANP).As for the electricity sector,State Grid was responsible for all inves
92、tments between 2010 and 2012,which were concentrated in the transmission segment.Between 2010 and 2017,yearly investments were made in the transmis-sion segment;a total of 14 projects were implemented in this period.Investments in the power generation segment started a little later,in 2013,with CTGs
93、 investments in hydropower plants.CTG was responsible for all investments in power generation until 2016,which is when the entry of new companies and investments in renewable energy sources led to the diversification of this segment(CTG Brasil,2021)8.The manufacturing industry,for its part,received
94、multiple projects every year up until 2018,most of which were between 2013 and 2017.The number of projects peaked in 2015.Investments in the industrys infrastructure began later,in 2016,but have been constant since;projects were executed in 2017,2018 and 2019.8.There was an increase in investments i
95、n renewable energy,especially wind power.161.3 Types of companies and projects Of the total 138 projects identified in the mapping process,64 were implemented by Chinese SOEs and 74,by private corporations.Even though Chinese SOEs implemented fewer projects than private firms,the volume of investmen
96、ts from the SOEs was greater,on average.Some SOEs,such as State Grid,CTG,Sinopec and others,are the biggest companies in their segment at the global level.Figure 6.Figure 7.17Figure 8.Figure 9.18Of the 138 projects identified in the mapping,72 are greenfield investments and 66,brown-field9.In terms
97、of the amount invested,brownfield investments account for a much larger share of the total.The five biggest projects were acquisitions by large SOEs in the oil and gas and the electricity sectors.Of the 10 biggest greenfield investments,9 were made by SOEs.Figure 10.The main Chinese corporations in
98、terms of cumulative value were state enterprises from the energy and extractive sectors.Cofco is the only company from the agricultural sector.2.THE FLOW OF CREDIT FROM CHINA TO BRAZIL Another way Chinese capital enters Brazil is through the loans and financing provided by Chinese banks to projects
99、and companies in Brazil.Chinas main financial institution is the China Develop-ment Bank(CDB),which has been an important source of funding for Brazilian and Chinese corpo-rations over the past 15 years.It has offered credit in the form of project finance,lines of credit to Chinese corporations for
100、the expansion of their operations and loans,mainly for Petrobras.9.Greenfield projects involve the construction of new structures and facilities.Brownfield projects do not involve the construction of new structures;they are generally acquisitions.19CDB initiated its operations in Brazil in 2007 by g
101、ranting a loan to the Brazilian Development Bank(BNDES)for the construction of the GASCAC gas pipeline10 the longest stretch of the GASENE pipeline and providing most of the financing for the Candiota III coal-fired thermal power plant.Both projects were mentioned in the Brazil-China agreement signe
102、d in June 2006(Brasil,2007),which aimed to promote bilateral cooperation in the oil and gas and electricity sectors,including the implementation of infrastructure works in these sectors11.The bank later began offering credit for renewable energy and electric mobility.In 2012,it granted Desenvix a US
103、$56 million loan for the construction of the Barra dos Coqueiros wind farm,the first wind plant in the state of Sergipe(Barbosa,2020).Then,in 2016,it authorized a US$294 million line of credit to Build Your Dreams(BYD)to expand its production of electric buses in Brazil(MacauHub,2016).Both loans are
104、 tied to the promotion of Chinese renewable en-ergy and electric mobility technologies12 in Brazil.In addition,it granted a completion guarantee a kind of insurance for the So Manoel hydropower plant.China Three Gorges is a member of the consortium that is building the dam,which is located at the Pa
105、r-Mato Grosso border.While the loans for the projects above were quite large,the biggest ones were those granted to Petrobras between 2009 and 2017.CDB awarded six loans with a combined value of US$25 billion;all are linked to the bilateral cooperation agreements signed between China and Brazil.Some
106、 loans included provisions stipulating that Petrobras is to prioritize the supply of oil to certain Chinese companies and,in some cases,the condition that part of the financing had to be used to acquire the goods and services of these Chinese companies.These loans helped Petrobras finance the explor
107、ation of the pre-salt oilfields in an adverse international context,right after the 2008 global economic crisis,when oil prices were plum-meting.In 2009,CDB granted a US$7 billion loan(Petrobrs,2009)13,which was of strategic importance for China,as it was backed by oil:the loan agreement required Pe
108、trobras to supply 150,000 to 200,000 barrels per day to Sinopec over a 10-year period14.Two other loans15 backed by oil were granted in 2016 and 2017 for US$5 billion each and involved the preferential supply of 100,000 barrels per day(Reuters,2017).These loans were important,especially since they c
109、ame at the time of the Lava Jato Operation16,when Petro-brass market value dropped significantly and it was having difficulty obtaining funds from international creditors.10.The gas pipeline contributed to energy integration in the country by connecting two sets of regional pipeline net-works that h
110、ad been separate until then,thus increasing energy security in the north-eastern region.11.These projects were also included in the Growth Acceleration Programme(PAC for its acronym in Portuguese),whose main goal was to accelerate the implementation of the infrastructure necessary for the sustainabl
111、e develop-ment of Brazil.12.The wind turbines of the Barra dos Coqueiros Wind Farm were produced by the Chinese company Sinovel.13.The loan was originally for the amount of US$10 billion,of which US$3 billion were to be used to purchase oil equip-ment from Chinese companies.Petrobras decided not to
112、use this part of the loan.14.Libor rate+2.80.15.This financing is the result of the Term of Commitment signed between the parties announced on 26 February 2016 by Petrobras;both loans are part of the same agreement.16.The“Lava Jato Operation was a major corruption scandal involving several of the bi
113、ggest Brazilian corporations including Petrobras which served as the arena for corruption.20It is important to note that CDB has not granted new loans to Brazil since 2017 and to Latin America and the Caribbean in general since 2020.The Covid-19 pandemic and the deteriora-tion of these countries fin
114、ancial conditions contributed to this situation,as they made China more cautious and less willing to offer loans in the region.In addition to CDB,another important financial player is China Eximbank(CHEXIM).We identified only one loan granted in 2018 for the amount of US$1 billion to Petrobras,which
115、 was to finance the state enterprises acquisition of Chinese oil equipment(Petrobrs,2016a).This operation is part of Petrobrass financial strategy to diversify its sources of financing.Table 1.Flow of credit from China to Brazil 2009-2022YearRecipientChinese bankSectorAmount in millions of US$Oil-ba
116、cked loan?Purpose2009PETROBRASCDBOIL AND GAS7,000YES10-year plan to supply oil to SINOPEC(150,000 barrels per day in the first year and 200,000 barrels per day in the fol-lowing 9 years).2014PETROBRASCDBOIL AND GAS3,000NOBilateral Cooperation Agreement-First Tranche.The funds were used for the direc
117、t and indirect procurement of goods and services acquired in China.2015PETROBRASCDBOIL AND GAS3,500NOPetrobras Global Trading BV(PGT),an indirect subsidiary of Petrobras,signed an agreement for a 10-year US$3.5 billion line of credit with CDB.Includes clauses stip-ulating that 60%of the amount must
118、be spent on Chinese products and services.2015PETROBRASCDBOIL AND GAS1,500NOOil exploration not specifically men-tioned;debt financing;Bilateral Coop-eration Agreement-Second Tranche;includes a clause stipulating that 60%of the amount must be spent on Chinese products and services.2016PETROBRASCDBOI
119、L AND GAS5,000YESLoan secured by an agreement to supply China National United Oil Corp.,China Zhenhua Oil Co LTD and CHEMCHINA Petrochemical CO LTD with 100,000 barrels of oil per day.2017PETROBRASCDBOIL AND GAS5,000YESLoan secured by agreement with UNIPEC Asia Company for preferential supply of 100
120、,000 barrels of oil per day.2018PETROBRASCHEXIMOIL AND GAS1,000NOThis operation is part of Petrobrass strat-egy to diversify its sources of financing and is related to the purchase of Chinese products and services.Source:Elaborated by authors based on information from Petrobrass website and the Bost
121、on University Global Development Policy Centers databases.213.BRAZIL-CHINA BILATERAL TRADEAnother important area of Brazil-China economic relations is trade.Since Chinas accession to the World Trade Organization(WTO)in 2001,its trade with the rest of the world has grown significantly.South America h
