Brazil-China state relations considered “quite stable” by business council

Brazil-China State relations are “quite stable”. They should remain so after elections in Brazil and the Chinese Communist Party Congress, according to Brazil-China Business Council (CEBC) research director Tulio Cariello.

“The state relationship between Brazil and China is quite stable, (…) the bilateral relationship is very institutionalized. Perhaps the fact that China has a solid state and few changes makes this easier”, Cariello told Exame magazine in an interview.

“We have a series of joint plans and 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”, he added.

The Chinese Communist Party (CCP) Congress this week marks one of the most critical moments for the country in recent years, with the choice of guidelines for the world’s second-largest economy and, on the political front, the new government leaders — including the likely and unprecedented reappointment of Xi Jinping for a third term.

“They [Chinese] understand that, first, Brazil’s relationship 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”, Cariello said.

The relationship with China is essentially commerce and has been breaking records even during the pandemic.

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 nearly 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 current scenario, Cariello says, “is more complicated”, with bilateral trade up to September declining, around 2%; “but it’s a much more conjunctural question”, with China “still a very closed with the pandemic, lockdowns, which end 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. The economic relationship — which guides the bilateral relationship, is independent of the government. It’s obvious that if the government doesn’t get in the way, that’s a lot”, the CEBC top researcher said.

“And in terms of agriculture, which is one of the main stakeholders and has a strong participation in the government, China is the main export destination.”

For example, this government created a nucleus within the Ministry of Agriculture just for China. That is, the relationship is already walking independently”, he added.

“The business relationship has become more complex, (…) 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 (…) we have managed to open up demand in the Chinese meat market, which does not enter as agribusiness, but as processing industry.”

“Today, we already export more chicken, pork, beef, and cellulose. And several sectors have potential”, Cariello said.

He added that Brazil would unlikely start exporting manufactured goods to China in volume, but it can explore “niches” and enter premium markets.

“The Chinese middle class is now the size of the entire US population; it has a lot of space.”

“We always say at the Council that we could explore sophistication and added value in a sector that we are already competitive with, which is agro, but exporting premium cuts, premium coffee, honey, nuts, and alcoholic beverages. And that is also part of creating a seal of Brazilian quality”.

The CEBC director points to a growing interest from China in the information technology sector and investments in green hydrogen, solar energy, and wind.

And in infrastructure, there are also “great opportunities” for China to engage more in construction contracts, with concessions to build railroads, ports, and roads.