CCCC halts operations in Brazil

The China Communications Construction Company (CCCC), which had purchased the Rio de Janeiro-based construction company Concremat, had the promise of large-scale projects when it came to Brazil in November 2016.

The Chinese state-owned firm announced a number of initiatives over the following several years that were appropriately large-scale, including the construction of a mega port in the state of Maranho’s So Lus that could handle the export of 10 million tonnes of grain annually.

In a public-private partnership with the government of Bahia state and the China Railway 20 Bureau Group (CR20), it planned to construct the 12-kilometre Salvador-Itaparica bridge, which would be the largest construction project on water in Latin America. These projects were supposed to be completed alongside domestic mining and logistics giant Vale.

Many political leaders and the market were of the opinion that CCCC would help propel Brazil’s infrastructure programme. As one of the biggest construction firms in the world and the general contractor for numerous important projects along China’s Belt and Road Initiative (BRI), CCCC had the means and the experience necessary to achieve that objective. However, none of its main projects has advanced past the design phase even now, five years later.

The CCCC announced its departure from the So Lus mega port last year. In February of this year, its project stake was sold and transferred to the Brazilian company Cosan for 720 million reais (about US$138 million). CCCC, long thought to be a major player in possible auctions, has made little progress on its other two major projects, and it has shown no interest in submitting bids for a number of important tenders that have recently been held in the nation.

It’s a peculiar situation, according to experts, especially now that Brazil is recapturing the interest of foreign investors. “Although we are in a difficult situation, in a post-pandemic scenario in which investments have contracted, we see a recovery process,” says Alessandra Ribeiro, an industry expert. “This step by the Chinese company, to exit a major project, seems isolated and goes against what we observe more generally.”

It is still unclear whether the CCCC’s action is merely a hesitance, which is typical in the lead-up to elections like the ones happening right now in Brazil, or whether it represents a retreat, which would highlight both the significant difficulties in investing in the Latin American nation and recent developments in China.

China had a history of double-digit growth when it announced the Belt and Road Initiative in 2013, with the goal of developing large logistics corridors of ports, airports, and trains that would promote international trade. The nation had the means to finance its businesses across the globe and a defined mission. Brazil in particular benefited from this, as did Latin America as a whole.

The scenery has changed a little since then. China has been reducing its contributions to the world under pressure from post-pandemic domestic worries and a GDP outlook that is modest by its standards – forecast at about 3 percent for 2022. According to UNCTAD, the UN agency for trade and development, there was a 5.5 percent decline in Chinese foreign direct investment in 2021 compared to 2020. The nation has also begun to give particular initiatives and geographical areas priority, focusing on significant projects in Asia and Africa.

One such Chinese organisation that appears to be taking this new path is the state-owned CCCC. In its most recent financial reports, only one project in Latin America—the Mayan Train in Mexico—was featured.