122、as accompanied this trend,as reflected in the bilateral trade re-lations between Brazil and China.Since 2009,the Asian country has been Brazils main trading partner,accounting for 26.8%of Brazilian exports,22.25%of Brazilian imports and 22.3%of Brazils total trade with the world in 2022(Ministrio da
123、 Indstria,Comrcio Exterior e Servios,2022).These figures reveal Brazils strong dependence on China for foreign trade.In compar-ison,Brazils total trade with the United States and Argentina its second and third largest trading partners represented 14.6%and 4.7%in 2022,respectively(Ministrio da Indstr
124、ia,Comrcio Exterior e Servios,2023).Figure 11.Between January 2010 and December 2022,despite a few fluctuations,bilateral trade was on an upward trend.The bulk of Brazilian exports to China are commodities,concentrated in three products:iron ore,soy and crude oil.While these products account for a l
125、arge percentage of Brazilian exports in general,their share of the total is even greater when we examine Brazils exports to China separately.In 2022,for example,62.9%of Brazils iron ore exports,68.3%of its soy exports and 39.3%of its crude oil products went to China.For the rest of the world,these n
126、umbers are 8.6%,14%and 13%,respectively(Ministrio da Indstria,Comrcio Exterior e Servios,2023).These three items combined ranged from 75%to 80%of Brazils total exports to China annually between 2010 and 2022.22Figure 12.The revenues from the export of these products oscillate according to their pric
127、es on international stock exchanges,which are influenced by demand from China.From 2017 on,we have observed sustained growth of Brazilian exports to China overall.Figure 13.23Figure 14.Brazil mostly imports a wide range of manufactured products from China.The main items are:valves and tubes;organic-
128、inorganic compounds,telecommunications equipment and a series of other products for the manufacturing industry(Ministrio da Indstria,Comrcio Exterior e Servios,2023).Figure 15 24Figure 16Figure 1725Figure 18In general,China is currently the main market for Latin American and Caribbean commodi-ties a
129、nd the leading exporter of manufactured goods to South America,meaning that it is now found at both ends.This situation tends to maintain South American countries,especially the less industrialized countries,in the position of exporters of raw materials.At the same time,the manufactured goods export
130、s of more industrialized countries in the region,such as Brazil,are losing their share of the interregional market due to growing competition from China(Severo,2021).This asymmetric economic interdependence tends to lead to the reprimarization and deindustrialization of the Brazilian economy in the
131、medium and long term.4.DIPLOMATIC RELATIONS AND AGREEMENTS SIGNED BETWEEN BRAZIL AND CHINA:AN OVERVIEWAfter presenting quantitative data on economic relations between Brazil and China,we now delve into the political-diplomatic relations that accompanied and,at times,favoured the entry of Chinese inv
132、estments in Brazil during the period of this study,as we will show below.We will discuss state visits,their contexts and the agreements signed since 2010,while seeking to identify,whenever possible,when diplomatic relations facilitated the entry of Chinese investments in specific sectors.26Diplomati
133、c relations between Brazil and China were established in 1974 when the Ernesto Geisel and Mao Zedong governments opened embassies in Beijing and Braslia,respectively.Since then,over 90 meetings of heads of state and state representatives from both countries have been held,of which more than 60 have
134、taken place from 2010 onwards(Brasil,2014a).In 1988,under the Jos Sarney administration(1985-1990)in Brazil,the bilateral partnership between the countries led to the agreement on the ChinaBrazil Earth Resources Satellite programme(CBERS),a technological cooperation programme for the production of E
135、arth observation satellites(Brasil,2014a).Then,in 1993,during the Itamar Franco administration(1992-1995),a“Strategic Partnership”agreement between both countries was signed.However,it was during the first mandate of the Lula da Silva administration(2002-2006)that relations between Brazil and China
136、intensified significantly.In 2004,the Sino-Brazil High-level Commission for Coordination and Cooperation(COSBAN)was created(Brasil,2014a).Its first meeting was held in 2006.In 2009,China became Brazils main trading partner.In addition to the bilateral sphere,Brazil and China also sustain ties in spa
137、ces of multilateral cooperation,such as the WTO,G20,BRICS and BASIC a bloc formed by Brazil,South Africa,India and China for joint coordination efforts on environmental issues(Brasil,2014a).In 2010,the two countries strengthened their ties by signing the Brazil-China Joint Action Plan 2010-2014.Draw
138、n up under the aegis of the COSBAN,the five-year plan defined strategic guidelines and goals and promoted dialogue between specific sectors in order to develop a“bilateral strategic partnership and cooperation in key areas”(Brasil,2010,pp.1).The following year,in 2011,after Minister of Foreign Relat
139、ions Antnio Patriotas trip to China,President Dilma Rousseff made a state visit to the Asian country to attend the 3rd BRICS Summit,among other events.On the occasion,the Brazilian and Chinese governments signed six documents,including five memoranda of understanding for cooperation in several secto
140、rs,such as water resources,science and technology and defence(Brasil,2011a).They also decided to draft a Brazil-China Ten-year Cooperation Plan(Brasil,2012),which,together with the Joint Action Plan,aimed to identify priority areas and key projects to be explored bilaterally.Also that year,as part o
141、f the efforts to take Brazil and Chinas strategic partnership further,the Minister of Commerce of the Peoples Republic of China Chen Deming visited Brazil to chair the meeting of the COSBAN Commercial-Economic Subcommittee and participate in the China-Brazil Business Seminar.During his visit,Deming
142、was accompanied by a sizeable delegation of businesspeople made up of representatives from various sectors,such as infrastructure,agriculture,energy,automotive and railway,among others(Brasil,2011b).In 2012,the 2nd COSBAN Meeting was held in Braslia,the first one since 2006.It was the first of four
143、meetings held in the 2010s,a sign of the growing importance of relations between Brazil and China.In his speech,then-Vice President Michel Temer revealed plans to diversify trade and investment flows(Temer,2012).Also that year,Chinese Premier Wen Jiabao visited Brazil for the Rio+20 Conference.In a
144、meeting with President Dilma Rousseff,the leaders signed agreements in the science and technology,energy,mining,infrastructure and transport sectors,among others,on the occasion of the celebration of the Ten-Year Cooperation Plan 2012-2021(ABC,2012).Furthermore,the leaders announced that bilateral r
145、elations would be 27raised to the“Global Strategic Partnership”level and the creation of the“Foreign Ministers Global Strategic Dialogue”.In 2013,no new agreements were signed.Even so,Brazilian and Chinese heads of state met twice at the 5th BRICS Summit and the 8th G20 Summit.Brazilian officials al
146、so paid a formal visit to China to discuss partnerships in the infrastructure sector,mainly railways(Brasil,2013),and the 3rd COSBAN Meeting was held in Guangzhou.The following two years were marked by the resumption of efforts to build closer ties between China and the countries of Latin America an
147、d the Caribbean.In 2014,the First Global Strategic Dialogue was held in Brazil in which Chinese Foreign Minister Wang Yi participated.Later that year,President Xi Jinping visited Brazil for the first time for the 6th BRICS Summit.On this occasion,32 agreements were signed in several areas such as,fo
148、r example,cooperation agreements in the Brazilian railway and electricity sectors,which included State Grids participation in the construction of the high-voltage transmission line for the Belo Monte hydroelectric dam;agreements between the BNDES,China Eximbank,CDB and the China Investment Corp on t
149、he expansion of credit for exporters and investors,and one with Build Your Dreams(BYD)for the production of rechargeable batteries and energy storage systems in Brazil(Jub and Peres,2014;Uol,2014).Moreover,an agreement on the creation of the New Development Bank(NDB),also known as the BRICS Bank,was
150、 signed(Brasil,2014b).In addition,the creation of the China-CELAC Forum was announced to celebrate the increasingly close ties and cooperation between the countries involved.This new space of dialogue was inaugurated in 2015 during the 1st Ministerial Meeting of the China-CELAC Forum in Beijing.Ther
151、e,leaders signed documents related to the forums institutionalization,as well as a cooperation plan between China and Latin American and Caribbean countries for the 2015-2019 period(Brasil,2015a).In 2015,the Premier of the Peoples Republic of China,Li Keqiang,also visited Brazil to make the signing
