SAO PAULO, Brazil — For 51 of its 52 years in business, brush and comb maker Escovas Fidalga was solidly profitable. Then last year, it plunged into the red. Ask boss Manolo Miguez why, and he fingers a culprit that would be familiar to many hard-pressed American manufacturers.

"Our biggest competition is Chinese imports. ... They started slowly, but today they take up 70 percent of the Brazilian market," said Miguez, the company director.

As Escovas Fidalga's plight demonstrates, American businesses aren't the only ones feeling the heat from the roaring Chinese economy. Brazilian manufacturers of toys, eyeglasses, footwear and textiles all howl that surging Chinese imports are submerging them.

But even as manufacturers struggle, Brazilian producers of commodities from soybeans to iron ore are prospering, thanks to ravenous Chinese demand. Companhia Vale do Rio Doce, one of the world's largest minerals companies, sold 55 million tons of iron ore to China last year, up from 16 million tons in 2000. "They have huge needs. ... Our prospects for China are very bright," said Jose Martins, CVRD's executive director for ferrous minerals.

China's sudden prominence in the Brazilian economy illustrates an emerging trend throughout Latin America. In a development that worries some in the U.S. Congress, Chinese executives and diplomats are fanning out in the United States' hemispheric backyard, signing deals and cultivating good will.

"China is expanding its investment down there. ... We have fallen a little bit behind the curve. China is very aggressive," said Rep. Dan Burton, R-Ind., who chairs a House subcommittee on Western Hemisphere affairs.

China covets Brazil — Latin America's most populous country and its largest economy — for its low-cost food supplies, equatorial satellite launch facilities and deep-water oil-drilling expertise.

Elsewhere, notably in Venezuela and Ecuador, Beijing's thirst for oil motivates growing engagement.

GROWING INFLUENCE

Since 2001, the U.S. preoccupation with fighting terrorism has left Latin governments feeling neglected and has presented China an opening to expand its regional influence. Chinese President Hu Jintao barnstormed through the region in 2004, making high-profile stops in Brazil, Argentina, Chile and Cuba. Highlights of his tour included a promise of $100 billion in Chinese investment by 2015 and a flurry of diplomatic and commercial agreements.

But the euphoria that Hu left in his wake has largely dissipated. Though total trade with China has soared 528 percent since 1999 to $12.2 billion, Brazil's bilateral trade surplus the past two years has been cut almost in half and shows signs of shrinking further.

One of Brazil's premier companies has learned the hard way to keep expectations in check. Four years ago, aircraft maker Embraer established a $50 million joint venture with China Aviation Industry Corp. to build the ERJ-145 regional jet at a plant in Harbin in northeastern China.

Since then, China's short-haul market has been slow to develop, and Embraer has notched only 16 sales. "The commercial development of the business is lower than what we predicted," said CEO Mauricio Botelho. "It will take longer than we expected."

Disquiet also is mounting among Brazilian industrialists about pirated Chinese goods, competition from low-cost Chinese imports, and a lack of follow-through on promised Chinese investment.

Along the Avenida Paulista, Sao Paulo's principal commercial thoroughfare, kiosks offer CDs, DVDs and T-shirts for a fraction of genuine products' retail price. The goods are trucked across the porous border with Paraguay or enter through the nearby port of Santos, where 300 customs inspectors — just one-seventh what's needed — struggle to keep pace.

Most of the pirated goods sold here originate in China, said Paulo Skaf, president of FIESP, Sao Paulo state's largest industrial federation. He said rampant counterfeiting is just one of the improper Chinese practices that suddenly tilted the manufacturing trade balance against Brazil.

"It's a skewed relationship that does not bring benefits to Brazil," Skaf said.

"Obviously, we're going to start feeling the pinch, and the damage is going to show unless immediate action is taken against their illegal and unfair practices."

GOING TO THE SOURCE

Escovas Fidalga already is hurting. As imports have gobbled up an ever-larger slice of the Brazilian market, Miguez cut his payroll in half to about 105 workers. He's closing a second facility and consolidating operations at his Sao Paulo location.

In 2000, there were 15 Brazilian brush makers. Now, only Escovas Fidalga and one other factory still make their own products, according to Miguez. In October, desperate to understand the goliath bearing down on him, he spent 18 days touring factories in Shanghai, Ningbo, Guangzhou and Wenzhou.

He returned to Brazil impressed with Chinese highways, the government's commitment to long-term planning and the ability of its factories to swamp any problem with countless low-wage workers. Hefting a typical hairbrush, Miguez said: "We'll probably stop making this one. The Chinese can make it for 50 percent less than I can."

