ISSN 2674-8053

The Chinese, the electrical sector, The technology… and Brazil

The Chinese appetite for the Brazilian electricity sector, and Brazil, it's no longer new. With the trillions of dollars they have to invest abroad, for some time now we became one of the focal points of their interest. Bearing in mind that in the period of 2014 a 2017 Brazil has become the second largest destination for sinic investments (com s…) all around the world, behind only the United States.

And our electricity sector is one of the ones that has attracted them the most. With great momentum, ended up displacing traditional private companies and became leaders in this sector in our country. According to “Brazil-China Chamber of Commerce and Industry”, a “China Three Gorges Corporation”(CTG) already invested US $ 12 billion in this area here, a lot in the clean energy sector. By the way, CTG is the manager of the largest hydroelectric plant on the planet, the Three Gorges Dam / Three Gorges, located on the Yangtze River, a megaproject that at the beginning piqued the interest of Brazilian construction companies, which came to create a consortium to grab – unsuccessfully – the enterprise. Is that never – as it turned out later… – the Chinese would hand over to a foreign company the construction of a project that they qualified as “national”. I was serving at our Embassy in Beijing at that time, and I witnessed the Brazilian momentum, as well as the Chinese strategy of quibbling to include us in the process at the time when they sent more and more delegations to Itaipu to learn about our technology…

Among the Brazilian hydroelectric plants that are now in the hands of the Chinese are those of Ilha Solteira and Três Irmãos. A “Companhia Paulista de Força e Luz” (CPFL) is now owned by “State Grid Brazil Holding”, arm of the Chinese state-owned company “State Grid Corporation of China”, which has already auctioned the hydroelectric power plants of Ilha Solteira and Três Irmãos. And there we go…

This is bad…or is it good, ultimately?

This is the dilemma that we have not yet solved…With or without reason, China is committed to becoming the great economic and technological power of the 21st century. Your plan “China 2025” of course: has already defined up to the ten high-tech sectors that will guide its development process from now on. The PRC is determined to leave behind the cheap manufacturing scheme and invest heavily in the economy / industry 4.0. In summary, “bye bye” 25 March, Chinese…

Is this a “window of opportunity” to Brazil, “global strategic partner” (this is the formal and diplomatic status of our relationship)?. Wouldn't it be smarter if, instead of resisting, e “we condemn” chinese appetite, as some propose, let's search “ways and means” to guide this partnership to our advantage? In international relations, nothing is black and nothing is white, everything is gray: if they are looking for us with such ghana, why not develop a strategic partnership that is really beneficial for us? David vs. Goliath????? It will be(he)?

I am convinced that we have the stakes to ally ourselves – in what interests us – to their projects; otherwise they would not seek us so hard. But where would our counterparts be? We have already mapped them?

Bold? Impossible? Or simply the reflection of “mongrel complex” that prevents us from seeing what even the Chinese (still) see in us: a partner????

We reflect…it's still time.

I suggest to friends to read the Estadão article below:


Chinese displaced traditional companies in electricity generation

Renee Pereira, The State of São Paulo

17 October 2018 | 04h00

With a lot of cash on hand and a strong appetite for risk, the Chinese managed to debunk traditional companies in the electrical sector and became leaders in private energy generation in Brazil. The position is the result of a series of acquisitions made in recent years, especially during the government of Michel Temer.

According to data from the Brazil-China Chamber of Commerce and Industry (CCIBC), a CTG, today the largest private generator in the country, invested R $ 23 billion; a SPIC, R$ 7 billion; e a State Grid, who bought the CPFL group, R$ 52 billion (US$ 14 billion). According to the Brazilian government's accounts, of 2009 Here, almost half of the Chinese money invested in Brazil went to the electricity sector.

But this movement does not seem to please the candidate for the presidency of the Republic much., Jair Bolsonaro (PSL), leader in electoral polls. He has already signaled for possible measures to restrict Chinese capital in the infrastructure sector. “I believe that economists as capable as Paulo Guedes (candidate advisor) will understand that the US $ 120 billion that China has invested in Brazil in recent years has helped to keep jobs and mitigate the economic crisis ”, stated Charles Tang, president of CCIBC.

According to him, currently six Chinese giants are looking at assets in Brazil. Sources heard by the State believe that businesses can go on standby until there is a clearer position on the matter. Specialists, who prefer not to identify themselves, fear statements will hinder ongoing business, such as the sale of the Santo Antônio Hydroelectric Plant to SPIC. Negotiations to buy stakes in state-owned Cemig and Odebrecht were well underway.

After the Trump effect, against foreign capital, some executives decided to alert the Chinese that the same could happen here during the election campaign. Therefore, per hour, there is no stress or concern in relation to the investments already made, said an industry executive. For him, who also prefers not to identify himself, Brazil needs external capital to expand infrastructure that is far below the needs of the population.

Besides that, completes the executive, it is necessary to understand that in a concession the investor manages the asset for a certain time and then he returns to the State.

Economist Elena Landau, president of the suprapartisan movement Livres, goes beyond: “There is a misunderstanding about the use of water. It is as if the plant owner, be it state or private, had autonomy over its water dispatch (which is defined by the National Electric System Operator)”. The discussion around the security of the electricity sector from the point of view of who controls the energy companies is not exactly new. Sources claim that former President Dilma Rousseff also had some restrictions on the Chinese presence in electricity generation - an area considered strategic for the country. The State found that companies in China tried to buy Rede and Neoenergia in the past, but they were barred.

“It makes no sense to discriminate against the origin of capital. I think he's talking to the military nationalist heart that has. In the background, he is against the privatization of hydroelectric plants because he has the head of a military man, or is he following Trump without knowing exactly why ”, says Elena Landau. No market, many analysts believe Bolsonaro's speech is yet another strategy to convince undecided voters to vote for him.

Originally published in: https://economia.estadao.com.br/noticias/geral,Chinese-displaced-traditional-companies-in-electrical-generation,70002550400?fbclid = IwAR3eM628plwk4h-NaoPav92RyIk6xS1YxcIhVUmzxn5qWhc1TJ9yunCn_M4

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Doctor of Public International Law in Paris. He entered the diplomatic career in 1976, served in Brussels embassies, Buenos Aires, New Delhi, Washington, Beijing, Tokyo, Islamabade (where he was Ambassador of Brazil, in 2004). He also completed transitional missions in Vietnam and Taiwan. Lived 15 years in Asia, where he guided his career, considering that the continent would be the most important of the century 21 - forecast that, now, sees closer and closer to reality.