When it arrived in Brazil in November 2016 with the acquisition of Rio de Janeiro-based construction firm Concremat, the China Communications Construction Company (CCCC) brought the promise of ambitious projects to the country.
What is CCCC?
China Communications Construction Company is a Chinese state-owned enterprise that is one of the world’s largest infrastructure firms, having built roads, railways, airports, ports, bridges and tunnels within China and beyond, including notable projects in the Belt and Road Initiative and Street.
In the following years, the Chinese state-owned enterprise announced a number of suitable large-scale initiatives: a megaport in São Luís, in the state of Maranhão, with the capacity to handle the export of 10 million tons of grain per year; alongside local mining and logistics giant Vale, a railway would be completed in the state of Pará that would connect iron ore mining sites in the Amazon to Brazil’s main ports; and in a public-private partnership with the state government of Bahia and the China Railway 20 Bureau Group (CR20), would build the 12-kilometer Salvador-Itaparica bridge, in what would be the largest construction project over water in Latin America.
The general feeling – in the market and among many political leaders – was that the CCCC would soon help catapult Brazil’s infrastructure agenda. One of the world’s largest construction companies and a contractor for many notable projects along China’s Belt and Road Initiative (BRI), CCCC had the right resources and track record to make this goal a reality.
However, half a decade later, none of her major projects have left the drawing board.
Last year, CCCC announced its exit from the São Luís megaport. The sale of its stake in the project was completed in February this year, being transferred to Brazilian firm Cosan for 720 million reais (US$138 million). Its other two major projects have also seen little progress, and CCCC — once seen as a major player in potential auctions — has shown no interest in submitting proposals for a number of major tenders held recently in the country.
Experts see it as a curious development, especially at a time when Brazil is once again attracting the attention of international investors. “Although we are in a difficult situation, in a post-pandemic scenario in which investment has shrunk, we see a recovery process,” says Alessandra Ribeiro, partner and director of macroeconomics and sector analysis at Tendências Consultoria in São Paulo. “This step by the Chinese company, to exit a major project, seems isolated and goes against what we observe in general.”
The changing landscape in China and Brazil
It is not yet clear whether the CCCC’s move is simply hesitation – common in the run-up to elections such as those currently taking place in Brazil – or whether it represents a retreat, and one that highlights not only the enormous challenges of investment in the Latin American country, but also the current developments in China.
When it launched the Belt and Road in 2013, with ambitions to build key logistics corridors of railways, ports and airports that would boost trade relations and transport goods around the world, China had amassed years of double-digit growth. The country had a clear purpose and resources to finance its companies around the world. Latin America, and Brazil in particular, benefited from this.
Now, the landscape is a little different. Pressured by domestic concerns after the pandemic and a GDP outlook that is embarrassing by its standards – projected at around 3% for 2022 – China has reduced contributions worldwide; there was a 5.5% drop in Chinese foreign direct investment in 2021 compared to 2020, according to UNCTAD, the UN’s trade and development agency. The country has also begun to prioritize certain projects and regions, turning its attention to major projects in Asia and Africa.
State-owned CCCC appears to be one such Chinese entity following this new path. In Latin America, only one project was highlighted in its most recent financial reports: the Mayan Train in Mexico.
Other factors that could influence the CCCC’s stance on Brazil, such as labor legislation, a complex Brazilian tax structure and cultural challenges, as listed by the CCCC in a wide-ranging 2019 statement originally published by the Ministry of China Trade and reprinted by state media Xinhua.
In June 2021, in one of the few statements to the press in Brazil, CCCC’s then-executive director in the country, Helder Dantas, told the financial newspaper Valor Econômico that it was difficult to explain to the often overbearing Brazilian bureaucracy to Chinese colleagues that it was difficult to get financing and that land problems were delaying the construction of the port in Maranhão.