152、of a new Joint Action Plan for the 2015-2021 period official(Brasil,2015b).Another 35 bilateral agreements were also signed,including a memorandum of understanding on cooperation and the promotion of trade and investment between the Brazilian Trade and Investment Promotion Agency(ApexBrasil)and BYD;
153、and cooperation agreements between Petrobras and three Chinese banks the China Development Bank(CDB),China Eximbank and ICBC Leasing on financing(Brasil,2015c).As a result of these agreements,in 2016,Petrobras and CDB signed terms of commitment on US$10 billion in financing(Petrobrs,2016b)and Petrob
154、ras and Eximbank signed another one for a US$1 billion loan(Petrobrs,2016a).In 2015,the 4th COSBAN Meeting and the 7th BRICS Summit were held.28Table 2.Key initiatives during the Lula and Rousseff administrations(2010-2015)2010201220142015Signing of the Brazil-China Joint Action Plan 2010-2014Signin
155、g of the 10-Year Co-operation Plan 2012-2021Agreement on State Grids participation in the Belo Monte transmission lineSigning of the Joint Action Plan 2015-2021Signing of the agreement on the creation of the New Development BankFinancing agreements between Petrobras,CDB,China Eximbank and ICBC Leasi
156、ngThe year 2016 was marked by a change in government in Brazil brought on by the impeach-ment of President Dilma Rousseff(2011-2016)and Michel Temer assuming the presidency in her place(2016-2018).The new administration redirected the focus of Brazils foreign policy to-wards building closer ties wit
157、h its traditional partners,such as the US and the European Union,and a more pragmatic relationship with China.As a result,few agreements were signed that year.Finance Minister Nelson Barbosa visited China to participate in the G20 Finance Ministers Meeting.Then,Michel Temer also visited the Asian co
158、untry,this time as the president,to partic-ipate in the Brazil-China High-level Business Seminar promoted by ApexBrasil and the Ministry of Foreign Affairs,held prior to the 11th G20 leaders summit in Hangzhou.The business seminar was attended by the ministers of foreign relations;transport,ports an
159、d civil aviation;agricul-ture,livestock and food supply,and finances,as well as representatives of 30 companies and organizations,such as the Associao Brasileira de Protena Animal(Brazilian Animal Protein Association),BRF,BBM Bank,Confederao Nacional dos Transportes(National Confederation of Transpo
160、rt),Marfrig,Minerva Foods,Seara and Vale(Apex-Brasil,2016;Brasil,2016a).The 8th BRICS Summit also took place that year in Goa,India,during which countries signed memo-randa of understanding on agriculture and on cooperation between ministries of foreign affairs and between national development banks
161、 and the NDB(Brasil,2016b).In 2017,President Michel Temer paid another visit to China to attend the 9th BRICS Sum-mit,during which he signed 22 agreements in a range of sectors.These include one between the Ministry of Mines and Energy and State Grid regarding the licensing of phase 2 of the high-vo
162、ltage transmission line for the Belo Monte hydropower plant;a financing contract with the China Communication and Construction Company(CCCC),which was to invest US$700 million in the construction of a private terminal in the Port of So Lus,and an agreement between the BNDES and CDB defining the para
163、meters for the establishment of a US$3 billion line of credit(Brasil,2017).Starting in 2018,the number of agreements signed between Brazil and China began to de-cline.The 2018 elections in Brazil were marked by uncertainties about relations with China stemming mainly from the hostile positions of th
164、en-candidate Jair Bolsonaro,who had aligned 29himself with the Donald Trump administration in the US.Early that year,Brazilian Ambassador Marcos Galvo participated in the 2nd Ministerial Meeting of the China-CELAC Forum during which the inclusion of Latin American and Caribbean countries in the Belt
165、 and Road Initiative(BRI)was discussed(Neves,2018).During the 10th BRICS Summit also held that year,the coun-tries agreed to set up a NDB regional office in So Paulo(Agncia Brasil,2018).Despite the belligerent rhetoric towards China,in 2019,Jair Bolsonaros first year in office,several high-level mut
166、ual visits were made.That year,Brazilian Vice President Hamilton Mouro went to China for the 5th COSBAN Meeting.This was followed by Chinas Foreign Affairs Min-ister Wang Yis trip to Brazil for the 3rd Global Strategic Dialogue Meeting.Also in 2019,at the invitation of President Xi Jinping,President
167、 Jair Bolsonaro made his first visit to China,during which eight agreements in the infrastructure,agriculture,education and energy sectors were signed,including ones on research and development on clean energy and the operating licence agreement that authorizes the State Grid corporation to begin op
168、erating the transmission line between the Xingu hydropower plant and Rio de Janeiro(Verdlio,2019a).President Xi Jinping then travelled to Brazil for the 11th BRICS Summit,which led to the signing of nine cooperation agreements,including a memorandum of understanding on strengthening cooperation on i
169、n-vestment-related matters(Verdlio,2019b).That was also when the State Power Investment Corporation,Prumo Logstica Global and Siemens signed a memorandum of understanding on cooperation on investments in and the development,construction,ownership and operation of natural gas power plants in Brazil(S
170、iemens,2019).Since the outbreak of the Covid-19 pandemic in 2020,few meetings have been held between Brazilian and Chinese government officials,and the ones that did take place were organized online.The 12th BRICS Summit and the 15th G20 Summit,held in 2020,and the 13th BRICS Sum-mit and the 16th G2
171、0 Summit,in 2021,did not lead to the signing of new cooperation agree-ments between Brazil and China.The Joint Action Plan 2015-2021 and the Ten-Year Cooper-ation Plan 2012-2021 also ended that year.In 2022,the 6th COSBAN Meeting was held online,the first one since 2019.On this occasion,the Brazilia
172、n and Chinese governments announced that they had concluded the negotiations for the 2022-2031 Strategic Plan,which contained long-term guidelines for bilateral relations,and the 2022-2026 Executive Plan,which specified concrete objectives to be achieved during the said period.In 2022,the 16th BRICS
173、 Summit was held online and no new agreements were signed.30Table 3.Key initiatives of the Temer and Bolsonaro administrations(2016-2022)201720192022Agreement with State Grid on the licensing of phase 2 of the Belo Monte hydropower plant transmission lineOperating license agreement,which authorizes
174、State Grid to operate the Belo Monte-Rio de Janeiro transmission lineStrategic Plan 2022-2031A US$700 million financing contract signed with CCCC for investment in the construction of a terminal in the Port of So LuisExecutive Plan 2022-20265.PUBLIC POLICIES AND LAWS ON FOREIGN INVESTMENT IN BRAZIL:
175、WHAT IMPACT HAVE THEY HAD ON INVESTMENT FROM CHINA?We analysed above the visits between heads of state and the main diplomatic initiatives between Brazil and China,some of which helped stimulate Chinese investments in Brazil.In this section,we will present the most important public policies,programm
176、es and legislation on foreign investment in Brazil and assess if and to what extent they facilitated the entry of Chinese investments.We will use the policy measures identified in the Investment Policy Hub platform of the United Nations Conference on Trade and Development(UNCTAD)17 as a basis and an
177、alyse the laws and programmes of the Dilma Rousseff(2011-2016),Michel Temer(2016-2018)and Jair Bolsonaro(2019-2022)administrations.The information is summarized in tables 4,5 and 6 in the appendix.The data show that during President Lulas second term in office(2010)and the Rousseff government,the go
178、vernment adopted investment-related public policies and legislation focused on stimulating industrial activities:these ranged from tax cuts or exemptions and loan programmes for car or ethanol production to incentives for the exploration and production of oil in the pre-salt fields.In the case of oi
179、l,the government established a production-sharing model in which state enterprise Petrobras was guaranteed a minimum share in the operation.These measures differ from those adopted during the Michel Temer and Jair Bolsonaro governments,which both favoured market liberalization and privatization,lead
180、ing to the denationalization of certain sectors such as oil and infrastructure.There are,however,initiatives showing a certain continuity throughout the Rousseff,Temer and Bolsonaro administrations,such as the ongoing 17.https:/investmentpolicy.unctad.org/investment-policy-monitor/30/brazil.Accessed
181、 March 2023.31privatization of airports and the gradual opening of airline companies to foreign capital.Some public policies during the Dilma Rousseff and Michel Temer administrations did,in fact,facilitate the entry of Chinese companies,particularly in the health,automotive,airport and oil industri
182、es.In the Bolsonaro government,however,policies aimed at promoting privatizations and concessions in the areas of infrastructure and energy,which had been important sectors for Chinese investors,did not end up attracting investments from the Asian country.For example,in the case of the“Infra Week”pr
