Brazil and China: An Uneasy Partnership

by Hongwei Shang on February 15, 2008

in News

“Brazil and China: An Uneasy Partnership”

Amaury de Souza
Senior Partner
MCM Associated Consultants
São Paulo and Rio de Janeiro

Introduction

In 2005 Air China started weekly flights between Beijing and São Paulo, inaugurating the first direct air route between China and Latin America operated by a Chinese carrier. The event symbolizes the astonishing growth of China’s economy and its seemingly insatiable hunger for commodities that has pushed it to forge new ties with countries in Latin America.

Brazil occupies a special place in the region in its relations with China. It was labeled a strategic partner in 1994, the first South American country to receive the designation, and it is China’s largest trade partner in Latin America.

Although Brazil traded with China before 1949, diplomatic relations were established only in 1974 and blossomed after Chinese President Jiang Zemin’s tour of the continent in April 2001. Bilateral relations were further strenghtened by President Lula’s visit to China in 2004, followed by the visits of President Hu Jintao and Vice President Zeng Qinghong in 2004 and 2005, respectively.

China’s booming market has helped Brazil to greatly expand exports and to balance its trade accounts. Brazil’s exports to China jumped from $676 million in 1999 to $10.7 billion in 2007, producing sizeable surpluses. During President Hu Jintao’s November 2004 visit, Brazil and China signed a bilateral trade partnership, hoping to propel the development of both nations, and Brazil conceded market economy status to China.

Geopolitical ambitions have also been important in the establishment of closer relations between the two countries. Brazilian diplomacy under President Lula has viewed China’s rise to global power as a means to counterbalance United States influence. Brazil also courted Chinese backing in its bid for a permanent seat on the United Nations Security Council.

Recently, Brazil’s eagerness to promote closer relations with China has been moderated by the realization that it is a double-edged sword. China’s spectacular growth rates have produced a booming demand for Brazilian commodities. But the ensuing surge in imports of Chinese goods has shown that China is also a formidable competitor to Brazilian manufacturers. Also, Chinese investments in Brazil’s infrastructure have been slow to materialize.

Likewise, diplomatic dreams of a strategic alliance with China to provide some balance to United States power or to advance trade negotiations at the Doha Round of the World Trade Organization (WTO) have been downscaled and are likely to be replaced by a more realistic foreign policy stance.

The bottom line is that China represents as much a threat to, as an opportunity for, Brazil. Increased competition from China is likely to adversely affect Brazilian exports in third markets and to displace inefficient producers at home. By the same token, China’s pursuit of its national interests will hardly be diverted by occasional efforts to join forces with Brazil in multilateral fora or by rhetorical adherence to a South-South strategic alliance. China’s success poses a challenge that Brazil can only hope to meet by increasing its own competitiveness.

To Read Full Text Click Here http://www6.miami.edu/hemispheric-policy/FinalVersionDeSouza21408.pdf

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