Obstacles to CCCC
Of all CCCC’s projects in the country, the port in Maranhão proved particularly challenging. Located near the capital of the state of São Luís, in an area of forests and mangroves, the project was created to occupy an area where the indigenous community of Cajueiro is located – a village of families engaged in fishing and extraction activities, and whose roots in area. date back to the 19th century.
Tensions in the area are long-standing and predate the arrival of CCCC, but as the company-led consortium appeared reticent to engage with local demands, the situation worsened. “There was no respect for the community on the part of the companies that were involved,” says Haroldo Paiva de Brito, a prosecutor for agrarian conflicts at the Maranhão State Public Ministry.
As for its Pará railway, the CCCC ran into problems with the local population, with concerns raised over the risks of such a large undertaking in a region with sensitive biodiversity and passing quilombola indigenous communities and villages. So far there is no clarification on the realization of the project.
As for the Salvador-Itaparica bridge in Bahia, in August of this year, the State Public Prosecutor’s Office recommended that technical studies be carried out for its construction, given its possible impact on the nearby protected areas in Salvador, Itaparica and Vera Cruz. The new forecast is that work will begin in 2023.
International action and response
The political landscape in Brazil may also have had an impact on the CCCC’s current stance, given the often bellicose attitude towards Chinese investment of current government Jair Bolsonaro.
Upon taking office in January 2019, Bolsonaro sought to appease the US — and the Trump administration — at a time when the trade war between the US and China was at its height. Although more rhetorical than effective, it served to damage the image of good Brazilian diplomacy and affected the relations that Brazil has always maintained with the Asian country.
Thorns have also been sold: one of the most consequential cases occurred in March 2020, when federal deputy Eduardo Bolsonaro, the president’s son, blamed China for the coronavirus in a tweet. The message was redacted by the then Chinese ambassador, Yang Wanming, with his embassy in Brazil issuing a official answer.
For agribusiness, the government’s stance has little impact. But for big infrastructure works that require huge investments and approvals, it is not possible to separate these things
The president of the Brazil-China Chamber of Commerce (CCIBC), Charles Tang, was one of those who came out publicly to warn of the dangers of this friction. He said comments against China could generate more red tape and hold back projects. “Without the charges, there would be more closed deals,” he told UOL in May 2021.
China remains Brazil’s largest trading partner. Chinese businesses are also among the top foreign investors in the country’s infrastructure and technology sectors. But it is undeniable that relationships are affected by such episodes.
“For agribusiness or even foreign trade, the government’s attitude has little impact. But when it comes to large infrastructural works that require large volumes of investment, licenses and approvals, it is not possible to separate these things,” said Pedro Brites, professor at the School of International Relations at the Getúlio Vargas Foundation in Rio de Janeiro.
For him, the current government’s stance not only contradicts the pacifist history of Brazilian diplomacy, but also places Brazil in a dependent position on the international stage. “It is no wonder that there are many expectations for the October elections. There is a great demand from the G7 countries themselves for Brazil to return to the important interlocutor it has been in the entire South American region,” commented Brites.
The record of current president Jair Bolsonaro and former president Luiz Inácio Lula da Silva, the two candidates for the second round of the presidential elections on October 30, does not leave much room for surprises in the field of international politics.
Bolsonaro’s hostility to China is evident, while a future Lula government may be more open to dialogue and Chinese investment. Celso Amorim, a former foreign minister during the previous Lula government and now his chief adviser on international affairs, recently told Diálogo Chino that if the former president is elected, China will have an important place in his international policy . “We will put the relations where we left them in the government of Lula and Dilma, with very good partnerships, with a very good coordination,” he said.
On a softer note, and without mentioning the current government or Lula’s Workers’ Party, CCIBC’s Tang told Diálogo Chino that “the political lack of definition in the pre-election period ends up putting many projects on hold.”
“I have no doubt, however, that by 2023 things will accelerate, especially if the government has the same ‘love’ for China that China has always shown for Brazil,” Tang added.
China Communications Construction Company did not respond to interview requests for this story.
Yedan Li contributed additional reporting to this article.