183、ogramme,in which the government auctioned off a series of concessions for roads,ports and airports,the absence of Chinese investors,who had previously announced their interest in investing in the West-East Integration Railway,was notable.Executives of CREC and CCCC,Chinese companies that formed a co
184、nsortium with Bahia Minerao(Bamin),had declared their interest in this project during a visit in 2018(Rittner,2021),but because of Brazilian authorities growing hostility towards China during the pandemic,their interest waned and the Chinese did not attend the event.We would like to highlight a few
185、public policies,programmes and laws that facilitated the entry of Chinese investments in Brazil.In the oil sector,after the enactment of the law that created the production sharing model for the exploration and production of oil in the pre-salt region in 2010,a consortium formed by Chinese SOEs Chin
186、a National Petroleum Corporation(CNPC)and China National Offshore Oil Corporation(CNOOC)won the bid for the Libra oil field in 2012.Then,in 2015,Brazil signed cooperation agreements between Brazil and China that involved US$7 billion in financing for Petrobras from the China Development Bank(Chagas
187、and Branco,2015).After the political crisis that led to the impeachment of Dilma Rousseff,one of President Michel Temers first measures was to alter the pre-salt law to open up the offshore oil fields to foreign investors.His amendment eliminated the mandatory participation of Petro-bras in oil expl
188、oration and production consortia for this region,but this did not prevent Petro-bras from taking part in several auctions.In 2019,Chinese SOEs CNODC and CNOOC won the auction for the Buzios block,in consortium with Petrobras,which had expressed interest in par-ticipating(Reuters,2019a).In 2021,the N
189、ational Oil,Natural Gas and Biofuels Agency(ANP)held an auction for the Spia and Atapu oil fields,in which Petrobras exercised its preference right to participate.The Spia contract went to the consortium formed by the French corpora-tion TotalEnergies,the Malaysian state-owned enterprise Petronas an
190、d Qatar Petroleum Brazil,and Atapu went to Shell and TotalEnergies,both in consortium with Petrobras(Malar,2021).Other oil auctions,held after the new legislation had been passed,were won by different Chinese companies,in some cases in partnership with Petrobras.Chinese-owned CNOOC,to-gether with QP
191、I and Shell,won the bid for the Alto Cabo Frio Oeste field in 2017(Souza,2017a)and the ES-M-592 Block in sector SES-AP2 of the Esprito Santo basin(Souza,2017b).CNODC partnered with Petrobras and BP to win the auction for the Peroba field(CEBC,2018).The REC-T-126 and REC-T-127 Blocks in the Recncavo
192、basin,in Bahia,were acquired by the joint venture between Chinese HLJW and Brazilian TEK leo e Gs(Fraiha,2017).CNOOC in partnership with BP and Ecopetrol are operating the Pau-Brasil Block(Estado de Minas,2018).Finally,CNOOC won 20%of the Aram field in consortium with Petrobras in the 6th auction he
193、ld by the ANP;Petrobras owns 80%(Jornal do Brasil,2019).32As for the automotive sector,it benefitted from tax reductions and exemptions in 2011 and 2012 and has attracted several investments from China.In 2013,Lifan Motors built a parts distribution centre in Salto,So Paulo,and Foton Aumark opened a
194、 truck factory(Reis,2020).In 2014,Chery announced the inauguration of a factory in Jacare,So Paulo and an assembly plant in Anpolis,Gois(O Globo:G1,2014),and China Automotive Systems began to build an auto-parts factory in So Paulo(Extra,2014).In 2015,BYD Motors established an electric bus factory i
195、n Campinas(BYD Servopa,2023).The Chongqing Shineray motorcycle manufacturer joined the Suape Port Industrial Complex(Automotive Business,2015a),and Metro-Shacman and Shaanxi Automobile Group formed a joint venture to build trucks in Brazil(Automotive Business,2015b).Finally,in 2016,ChemChina acquire
196、d 26.2%of the Pirelli Group,which has factories in Santo Andr(SP),Campinas(SP),Feira de Santana(BA)and Gravata(RS)(Munhoz,2016).In the following years,several projects were announced but never implemented18.In 2022,the Chinese company Great Wall Motors stated it would start production in the interio
197、r of the state of So Paulo(Moreno,2022).The privatization of airports facilitated the entry of Chinese investors at first.In 2011,Chinas Hainan HNA Infrastructure took over as the main shareholder of the International Airport of Rio de Janeiro(Riogaleo)a position previously held by Odebrecht by acqu
198、iring 51%of the consortiums private shares(CNT,2017).Later auctions held in 2012,2017 and 2021 attracted investors of European origin and other nationalities,but not from China.The opening of other sectors raised Chinese investors expectations,but they did not come to fruition.In the healthcare sect
199、or,in 2015,the government authorized foreign companies to operate services that are complementary to the public health system.This led several Chinese groups to visit Brazil:the government of the state of Cear and the China Meheco Corporation signed a memorandum of understanding with the China Devel
200、opment Bank(CDB)in 2017 to raise US$4 billion for the healthcare sector.Later,in 2019,the governor of Cear visited China and signed an agreement on the supply of equipment and the establishment of facilities by Chinese corporations(OPovo,2019).In 2017,then State of So Paulo Governor Geraldo Alckmin
201、received a delegation of medical experts sent by the Chinese government to discuss plans for the first Chinese hospital in Latin America(Governo de So Paulo,2017).Also that year,the privately owned Chinese group Fusan initiated a round of negotiations with hospital networks in So Paulo,Bahia,Paran a
202、nd Pernambuco(Exame,2017).Although the agribusiness sector is at the centre of trade relations between Brazil and China,credit measures and tax incentives offered in the ethanol sector proved ineffective.Despite announcements of intentions to invest such as China National Heavy Machinery Corporation
203、s disclosure of its plan to set up a corn-based ethanol plant in Mato Grosso in 2013 no investments were made(Alves,2013).Similarly,in 2015,the BBCA Group reported that it would invest in a corn and soy processing plant in Mato Grosso do Sul(Maracaju),with financing from CDB,but the project has stil
204、l not been completed(Oliveira,2017).18.For example,in 2017,Jac Motors announced its plans to build a factory in the state of Gois,starting in 2019,but it has never confirmed the investment(Estado,2017).33Finally,the opening of airline companies to foreign capital,initiated during the Dilma Rous-seff
205、 administration and finalized in 2019 by the Jair Bolsonaro government,has led a number of transnational corporations to enter the aviation sector in Brazil.Air China announced its inten-tion to operate in Brazil(Bouas,2019).Also,the Jair Bolsonaro governments announcement of the privatization of th
206、e state-owned energy company Eletrobras which has yet to go to auction raised the expectations of Chinese groups,such as State Grid,CTG,Power China and CGGC,which are the main investors in the electricity sector in Brazil(Reuters,2019b).346.THE DYNAMICS AND IMPACTS OF CHINESE INVESTMENTS IN THE TERR
207、ITORIES:THE CASE OF THE INDUSTRIAL PARK OF MANAUSWe have thus far discussed the evolution of Chinese investments in Brazil while observing trends in credit and trade flows and the political and diplomatic relations that accompany and sometimes support economic relations between the two countries.We
208、then examined the public policies on foreign investment in Brazil adopted during the Dilma Rousseff(2011-2016),Michel Temer(2016-2018)and Jair Bolsonaro(2019-2022)administrations to assess to what extent these policies facilitated Chinese investors entry in Brazil.Our analysis sought to provide a ge
209、neral overview from the“upper floor”:capital flows,transnational corporations,intergovernmental institutions and national public policies.But what happens when the projects,investments and public policies are implemented in the territories?What dynamics,impacts and consequences do they generate?Whil
210、e mapping these investments,we came across projects that can be classified in four broad categories.The first one refers to projects in which a Chinese company obtained the right to engage in an economic activity by winning an auction.This is very often the case for electricity transmission and oil
211、and gas projects.In regards to the former,since State Grid entered the Brazilian electricity sector in 2010,it has been accumulating investments in the subsector and with them,a growing amount of strategic assets.35The second category includes the major acquisitions by Chinese state-owned enterprise
212、s in the electricity sector(the generation,transmission and distribution subsectors),the extractive industry(oil and gas and mining)and agriculture.These were some of the biggest investments registered during the period analyzed.In the third category,we find investments in the manufacturing industry
