Six years on, Brazil-China Fund yet to back a single project

Announced with great fanfare six years ago, the Brazil-China Fund has yet to finance a single project with the USD 20 billion it has at its disposal. The fund is struggling to attract any market interest, which analysts put down to fluctuating exchange rates, a high degree of bureaucracy, and scant interest from the Brazilian government.

Brazil and China announced the fund’s creation in 2015, as the latter needed to export its surplus industrial capacity and had the cash to do so in strategic locations. Chinese authorities traveled the world that same year, inking deals with the European Union, Russia, Indonesia, and several other countries.

For Brazil, it was the right time to create a fund tasked with expanding the country’s productive capacity, after witnessing an abrupt end to a near decade-long commodity supercycle and seeing investment shrink.

“At this time of slowdown in the international economy, reciprocal trade and investment between Brazil and China can and will mean an improvement in our economic situation,” said then-President Dilma Rousseff, upon signing the agreement.

Incorporated two years after its launch, the fund foresaw a contribution of USD 15 billion from the China-LAC Industrial Cooperation Investment Fund (Claifund) — established around the same time — and another USD 5 billion from Brazil’s Caixa Econômica Federal and the Brazilian Development Bank (BNDES). Meanwhile, equivalent Chinese funds were financing dozens of projects worldwide.

Bureaucracy behind the Brazil-China Fund

The fund set up a committee consisting of three members from each country to review projects interested in receiving finance. On the Brazilian side, this included secretaries from the Office of the Chief of Staff, Planning Ministry, and Foreign Affairs Ministry. Officials from the People’s Bank of China, China Development...