Jamil Chad Bolsonaro ignores promises and ideology and intensifies trade with China 28.12.2022 04h00

If the rhetoric of Bolsonarism has tried to make China a sort of international traitor and the target of communist attacks around the world, the truth is that Jair Bolsonaro’s tenure comes to an end with the trade and investment relationship between the two countries breaking records.

The numbers contradict former Chancellor Ernesto Araújo’s continued attacks on Beijing, contradict the president’s speeches against the Chinese vaccine, and show that the strategy adopted by Itamaraty in the early years of government has failed to undermine any rapprochement between Brasilia and Beijing.

In the government, in the first months of 2019, the mandate was to promote full rapprochement with Donald Trump’s US and even forge diplomatic alliances against the Asian country. At UN meetings, while Chinese communism was denounced by Itamaraty, then-Health Minister Luis Henrique Mandetta even admitted that any rapprochement between his portfolio and China was undermined by the Executive.

The truth was very different from Bolsonarist rhetoric. Data from the government showed that by the end of November, China represented 27% of all exports from Brazil to the world.

In other words, one out of every four dollars the country earns from international sales comes from China.

Taken together, the five main destinations to which Brazil exports after China do not reach the value of the Beijing market for domestic goods.

The American market consumes 11% of Brazil’s sales to the world, compared to 4.7% in Argentina, 3.6% in the Netherlands, 3% in Spain and 2.7% in Chile.

What happened in Bolsonaro’s four years? In short, Brazil and China intensified their trade and investment relations in an unprecedented way in Brazil’s recent history.

The first year of the government, 2019, ended with Brazil’s $63 billion in exports to China and $29 billion in sales to the U.S. market. Four years later, the gap in the role of Americans and Chinese on the Brazilian agenda was even greater. By November 2022, Brazil exported US$83 billion to China versus US$33 billion to the US.

The increase in exports was mainly driven by growth in the agriculture and mining industry.

On imports, too, the data show that pragmatism and commercial realism are unaffected by a government with ideological parameters.

In 2019, China and the US competed for space as Brazil’s largest supplier of goods. At the time, Beijing had exported US$36 billion to the country against US$34 billion of the US. Four years later, the leap is significant in the Chinese presence.

By November 2022, China had exported US$56 billion worth of goods to Brazil versus US$47 billion in US imports.

In fact, in 2022 alone, imports of Chinese goods to Brazil increased significantly, with a 30% jump over 2021 data.

The data is impressive:

• Between the years 2020-2022, the trade relationship between China and Brazil broke records one after the other.
• In 2021, 20% of all food imported by China came from Brazil.
• In 2020, Brazil’s trade surplus with China represented 65% of all Brazil’s trade surplus with the world.
• Between 2011 and 2021, Brazil’s trade surplus with China reached $200 billion.

There are several reasons for this commercial boom. According to Cláudia Trevisan, Executive Director of the Brazil-China Business Council, some of these can be explained as follows:

• The trade war between China and the US is opening up space for the export of agricultural products from Brazil to the Chinese market.
• The growth of the Chinese economy at the peak of the epidemic.
• Structural interdependence relationship between two countries.

What about investments? The Brazil-China Business Council highlights that in 2021, Chinese companies invested in Brazil US$ 5.9 billion, 208% higher than in 2020 and the highest since 2017.

What the numbers show refutes Bolsonaro’s anti-Chinese rhetoric once again. According to the Brazil-China Business Council:

• The growth of Chinese investment in Brazil has far exceeded the 23% increase recorded by the Brazilian Central Bank in total foreign investment in the country in 2021.
• According to the Chinese Ministry of Commerce (MOFCOM), the progress of Chinese investment in Brazil is much higher than the expansion of 3.6% of Chinese investment in the world to US$113.6 billion in 2021.
• The China Global Investment Tracker estimates that Brazil was the country with the most Chinese investment in the world in 2021, with a total share of 13.6%.
• Despite the expansion recorded in Brazil, China’s investments in the USA decreased by 27%, while investments in Australia decreased by 70%. The Belt and Road Initiative (BRI) fell 41%.

And the future?

According to Cláudia Trevisan, one of the innovations in bilateral trade is complexity in China’s food consumption, which will mean greater diversity in Asian purchases of Brazilian products.

Instead of buying products in bulk, there is an increasing trend towards ready-to-eat foods today. Therefore, the added value is higher.

On the transition team in Brazil and among members of the government of President-elect Luiz Inácio Lula da Silva, China will play an important role in reformulating the country’s foreign policy, making it one of Lula’s first international travel destinations.

The hope of the new government is to once again strengthen relations with the Brics. But without this approach, it means a new relationship of automatic alignment or subordination to the country that represents the greatest destination for national exports.