213、.There are many of them,albeit with a low average value,and they are concentrated in southeastern Brazil,namely the state of So Paulo,but also in the Manaus Free Trade Zone.Finally,the fourth category refers to greenfield projects in the power generation and port infrastructure sectors,whose install
214、ation caused serious socio-environmental impacts.Three concrete examples of projects backed by investment or financing from China that had socio-environmental impacts are the Port of So Lus,the So Manoel hydroelectric dam and the Barra dos Coqueiros wind farm.In the case of the So Manoel dam,built b
215、y the consortium formed by China Three Gorges and other partners,there were two main kinds of impacts:environmental and socio-cultural.In relation to the first,water quality deteriorated and biological diversity was lost,as reflected by the decline in the number of fish.This had a direct impact on t
216、he autonomy,food security and health of the indigenous peoples of the affected region(ISA,2018).As for the second,the installation of the dam resulted in the destruction of sacred sites of the Munduruku people,such as the Morro dos Macacos(“Dekokaa”).To this,one should add the displacement of urns a
217、nd archaeological artifacts,which affected the mental health of the Munduruku people,as it caused them severe anguish and anxiety(Frum Teles Pires,2017).Financed by the China Development Bank,the Barra dos Coqueiros wind farm was established in an area where the local context was complex and marked
218、by several problems.There,quilombola communities,artisanal fisherfolk and family farmers have been suffering from the impacts of the installation of the Ignacio Barbosa Sea Terminal in Sergipe on their way of life(O Globo:G1,2015;Mapa de Conflitos,2022).Furthermore,the wind farm was built in an area
219、 of fixed dunes located in a permanent protection zone.During construction,the dune system typical of the zone was deforested,having major impacts on the local fauna and flora.The development of the Port of So Lus,in which the China Communications Construction Company owns shares,was part of the Pla
220、no Arco Norte(Northern Arch Plan)implemented in 2016(Toyama,2022).The general objective of this plan was to make the transport of Brazilian commodities to China more efficient by building port infrastructure in northern Brazil to reduce the cost of logistics.This project has been directly affecting
221、the Cajueiro community whose origin dates to the 19th century.Despite evidence of irregular land ownership,possibly involving land grabbing practices,the community has been suffering from forced evictions to make way for the construction of the port.These works have also been fueling deforestation i
222、n the area(Bourscheit,2019;Toyama,2022).366.1.The Chinese production model in the Amazon:labour rights in the Industrial Park of ManausIn the case of the Amazon,there are two areas of Chinese interests that indicate that China is attempting to implement part of its Belt and Road Initiative in one of
223、 the most coveted regions of the planet.The first one is related to Chinas advances in the areas of infrastructure,food and raw materials.The main projects in this process are:the creation of the Tapajs River Logistics Corridor to establish a grain route between Brazil and China with lower operating
224、 costs,which involves the construction of railway lines,highways and port infrastructure;works to directly link the city of Manaus to Suriname(where almost 10%of the population is of Chinese origin);mineral prospecting in the Amazon,primarily gold,tin,aluminum,iron,copper and manganese,many of which
225、 are located in indigenous territories or environmental protection areas;the construction of hydroelectric power plants and dams,headed by the Chinese state-owned giant China Three Gorges,and the acquisition of land by Chinese companies19.Another area in which Chinese companies have advanced is the
226、manufacturing sector,where the initiatives serve the interests of both state-owned and private enterprises,which produce durable consumer goods.These business ventures seek to achieve two of Chinas goals:to position its SOEs so they can better compete with traditional electrical and electronics comp
227、anies and to open up production and market space to a capitalist class that wants to take part in the boom in Chinas expansion.This is the reason for the current race to capture part of Brazils domestic market sales and to export to neighbouring countries.The Chinese also intend to control the expor
228、t of inputs used by the Brazilian industry,which is fundamental for competing on the global manufacturing market.Therefore,the Amazon re-emerges as an important space to host a free-trade zone,especially the city of Manaus because of its special taxation system and industrial park,which is where the
229、 factories of most of the companies that build motorcycles,televisions,laptops,smartphones,air conditioners and watches,among other items,in Brazil are located.Manaus is also home to a specialized workforce that has decades of experience in manufacturing these products at a lower cost.There is also
230、the fact that China wants to enter a market that has been dominated by its competitors from the West,such as Europe and the United States,and its Asian neighbours,namely Japan and South Korea.19.There has been a great deal of local opposition to these projects,especially from the indigenous and rive
231、rine peoples who have already been affected or who will suffer material and cultural damages because of these works,as studies by Moreno(2015)and Aguiar(2017)have shown.37The Manaus Free Trade Zone:contexts,its creation and limitsManaus is the capital of the state of Amazonas and one of Brazils bigg
232、est cities in terms of both its population(2.1 million inhabitants)and economy(of all Brazilian capitals,it has the 8th largest gross domestic product).It is also known for being located in the region with the greatest biodiversity on the planet:the Amazon.An example of this is the emergence in Mana
233、us of an industrial region Manaus Free Trade Zone(MFTZ)20 as the result of the transformation of capitalism in Brazil.History of the Manaus Free Trade ZoneCreated on 28 February 1967 by the industrial policy of the Brazilian military dictatorship,the MFTZ was one of the first free trade zones implem
234、ented in the world.It was the result of a combination of various interests at both the national and international level.At the international level,it catered to the capitalist need to create markets and new consumers at a time when several countries were pursuing protectionist policies.It was also m
235、eant to mobilize and accommodate capital by freeing it from union pressure and labour costs in developed countries.At the national level,a key factor was the partial conversion of the state to liberalism,which sought to attract foreign investment,on one hand,while continuing to pursue an industriali
236、zation process based on an import substitution policy,on the other hand(Valle,2007;Serfico,2011).In this context,the Brazilian state bureaucracy was in favour of opening up part of the national territory to global capital,while keeping other regions“closed”(Silva,2013).This went hand-in-hand with th
237、e debate about what to do with the Amazon,which the Brazilian military saw as the target of international greed.Regionally,the Amazonian economy was stagnant at the time,as it was based on the extraction of forest products.In parallel to this,the local elite in Manaus felt abandoned.This can be expl
238、ained by the fact that the region had experienced national and even international prominence in the late 19th-early 20th century,a time when rubber extracted from rubber trees accounted for approximately 50%of Brazils total exports.For the elite,then,the creation of the MFTZ was to be the“domesticat
239、ion of the forest”(Silva,2013)and bring local political and economic“redemption”(Serfico,2011).Amazonas became home to the MFTZ.Its main“competitive advantage”was a different tax policy from the one applied in the rest of the country,as it offered tax and non-tax incentives to companies implementing
240、 projects in this special economic zone:for instance,up to 88%reduction of the import tax on inputs for industrialization processes;exemptions from the industrialized products tax;75%reduction of corporate income taxes,and land for the 20.https:/www.gov.br/suframa/pt-br/zfm.Accessed March 2023.38ins
241、talment of operations offered at a symbolic price.This served the interests of global capital,which sought to avoid both labour costs and taxes.For the local elite,the justification was a reduction in the“Amazonian costs”21.According to the original plans for the MFTZ,it was to be developed as a com
242、mercial,an agricultural and livestock and an industrial hub.However,in practice,only the commercial/industrial hubs got off the ground,especially the latter,which became known as the Manaus Industrial Park(MIP)22.Since then,in the MIP,there has been a proliferation of factories from a wide variety o
