Lula’s visit: a big boost for Sino-Brazil synergy
BRAZILIAN President Luiz Inácio Lula da Silva – affectionately known as Lula – has culminated his much-awaited trip to China, which is expected to significantly propel bilateral relations to a new echelon by fostering a more all-encompassing partnership in areas beyond conventional domains like trade and investment. This includes collaboration in cutting-edge arenas like finance, anti-poverty measures, cooperation under the auspices of the Belt and Road Initiative, and joint mediation to address the globally pressing issue of the Ukraine crisis. For various reasons, this is billed to be a historic visit.
In South America, Brazil stands out as China’s foremost economic and political ally, and a significant member of the BRICS bloc. In terms of their global aspirations, China and Brazil have always shared a mutual disdain for the existing liberal international order, though their proposed solutions may differ. Starting in 2005, China began to extend its foreign direct investment to other countries, and Brazil emerged as a significant destination for its capital. Initially, these investments were predominantly focused on the commodities sector, but they soon expanded to include a broader range of infrastructure projects.
By 2017, over half of China’s investments in South America were being directed towards Brazil. While Brazil has not been formally included in China’s Belt and Road Initiative, it is clear that China’s overseas investment programs impact Brazil’s global interests and export markets, particularly as they tend to shift the world’s economic center of gravity away from the United States, which is another major trading partner for Brazil. In 2021, Brazil emerged as the top recipient of Chinese foreign investment, accounting for almost 13.6 percent of China’s total foreign direct investment. The majority of this investment was directed towards bolstering Brazil’s electricity grid and oil extraction projects.
The partnership between China and Brazil is firmly anchored in a broad trade and investment association. China started to engage in significant trade activities with South America after 2000, mainly targeting commodities to fuel its burgeoning industrial sector and satisfy its population’s needs. Brazil is among the world’s most productive agricultural exporters, competing with the United States in this domain, in addition to being a notable exporter of mineral products, thereby consolidating its position as a vital economic partner for China. As global trade prospects become increasingly dismal and tensions with the United States continue to escalate, China is seeking to expand its network of economic and trade allies.
Brazil, the biggest economy in South America, is also eager to enhance its exports of iron ore, farm produce, and oil, whilst simultaneously revitalizing its manufacturing sector, thus making itself an attractive trade and economic partner for China. China has maintained its position as Brazil’s primary trading partner for over a decade. The two countries saw their trade volume surge by 8.1% to reach a record $171.5 billion in 2022. Brazil is the largest provider of soybeans, chicken, and sugar to China. The country also exports significant quantities of corn and beef.
The large delegation accompanying President Lula, which included over 240 business, industry and agriculture representatives, is a testimony to the ever-flourishing business ties between the two nations. During the visit, over 15 deals were signed across a range of critical sectors, including health, agriculture, education, finance, industry, science, and technology. The agreements also include the building of a sixth satellite used to monitor the Amazon, and the development of technology for 5G telecommunications, the internet and cyber security.
Lula also visited He visited the R&D centre of Huawei, the Chinese tech giant that has been put under restrictions by the US government citing national security threats. During this visit, Lula also attended an important ceremony where former Brazilian President Dilma Rousseff was inaugurated as the chief of the Chinese-funded New Development Bank. The Bank’s financial support for infrastructure projects in Brazil and other developing nations presents itself as an alternative to the International Monetary Fund and World Bank, institutions that are often criticized by these nations for imposing harsh loan conditions. It was established as part of a larger framework of cooperation between countries known as BRICS — Brazil, Russia, India, China and South Africa. Since its inception, the bank has authorized an impressive 99 loan projects, valued at over $34 billion, with a primary focus on infrastructure initiatives.
This extensive and diverse agenda highlights the growing importance of the relationship between China and Brazil and underscores their commitment to expanding cooperation and collaboration in critical areas that will undoubtedly shape the global economy in the years to come. China has emerged as Brazil’s top source of manufactured goods, benefiting from the vast market of the country’s 215 million people. Among the key exports from China to Brazil are mobile phones, steel, and increasingly, Chinese cars. But there is much more beyond trade and business that will be discussed between President Xi and President Lula. In contrast to his far-right predecessor Jair Bolsonaro, President Lula has taken a more cordial stance towards China. The Workers’ Party, which Lula represents, has been known to have a congenial attitude towards the country.
President Lula also wants to abandon the isolationist foreign policy of his predecessor. That is why he is quite active in the global arena after taking charge. In addition to his economic agenda, Lula is also interested in playing a role in global peace efforts. Lula also discussed his proposal about the creation of a “peace club” with China and India to mediate an end to the conflict in Ukraine when he met with President Xi Jinping. China has already released its Position Paper on the settlement of the Ukraine conflict, and Lula’s proposed peace club is actually reinforcement of the Chinese proposal of mediation on the Ukraine issue. Lula’s visit reflects that the China-Brazil relationship is a positive development with the potential to impact peace, stability, and prosperity not just within their respective regions, but also globally. It also shows the emerging trend of multi-polarism in the global power structure.
—The writer is political analyst, based in Karachi.
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