Still, he refuses to follow the lead of other Brazilian manufacturers who've become importers or shifted production to China, saying he feels an obligation to maintain employment at home.

In February, China agreed to limit shipments of eight types of textile products, though not brushes, in response to complaints from Brazil. Some Brazilian manufacturers are demanding additional protection.

Rather than seeking such safeguards, Brazil should focus on eliminating some of its 61 business taxes and lowering real interest rates that reach 45 percent, said Charles Tang, who heads the Brazil-China Chamber of Commerce in Rio de Janeiro.

A Brazilian citizen, Tang, 58, is a former Bank of Boston leasing specialist and a Cornell University graduate. His family fled its home in Wuxi, about 80 miles west of Shanghai, after Mao Zedong's communist armies took control of China in 1949. Two cousins who stayed behind joined a party cell with Jiang Zemin, later China's leader following the 1989 Tiananmen Square massacre.

Tang said trade between the two countries could double in the next five years. He hosts a steady stream of Chinese visitors — more than 1,000 delegations of government officials and business executives visited Brazil in 2004. "Brazilian people who don't know China are afraid of China. Those who do know China become very enthusiastic about the opportunities they see," Tang said.

RAW MATERIAL

Chinese demand for Brazilian raw materials already is stimulating the economy. CVRD, the largest private investor in Brazil, said 80 percent of its planned $4.6 billion in new investment this year is linked to meeting Chinese demand. That spending will help create 20,000 new jobs, the company said.

"The economic situation in Brazil — a big part of it is due to this tremendous boom in China," Martins said.

Yet, measured against expectations fanned for two years by Brazilian President Luiz Inacio Lula da Silva, China has been a letdown. On a visit to Beijing in 2004, in an echo of the Third World solidarity that both countries have cultivated in the past, Lula spoke of crafting a "strategic partnership" with China.

When the Chinese president traveled to Brasilia later that year, Brazil rewarded him by granting China "market economy" status, which insulates China under global trade rules from some anti-dumping measures. At the time, Brazil hoped China would reciprocate by backing its drive for a seat on an expanded U.N. Security Council and contributing desperately needed investment to Brazil's roads and ports.

But the council seat is no closer to being realized, and China's checkbook remains closed. Sinopec, the Chinese oil company, was expected to arrange Chinese government financing to help Petrobras, Brazil's state-owned oil giant, build an 850-mile natural gas pipeline from Brazil's southeast to its northeast. The "Gasene" project, however, has been hit by spiraling costs and repeated delays.

Still, Petrobras is pursuing cooperation with China in refining high-sulfur Brazilian crude oil at Sinopec's facility in Qingdao. The two oil companies also might swap technical know-how. The Chinese, who do well with on-shore oil fields, lack Petrobras' expertise in deep-water prospecting. But nothing is definite.

"There are some hiccups. There are moments that are good; there are moments that are problems," said Jose Gabrielli, Petrobras president.

Brazil's experience isn't unusual. The Chinese typically sign nonbinding letters of intent that promise investment, but deliver only if benefits are guaranteed, said Cynthia Watson, a professor at the National War College in Washington. "Beijing has a history of 'intending' to invest," she said. "We generally do come through with investments. ... Beijing doesn't do that, and they (Brazil) are just beginning to find that out."

Tang, a Chinese-American businessman who has been promoting Sino-Brazilian trade since 1986, blames Brazil's sometimes sluggish business environment for derailing potential deals. For example, Shanghai Baosteel, China's largest steel producer, said in 2004 it planned to build a $1.5 billion steel mill in Brazil. But two years of waiting for zoning approval and concerns over Brazilian plans to levy a tax on machinery imported for the plant have imperiled the deal.

"The Chinese government got fed up," Tang said.

Walking across a cracked linoleum floor, with weak sunlight peeking through the factory skylights, Miguez wears the sad-eyed look of a man who knows his days are numbered. Young women clad in the company's red vests stand at workstations transforming plastic cylinders and tufts of fibers into brushes of every imaginable size and function. Two-thirds of the machines here are idle.

Trying to stay one step ahead of his Chinese pursuers, Miguez plans this year to roll out new ceramic designs. He hopes they'll be harder for the Chinese to copy. "If that doesn't work, I'll probably go out of business within a year," he said.

His wife's father started the company more than 50 years ago when China was an impoverished shamble, consumed with ideology, not commerce. Now, its rise appears unstoppable. The textile factory across the street already is shuttered because it couldn't match Chinese competitors.

A genial woman, wife Rosa Maria sours quickly when asked about the future.

"If you let the Chinese get away with it," she said, eyes narrowing, "they'll finish us all off — not just Brazil."