243、f industrial sectors from all over the world.However,the military governments industrial policy did not lead to public policies that generated more benefits for workers.As we will see below,the main benefits won by the working population of the capital of Amazonas are the result of the social class
244、struggle against the forces of capitalism,and not the actions of the federal government.As such,workers are at the mercy of the comings and goings of manufacturing companies,on one hand,and suffer from the lack of educational programs,housing and sanitation policies and professional or technical tra
245、ining opportunities,on the other.Changes to work in the Manaus Industrial ParkThe type of labour and the relationship between companies and workers have undergone important changes throughout the existence of the MFTZ and its industrial park.These changes are due to the type of capital that has arri
246、ved in Manaus over the last few decades.In the 1970s and 1980s,capital from the United States,Europe and Japan dominated the MIP and as a result,work tended to be highly Taylorist meaning strict hierarchy,little employee training and the simplification of tasks required to assembly the equipment.It
247、was around this time that the unions appeared and organized major protests against capital(Spindel,1987;Valle,2007).In the mid-1990s,the“Asian tigers”arrived,led by South Korean companies.This marked the beginning of a new cycle of investments.During this period,the Japanese management model was imp
248、lemented in the MIP.Its main pillars were“participatory management”,“just-in-time”,the“culture of quality”,“collaboration”,“workers skills”and“multi-skilled and multi-functional workers”(Scherer,2005;Valle,2007).At the end of that decade and the dawn of the new millennium,as a result of strong union
249、 pressure,workers obtained more benefits and a share in company profits and results.In relation to management style,the Japanese model was consolidated through the adoption of worker participation policies,bonuses and forms of worker“recognition”by companies as a way of alienating their employees fr
250、om the unions and raising productivity.21.Lack of roads and railway lines connecting the region to the rest of Brazil and the distance from the biggest con-sumer market:the south-eastern region of the country.22.https:/www.gov.br/suframa/pt-br/assuntos/polo-industrial-de-manaus.Accessed March 2023.3
251、9Starting in the early 2000s,a new investment matrix emerged in Manaus from China.Over 20 state-owned,semi-state and private factories arrived in the area.By 2017,they were responsible for around 10%of all jobs in the MIP.Chinas presence in Manaus and the“New Tropical Silk Road”Chinas presence in th
252、e Industrial Park of the Manaus Free Trade Zone began even before the factories themselves arrived.Two specific moments marked this process.The first one is linked to the role China has played in the MFTZ since the 1990s as an exporter of inputs to the factories in the Amazon.In view of the new dire
253、ctions in globalization and the changes in the international division of labour,these factories began to turn to the Asian country as a source of inputs produced at large scale,low-cost facilities in China that constantly incorporated technology in production processes(Pires,2009).Responsible for ov
254、er 90%of Amazonas imports,the Manaus Industrial Park(MIP)was strongly influenced by Chinese production and significantly increased the total amount of inputs that it imported from China in the 1990s and 2000s.In 2004,China assumed the first-place position and was the source of more than 28%of all in
255、puts purchased by Amazonas abroad.In 2015,its share rose to 47%,making Amazonas one of the Brazilian states with the highest average imports from China.The second moment was the arrival of Chinese investments in the MIP.As MFTZs model is dependent on foreign investments,government bodies and busines
256、s associations from Amazonas have made efforts to attract Chinese capital.State representatives have been participating in trade fairs in China by sending missions to the Asian country in an attempt to“advertise”the regions potential and opportunities.An example of this was their participation in th
257、e electronics trade show in Guangdong and Hong Kong,and the hosting of Chinese delegates who came to Manaus to explore local opportunities.In the vision of the then-Secretary of Planning of Amazonas,these government and business initiatives have been fundamental because“for the Chinese,the Amazon is
258、 the new frontier for exploration.And when they identify these opportunities,they really do come and set up operations”23As a result of Amazonas attempts to attract foreign investors and in the context of Chinas ongoing expansion into several parts of the world,Chinas stake in the MIP has gradually
259、increased since the late 1990s and become more visible in the post-2008 crisis period.Chinas average share in the MIP jumped from a little over 2%to about 10%from 2008 to 2017,thus surpassing countries such as Germany,France,Finland and Canada.This increase was the result of a series of acquisition
260、of companies previously owned by these countries,such as Lenovos purchase of IBM,Motorola and CCE;TPV Technologys acquisition of Philips(video 23.Former secretary.Interviewed by the author.40sector)and the joint venture between the Chinese-based Midea and the US firm Carrier,which together began man
261、ufacturing the Toshiba and Springer brands,to mention only a few of the more recent examples.By 201724,Chinese investors owned a total of 22 factories in Manaus,of which 13 were in the electronics subsector(televisions,laptops,smartphones),three in the mechanical subsector(air conditioning,watches,h
262、ome appliances),two in the thermoplastic subsector(packaging,auto parts,adhesive tape)and four in the two-wheeler subsector(motorcycles,bicycles).Figure 19This shows how Chinese investments are spread across several subsectors in the MIP.In relation to the workforce,in 2017,these Chinese companies e
263、mployed around 10,000 workers,which represented approximately 10%of the entire labour force in the industrial park25.The arrival of Chinese capital is still seen,even today,as a kind of ghost that haunts the region.At the global level,the literature refers to the Chinese presence as the deployment o
264、f“bloody Taylorism”,“managerial despotism”,a“Trojan horse”and“Chinese enclaves”.At the national level,reports claim that 42%of the employees of Chinese companies in Brazil quit their jobs within their first year of employment.Regionally,leaders and managers used to say that“the Chinese dictatorship
265、was coming”,“the Chinese wanted to enslave people in Manaus”and“the Chinese would not adapt to the MFTZ”.24.The most recent data are from 2017.In its attempt to reduce costs,the Brazilian agency responsible for these spe-cific data stopped publishing them.25.Direct employees,excluding temporary work
266、ers or employees of outsourcing companies.ElectronicFactories by subsectors59%Mechanical14%Thermoplastic9%Two-wheeler 18%41Below we present the results of a field research on four Chinese factories in the MIP:ChinaBoard(private),TVChina(private),MotorChina(partially state-owned)and ArconChina(centra
267、l state-owned).The methodology used consisted of factory visits and interviews with managers,Chinese expatriates,factory workers and administrators,employees of the labour court system and trade union leaders,as well as document analysis and literature review This part of the report has benefited fr
268、om Cleiton Britos doctoral research carried out from 2013 to 201626.The interviews and discussions have been revisited for the purposes of this report and to compare the Manaus Free Trade Zone with Chinese Special Economic Zones in Africa,particularly in South Africa.The trade unions view of Chinese
269、 factoriesIn the Metalworkers Union of the State of Amazonas,which represents the employees of the companies studied,opinions on the presence of Chinese factories in the MFTZ vary.According to the union president,the Chinese are the worst.They are the worst to work for.They abuse people psycho-logic
270、ally,yell at people.Theres a cultural problem major culture shock.Then,when they dont adapt to our culture,theyre sent back.They have very serious problems27.The union president spoke about the difficulties that union leaders have in getting Chinese companies to comply with labour standards and the
271、collective bargaining agreement:It was decided in the agreement that something or the other would be done;a collective bargaining agreement was signed here.They have to go to China to get approval to be able to follow it.So,as they bring this culture of theirs with them,its complicated for us to mak
272、e them comply with Brazilian laws.You have to resort to confrontation because when the court fines them,they dont care about the fine.In fact,we are going to bring these companies to a halt.However,in another union leaders opinion28,the arrival of Chinese companies was something new and the union wa
273、s watching to see how they would behave in relation to the labour laws,since contrary to what the union president had suggested,nothing had happened yet that would justify occupying the factory.26.Cleiton Britos work was recently published in China and Globalization in the Amazon:Workers,Expatriates
