In Brazil, China has been expanding in two strategic industrial sectors, fiber optic and steel. More than half of the national fiber optic market, which buys some 10 million kilometers of fiber optics per year, is imported, mainly from China. According to the Brazilian government’s foreign trade platform, Comex Stat, the import of fiber optics from Beijing increased from $11.5 million in 2022 to $18.5 million in 2024.
As for steel, according to a recent report by the Brazilian Steel Institute, which represents the country’s steel companies, from 2023 to 2024, Brazilian imports of Chinese steel increased by 50 percent, from 2.89 million tons to 3.3 million tons, out of a total of 4.8 million tons imported. The data indicates that China has become the largest exporter of this product to Brazil to the detriment of the South American country’s domestic production, which fell by 6.5 percent in the same period.
“It’s an avalanche of Chinese steel. It’s unacceptable and absurd,” Marco Polo Lopes, president of the Brazilian Steel Institute, told CNN Brasil.
With 1.8 percent of world steel production, Brazil ranks ninth on the list of producers, while China is the largest, with a global share of 54.7 percent. The invasion of Chinese steel in the Latin American country is also impacting Brazilian exports of the material. In 2024, 9.6 million tons of steel left Brazil, worth $7.7 billion. These figures represent a reduction of 18.1 percent in quantity and 21.9 percent in value, respectively, compared to the same period in 2023.
“China’s excessive production capacity translates into the export of large volumes of steel at low prices, affecting the competitiveness of domestic companies,” Brazilian economist Lucas Ferro, a specialist in Market Intelligence and International Trade, told Diálogo.
Dumping and other predatory practices
According to experts, dumping practices caused the crisis in these sectors. Beijing exports at below market value, damaging local producers.
“This strategy is possible thanks to a combination of factors, such as high production capacity and government policies that subsidize Chinese industry,” says Ferro. According to the economist, “the Beijing government offers incentives such as soft loans, direct subsidies, and input cost controls, which allow companies to export at artificially low prices.”
Protectionist measures that some countries have adopted, imposing tariffs and quotas, also redirect excess production to more open markets, such as Brazil. “This dynamic intensifies the pressure on local industry, requiring effective strategies to protect the domestic market,” says Ferro.
In the steel sector, in April 2024, the Ministry of Development, Industry, Trade and Services (MDIC) created import quotas for certain steel products. Imports exceeding the quotas trigger a 25 percent import tax increase for a period of 12 months.
In October 2024, the fiber optic sector also saw import taxes increase to 35 percent for six months. “However, the effectiveness of these measures depends on constant vigilance and strong international cooperation,” says Ferro.
In addition to dumping, China employs other predatory practices in the steel trade, such as technical smuggling and circumvention. “Technical smuggling consists of undervaluing or misclassifying products to avoid higher tariffs. Circumvention, on the other hand, consists of slightly modifying the product or sending it through third countries to circumvent anti-dumping measures,” says Ferro. According to the expert, “these strategies undermine the effectiveness of trade barriers and intensify unfair competition in global markets.”
In 2024, Chinese fiber optic cable companies were also accused of dumping by two foreign companies operating in Brazil, Prysmian and Furukawa.
“Here in Brazil, the price of Chinese fiber optics is 60 percent lower due to the tax incentives that the Chinese government applies to those who export fiber and cables,” Emerson Tonon, president of Prysmian in Brazil, told news site Convergencia Digital. While one kilometer of fiber produced in Brazil costs $6, the same imported from China costs $2.50.
Prysmian’s legal director, Inaiê Reis, warned of the risks of China’s expansion to Brazil. “The country will be held hostage by China in the fiber optic sector,” she said.
Job losses
Among the main consequences of China’s unfair competition are factory closures and job losses in Brazil. According to daily Estado de Minas, in 2023 Gerdau, one of the country’s largest steel companies, laid off 700 workers and reduced production at its factories in Brazil due to the impact of Chinese exports. In addition, in 2024, it had to suspend employment contracts for five months for some 50 of its workers at the São José dos Campos plant in the state of São Paulo.
“The paradox is that Brazilian mining companies export iron ore to China, which transforms it into steel and returns the product at a lower price than Brazilian steel itself,” unionist Weller Gonçalves told Brazilian economic news site Exame.
Due to China’s steel invasion, Prysmian’s fiber optic plant in Sorocaba, in São Paulo state, temporarily closed in 2023, and operated well below capacity in 2024. Of the 250,000 km of cables and fibers it can manufacture per month, Prysmian produces 100,000 km, Convergencia Digital reported.
With the fiber optic market, China is also penetrating regions of interest for the exploitation of resources, such as the Amazon. In the North Connect Program project, launched in 2023 to install 12,000 km of fiber optic cables in the rivers of the Amazon basin, fiber optics from the Chinese company ZTT have been used so far, which were sent directly from China to the port of Manaus, in Amazonas state. In 2019, the World Bank debarred ZTT for 20 months due to “fraudulent practices under the Lusaka Transmission and Distribution Rehabilitation Project in Zambia.” The project in the Amazon will cover some 60 cities and 10 million people.
“The main protection mechanism is a large increase in tariffs because it offers more complete and immediate protection against artificially low prices, stabilizing the internal market and allowing Brazilian industry to maintain its competitiveness,” says Ferro. According to the expert, “this strategy prevents Chinese overproduction from affecting the local market” by offering a shield against unfair competition practices.
