Relations with Chinese language are impartial from the federal government, says director of the Brazil-China Enterprise Council

With the Communist Party moving to keep Xi Jinping in the lead, relations with Brazil should not change abruptly even with Brazilian elections, says CEBC research director Tulio Cariello

The Chinese Communist Party (CCP) Congress this week marks one of the most important moments for the country in recent years, with the choice of guidelines that will guide the world’s second largest economy and, on the political front, the new government leaders. — including the likely reappointment of Xi Jinping to a third term, unprecedented in recent history, since a transition of power every ten years was common. Although the imbroglios of Chinese politics do not appear so much in the Brazilian news, Tulio Cariello, director of content and research at the Brazil China Business Council (CEBC), argues that Congress, “after the American elections, is the main international event in which Brazil should pay attention”.

In addition to being Brazil’s largest trading partner, with more than US$135 billion traded in 2021 (an increase of almost 30%), China was also the source of almost US$6 billion in investments in the country in the year, with projects in the oil sector. , electricity and information technology, as shown in a recent CEBC report. THE EXAMCariello spoke about the opportunities in the Sino-Brazilian relationship, which he believes will not change that much regardless of the government elected here in October or what the top communist echelon decides in Beijing in the coming days. “The state relationship between Brazil and China is quite stable. Government enters, government leaves, the bilateral relationship is very institutionalized”, she says.

Below are the main excerpts from the interview.

Why should congressional events matter to observers in Brazil?

The Congress takes place every five years and is where it is decided who will enter the Chinese government’s top leadership. After the US elections, I would say that it is the main international event that Brazil should pay attention to. This year, in particular, it is very difficult to have forecasts, because we did not have a large leak of information. One of the only certainties is that Xi Jinping should enter his third term, which will be unprecedented.

It is possible that we will also see a change in the central committee, such as a change of prime minister — this is relevant because the prime minister is really in charge of the economic part. It is a Congress that lasts for days, it also takes stock of recent years and goals and priorities for government action. We are in a very troubled international scenario, and China plays a very important role, especially in the commercial and investment area. Something we have to be very attentive to is the environmental agenda: after an “at any cost” growth in the 1980s, China today actually has a much greater leadership role in this energy transition, investing in energy, electric vehicles, and including here in Brazil.

How does the fact that we have a change of government here in Brazil with this year’s elections impact this relationship with the Chinese? Or does it not make an impact?

The impact is very small, to be honest. The state relationship between Brazil and China is quite stable. Government enters, government leaves, the bilateral relationship is very institutionalized. Perhaps the fact that China has a very strong state and few changes makes this easier. We have a series of joint plans and we have a Sino-Brazilian High-Level Coordination and Cooperation Commission (Cosban) that brings together the two countries. I believe that this commission has even greater weight today than it ever had — the vice-premier was the one who presided over the Chinese side, but today it is the vice-president.

Do controversial statements regarding China by the Brazilian government have the potential to worsen the relationship over time?

They [chineses] understand that, first, the relationship that Brazil has with China is essentially economic. We do not have such a close political relationship in many international forums, for example, even though we are together in forums such as the BRICs. The relationship with China is essentially trade, and at this point it is going very well, breaking records in the pandemic.

The current scenario, on the other hand, is more complicated: I analyzed trade up to September and China was the only one among Brazil’s main export destinations with a decline. It was a small drop, around 2%; but it’s a much more conjunctural issue, it’s not a problem with the government. China is still a very closed country with the pandemic, lockdowns, which ends up delaying the shipment of goods and generating commercial challenges. Investment is also doing well, we had the second highest number of projects in China in the entire historical series. At the end of the day, the economic relationship — which is what guides the bilateral relationship in fact — is independent of the government. It’s obvious that if the government doesn’t get in the way, that’s a lot. In the Bolsonaro government itself, the rhetoric seen at the beginning of the government was later muffled, especially from the term forward, there was a change of chancellor. And in terms of agriculture, which is one of the main stakeholders and has a strong participation in the government, China is the main destination for exports. In this government, for example, a nucleus was created within the Ministry of Agriculture just for China. That is, the relationship already walks independently.

Soybean harvest: China is the main destination for Brazilian exports (Getty Images//iStockphoto)

And at the other end: can the results of the Communist Party Congress, such as the reappointment of Xi Jinping or possible new goals in the economy, change anything in this relationship with Brazil and Latin America? Can you change investment priorities, for example?

I don’t think there will be any long-term structural changes that will bring about a Chinese change in the region. Latin America is not a priority for China — the priority is above all that surrounding Asia. They have Russia, which is a troubled neighbour, and China’s main challenge, which is the US, as well as Europe divided over interactions with the Chinese. Latin America, even due to the geographic distance and this economic relationship already established, ends up not generating much of a problem.

The relationship is growing, of course, in recent years we have seen a great proximity between China and the countries in the region. And it’s reciprocal, countries have sought out China, repositioned their status with Taiwan, for example. Argentina has entered the Silk Road — not just any country in the region, it is an important economy — and Uruguay is trying to make a deal with China despite Mercosur. In South America especially, only Brazil and Colombia are not on the Silk Road. And above all, commercial proximity is growing and natural, as it is a type of trade in which China needs to import commodities on a large scale and all countries in the region export, Brazil and Venezuela in oil, Brazil and Argentina in agro, Brazil, Chile and Peru in ore. So the relationship is on the upswing. And I don’t think there will be any change because of this Congress, it tends to be more of a continuity of what is already being done.

Is there room for greater complexity in the economic relationship in these transactions, beyond the export of commodities such as soy or ores?

The business relationship has become more complex. When we look at the raw data, it is difficult to see this, because sometimes more than 80% of what we export is soy, ore and oil. The products that are below will never reach more than that, due to the nature of the relationship and the Chinese demand that is very high. But there are some points, for example, we have managed to open up demand in the Chinese meat market, which does not enter as agribusiness, but as a processing industry. Today we already export more chicken, pork, beef and cellulose. And there are a number of sectors that have potential.

It’s no use thinking that we’re going to start exporting manufactured goods to China in volume, that’s what they do, but we can explore this in a niche thing. We can enter premium markets: the Chinese middle class is now the size of the entire US population, it has a lot of space. What we always say at the Council is that we could explore sophistication and added value in a sector that we are already competitive, which is agro, but exporting premium cuts, premium coffee, honey, nuts, alcoholic beverages. And that is also part of creating a seal of Brazilian quality. Chile is a country that is very successful in this, it exports premium fruit, wine — they don’t just export copper.

Does this same space for increasing complexity and advancing relationships apply to direct investments? Recently, the CEBC itself showed in one of its events cases such as the Great Wall [montadora de carros elétricos] or from CTG [em energia]with investments beyond commodities.

Certainly. We see growing interest from China in the information technology sector here, and the area of ​​sustainability also has huge potential. Many investments here are already in clean energy. Fronts such as green hydrogen, solar energy, wind energy, China has invested a lot abroad and has space here in Brazil.

And in the area of ​​infrastructure there are also great opportunities. According to the model in which it has experience, China would come more in construction contracts, with concessions to build railroads, ports, roads. And I’m really curious to understand why there isn’t more of that, more investment in infrastructure from China here. Sometimes the businessmen there ask me that, and I return the question. [risos]. China has a gigantic rail transport network, and Brazil is huge, in a way there are many similarities that could be explored.

Source: Exam