274、,and the Chinese Production Model.London:Routledge,2022.27.Union leader.Interviewed by the author.28.Union leader.Interviewed by the author.42As for a third union leader interviewed29,right after the Chinese companies arrived in Manaus,non-compliance with labour agreements was a constant issue,and m
275、any firms preferred to pay a fine than comply with a labour court ruling.However,according to this leader,this relationship has been slowly changing and the Chinese have become more adapted to the countrys context now.Data gathered in the field go more in the direction of confirming the Chineses ada
276、ptation than the claims of“Chinese savagery”.Even though the union president reported physical abuse,the non-payment of wages and non-compliance with Brazilian laws,no data from the period confirms this.In addition,the information obtained from the labour courts did not indicate a higher number of c
277、omplaints against Chinese firms than other companies in the MIP.Chinese enclaves:the companies human resources policyIn the companies studied,it was interesting to note that the human resources(HR)department was directly linked and subordinate to headquarters in China.Human resource personnel first
278、have to report activities involving hiring,dismissals,training policies,skills,workers wages and benefits to head office in China,wait for a decision from China and only then can they implement or suspend them.Studies by Lee(2017)on Chinese corporations in Africa and by ank(2016),Smith and Zheng(201
279、6)and Sacchetto and Andrijasevic(2016)on ones in Europe found that the companies in those regions set up similar processes as a way of controlling the local labour force.In the case of Manaus,we call it human resources practices/policies of Chinese enclaves,which influence the companies factory stru
280、cture,organizational hierarchy and the assignment of functions.Local factory managers have no say in HR matters,which are fully controlled by HR in China.This is how a manager of the ArconChina company views this issue:We are in direct contact with head office in China.The human resources sector her
281、e does not report to the Manaus manager.It is,in fact,an independent office,an organization bound to headquarters.So,I am in no way subordinate to the lo-cal manager.Obviously,in a practical way,I am;I have to answer him as a service provider.But my manager the one who makes decisions about my life,
282、increases,promotions,etc.hes in China;hes the global human resources director.This is to give the department more autonomy and make it easier to negotiate human resource issues with the companys management(.).Here,there are other de-partments that work like this too.Information technology is like th
283、at;its directly linked to headquarters30.29.Union leader.Interviewed by the author.30.ArconChina HR manager.Interviewed by the author.43In practice,as a Chinese enclave,HR makes decisions globally about the local.This makes not only production but also the companies institutional and mediation syste
284、ms more Made in China,and less Produced in Manaus.As a“global Chinese territory”,the local HR department is part of the way China coordinates and controls production in its current phase.Besides hiring workers and making payments,the role of the HR department is to give China power over decisions on
285、 both basic and highly complex local issues by reporting them to headquarters so that the decisions can be made on the other side of the world.Placing the matter under the decision-making power of the board of directors in China is a way to avoid dealing with local pressure directly.This can be exem
286、plified in the case of labour disputes,as head office in China is the one to decide whether or not the company should comply with the labour agreements negotiated in Manaus or if it is better off paying a fine.To operationalize this process,head office requests that the documents be sent to China an
287、d then,it designates and chooses the Chinese nationals in Manaus who are to stand as witnesses in labour lawsuits and maps out the lawsuits underway or that could potentially be filed with labour tribunals.For a RH manager,this level of control is“because the Chinese are unable to understand the num
288、ber of Brazilian labour laws,nor how the company is supposed to deal with the situation”31.According to him,once a Chinese production manager wanted him to call a worker who was away on vacation.He told the Chinese manager that the law does not allow him to do so,but the manager“wouldnt accept it an
289、d wanted to call the employee to order him to come back from his holidays and go to work”.For a manager of TVChina,The Chinese dont fully understand the level of requirements imposed by Brazilian labour laws that is,the amount of social security contributions there are,controls on overtime,governmen
290、t quotas for hiring people with physical disabilities.The Chinese dont understand any of it32.Similarly,a ChinaBoard manager stated that,One of the Chineses biggest difficulties in adjusting is the difference between labour laws in China and in Brazil.This makes it difficult for those who manage the
291、 company to get the Chinese managers to understand all the obligations that there are and that failure to comply with them will make their business unviable in Brazil33.31.ArconChina HR manager.Interviewed by the author.32.TVChina HR manager.Interviewed by the author.33.ChinaBoard HR manager.Intervi
292、ewed by the author.44According to an administrative assistant,what is striking about the Chineses relationship with HR is the level of control and the bureaucratic procedures.She shared thatIn my sector,the most obvious thing about the Chinese is control.They imple-ment very strict controls,even if
293、this control means we have to go back in time and use paper for approvals.Everything is very bureaucratic,with stamps,etc.34 While the format of the head office-subsidiary relationships and the reasons that lead the HR department in China to run operations as a Chinese territory within the MIP vary,
294、these aspects are clearly common and unique to Chinese management,in both content and scale something that previously was not part of the culture or standards in global capitals factories in Manaus.This gives us an indication of where Chinese globalization is heading today,as it strategically organi
295、zes itself as an economic and bureaucratic bloc in other countries by setting up a centralized system of control and coordination of production,management and HR policy in its factories.In addition,the relationship between the factories and the unions in Manaus has a history of conflict and attempts
296、 at adjustments.According to the managers interviewed,the unions are no longer as“radical”as they were when the Chinese companies arrived in the region.Today,they are more open to dialogue and do not want to shut down the factories for just any reason.The account of one of the companies HR managers
297、is illustrative of this,Today,the union does not come with impositions or the radicalism that existed in the past some 20 or 30 years ago.Actually,I think we have a very good relation-ship with the union today because they are open.In fact,some union leaders are company employees.They are free to co
298、me here.If there is a complaint from an employee who calls to say that the food in the cafeteria is bad,the union comes here,sits with us,discusses the issue and we go to talk to the cafeteria staff to find out what happened on the specific day of the complaint.We try to deal with the root cause and
299、 so on.35Despite the claim that the relationship with the unions has improved,this discourse contrasts with the position of some local union leaders,who emphasized the difficulties that the Chinese companies create for the unions.The union leaders explained that,at first,these companies would preven
300、t union representatives from visiting the factories and handing out pamphlets to workers by barring them at the factory gate.There were also cases where companies fired workers who had close ties with the union.Then,through confrontation and negotiations,this problem was gradually resolved.But for t
301、hem,the Chinese are still mistrustful of and prejudiced against unions.34.HR assistant.Interviewed by the author.35.HR manager.Interviewed by the author.45One way to reduce potential“misunderstandings”between the Chinese and the workers was to offer courses on“good manners”and lectures with labour l
302、awyers for Chinese nationals arriving in Brazil.According to one company manager,the goal of this type of course was to raise awareness on Brazilian laws and how to treat others at work.These activities also aimed to stress the importance of labour courts in Brazil,which,according to the manager,are
303、 much more favourable to workers causes.The strategy yielded some results,albeit limited ones.On one hand,the Chinese that we interviewed spoke well of Brazilian legislation and unions.They affirmed that unlike unions in China,the local union leadership actually protected Brazilian workers.On the ot
304、her hand,they continue to think that there are a lot of worker benefits in Brazil,which is good for workers,but bad for the countrys development.The law is the limit:policies on wages and worker benefits Chinese capital spends less on salaries and benefits in the factories in Manaus than investors f
305、rom other countries,and the Chinese do not offer anything above the legal minimum.They also offer little training to workers,thus transferring the responsibility for this to individual workers.This is consistent with the observations of other international authors on Chinese companies resistance to
306、paying better wages in different parts of the globe(Burgoon and Raess,2014;Sacchetto and Andrijasevic(2016);Smith and Zheng,2016;Lee,2017).There are,however,specific matters that should be put into context.One is that in general,the companies policy is to pay the employees of their subsidiaries a wa
307、ge that is close to the average amount paid by the parent company in China.An operator of TVChina in Manaus receives a monthly salary of approximately US$350.00,whereas in China,the salary is US$434.00.In ArconChina,the monthly salary of an operator in Manaus is US$420.00 and US$579.00 for one worki
308、ng for headquarters in China.As for MotorChina,the subsidiary and the parent company pay operators US$470.00 and US$593.00 per month,respectively,as shown in table 7 below.Table 7.Monthly salary of operators employed by the parent company and its subsidiaries(US$)PositionAverage monthly wages(US$36)
309、TVChinaArconChinaMotorChinaProduction operator in Manaus350.00420.00470.00Production operator in China434.00593.00622.00Source:Elaborated by the author based on direct research.36.The Brazilian and Chinese exchange rate at the time of the research were US$1=R$3.20 and US$1=CNY 6.90,respectively.46Wh
310、en compared locally,wages in Chinese factories in Manaus have generally been lower than the ones paid by other international companies in the MIP.In our calculation of wages,we included both the average salary and the amount that companies are obliged to pay for taxes and workers benefits.In the ele
311、ctronic subsector,we compared TVChina and ChinaBoard.In 2015,at TVChina,the average monthly salary was US$1,032.00.When compared to companies in the same subsector,this Chinese factorys average wage was slightly higher than the wage levels of one Japanese factory and two South Korean factories.Howev
312、er,when we include worker benefits in the analysis,Japanese companies are the ones that spent the most on this type of expense.TVChina has been spending less on worker benefits ever since it initiated its operations in Manaus.ChinaBoard,for its part,paid an average monthly salary of US$597.00 in 201
313、5,which is below the average wage of other companies in this subsector.The amount allocated to workers benefits was also lower than that of other factories,including a Chinese competitor that spent US$271.00 per employee.In the air conditioner subsector,ArconChina had the lowest average monthly sala
314、ry:US$805.00.However,it spent the most on workers benefits for each employee,which added up to US$414.00 a month.Its average wage was higher than the general average of the mechanical subsector,which was reported to be around US$773.00.In the two-wheeler subsector,the average monthly salary at Motor
315、China was lower than the average of both another Chinese company and a multinational corporation of Japanese origin.While the average wage at MotorChina was approximately US$657.00 a month,the Japanese firm offered almost triple the amount,around US$1,655.00 a month.MotorChinas average wage was also
316、 lower than the subsectors average(approximately US$1,215.00).As for the amount allocated to benefits,MotorChina spent US$411.00 and the Japanese company,US$641.00.Data on wages and benefits are summarized below.47Table 8.Wages and benefits by the companies country of origin(2015)(US$)COMPANY*ORIGIN
317、PRODUCTMonthly salary(US$)*Social benefits US$TVChinaChinaTVs,monitors and tablets1032.00413.00ChinaBoardChinaBoards597.00271.00iFexxChinaBoards734.00348.00SunmoongSouth KoreaTVs902.00862.00NNGSouth KoreaTVs820.00384.00ZonicJapanTVs1043.00444.00HunamoJapanTVs931.00787.00ClimexxUS/ChinaAir conditione
318、rs1122.00339.00ArconChinaChinaAir conditioners805.00414.00EurogreenSwedenAir conditioners854.00408.00FoxKongChinaMotorcycles996.00255.00MotorChinaChinaMotorcycles657.00411.00HamaydaJapanMotorcycles1655.00641.00SUBSECTORAverage wage of each subsector(2015)US$Electronics782.00Two-wheelers1215.00Mechan
319、ics773.00Source:Elaborated by the author based on direct research.This data shows the deepening of a trend that has been developing since the 1990s,where lower salaries began to account for a larger share of all wages in the factories in Manaus.This was more evident in the electronics subsector than
320、 in the two-wheeler subsector,where the salaries of most workers have remained,over the years,in the pay scales of 1.5 times the minimum wage and above.The way Chinese companies in Manaus have been managing wages,benefits and participation have affected the lives of the workers interviewed in severa
321、l ways.Some reported that the amount they received for many benefits in other companies were lower at the Chinese companies.This is the case of the amount that workers were paid for basic food baskets:Japanese companies paid US$40.00,whereas the Chinese paid US$15.00.Chinese management had cut some
322、of the benefits that they used to have in other companies or would even charge them extra for access.For instance,while European companies had offered free dental plans,Chinese companies started charging US$3.00 per family member and deducted the amount from workers salaries.Moreover,wages have also
323、 been reduced.One ArconChina production operator reported that while his salary at his previous job was US$443.00,at the Chinese company,the wage for the same position dropped to US$386.00.One worker also stated that her salary was lowered when TVChina bought the Dutch company:48The salary for my po
324、sition was US$360.00 but at TVChina,it was US$280.00.A supervisor for the Dutch company made US$750.00 and at TVChina,US$530.00.()At the Dutch company,every time an employee completed two years with the company,they got a letter congratulating them()and saying that they would get a US$10.00 raise th
325、e following month37.The case of the acquisition of the Dutch company by TVChina exemplifies well the changes arising from the alteration in global capital and exposes the process of growing job insecurity in Chinese factories in Manaus.In the transition to Chinese ownership,more than 70%of the emplo
326、yees close to 300 people who worked for the company while it was still controlled by Dutch capital were dismissed when Chinese capital bought the factory.Months later,the company rehired many of them,but offered much lower salaries than before.It also cut many worker benefits,such as day care,allowa
327、nces for pregnant or nursing women to buy milk and baby clothes,health insurance and a workers savings fund.There,we had a policy that worked like this:we could deposit money in our ac-count at the company and the company deposited the same amount too.If we left the company,we could withdraw that am
328、ount.But the Chinese terminated our rights they eliminated our recreation area,got rid of the area for women and gave priority to the men.They closed off the part where we could go to rest and watch tv and put in production lines instead.And they fired a lot of people who worked for the Dutch compan
329、y.They really cleaned house38.In addition to this,the interviews revealed that under the previous owners,workers had more job stability,as well as wage increases,bonuses and worker benefits something that changed when Chinese capital took over.Chinese companies will comply with the law,but nothing e
330、lse i.e.,the law is the limit.A Brazilian manager described the Chinese philosophy about TVChinas labour costs and identified the changes that occurred after the new investors arrival:The Chinese are very careful about the organizations expenses.So,they do not accept any benefits or contributions th
331、at are not required by law.The ones required by law,they do,but they question the ones that are not imposed by law and start eliminating them39.37.TVChina worker.Interviewed by the author.38.Idem.39.Idem.49To this,he added:The Dutch company had a culture of providing day care to 100%of the employ-ee
332、s who needed to put their children in day care.But if you look at Brazilian law or even the collective bargaining agreement,which complements the law,it does not obligate the company to provide 100%.()So,the Chinese go up to this quota.They dont understand that they need to give 100%.The law does no
333、t force them to.There is nothing in the collective agreement,no requirement that demands this.So,the Chinese will give what is just,what has been defined.If authorities decide a year later to increase it,they will comply,but as long as that quota is effect,thats what they are going to give.()On the management level,there are factories that offer the benefit of receiving a car every three years.For
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