BY LORO HORTA
When President Lula Da Silva took office in 2002 he made relations with the People’s Republic of
In 2010 the Chinese government granted
Both countries also grew increasingly close politically supporting each other’s position on issues such as the world trade regime, human rights, UN reform and climate change. In 2009 in the wake of the world economic crisis and a weakening American dollar, both countries signed a currency swap agreement under which both nations pledge to increasingly conduct their bilateral trade in their respective currencies.
This growing economic and political interaction between the two giants led some observers to conclude that a growing political alliance was being forged between two rising powers to balance American global influence. While indeed Sino-Brazilian ties have witnessed a remarkable increase closer scrutiny shows that things are far more complex.
Sino-Brazilian relations benefited enormously from the personal enthusiasm of long serving Brazilian foreign minister Celso Amorim and President Lula. Amorim confronted serious reservations and opposition from the Brazilian political establishment and the business sector who feared the negative impacts of Brazilian recognition of
Brazilian textile manufacturers have been hard hit by Chinese cheap imports and the once thriving sector is struggling to survive. Joze Gomes da Silva, president of the Brazilian Textile Association complains: “The openness of the Brazilian economy can't just lie on opening imports to every country while not getting anything in return.”
The opportunities offered by the large Chinese market to Brazilian companies were expected to offset and compensate for losses caused by Chinese penetration of the Brazilian economy. However, argue the critics, excessive Chinese protectionism had made it very difficult for
The Brazilians also accuse the Chinese of having lured them with the promise of big sales to the growing Chinese domestic aviation market to get their technology and then left them in the cold. In 2008, Embraer sales were so low that the company seriously considered terminating its operation in
Sino-Brazilian competition is now fast spreading to former Portuguese Africa where Brazilian companies are now faced with a surge in Chinese investments. Brazilian mining giant Vale is aggressively competing with the Chinese in coal rich Mozambique. Since 2009, Vale invested $1.3 billion in coal mines in the central provinces of Zambezia and Tete, while Chinese steel giant Wuhan Steel & Steel has invested a $1 billion. Brazil has been investing heavily in oil rich Angola where China is now the largest trading partner of that nation. In 2008 the director of the Brazilian state investment agency denied reports of Brazilian and Chinese competition over resources in Africa. During President’s Lula da Silva visit to Africa in July 2010 the Brazilian newspaper Globo ran a story entitled “Lula exacerbates competition with China” in which it described the growing tensions between the two giants.
In February 2011 Brazilian media reported that the government was planning to introduce protective legislation to safeguard the steel and mining sector in the country. Among the legislation are laws establishing limits for foreign investment in certain sectors of the economy and laws establishing quotas forcing foreign companies to meet domestic market needs. The media reports clearly state that these measures were directed mainly at China. In November 2010 in a long interview with the Brazilian newspaper Estadao Amorim, the main architect of the Sino-Brazilian partnership, said that Brazil needed to rethink its relationship with China. After carefully nurturing this important relation one of Brazil’s longest serving foreign ministers and one of its most brilliant thinkers seemed to be consumed with doubts and regrets.
Despite all the tensions there are still many benefits that both countries have and will continue to take out of this relation. For instance Chinese agriculture imports are crucial for Brazil’s economy in light of protectionist policies in the United States and Europe. Brazil needs Chinese capital to develop its new oil fields and is likely to side with China in many international issues such as climate change and international trade negotiations.
However, one thing seems to be certain the enthusiasm for an alliance between two developing world giants to counter the United States seems to be dead. Sino-Brazilian relations are likely to be marked by pure pragmatism as the ideological idealism of the Lula administration seems to have been badly misplaced. When Obama visited Brazil in March he was warmly received with the tone of the visit being quite conciliatory and diplomatic.
Brazil thought of using China to balance the United States, but it may now need the United States to balance China. In October 2010 -- in perhaps an indication of the current state of relations -- a friendly basketball game between the Chinese and Brazilian national teams ended in a massive brawl. As the Brazilian saying goes:
“Amigos amigos amigos, negocios a parte (There is no such a thing as friendship in business)”
The Chinese seem to understand this better than the Brazilians
Loro Horta is a graduate of the People’s Liberation Army National Defense senior officer’s course and the Chinese Ministry of Commerce Central School. He is also a graduate of the United States National Defense University and is currently pursuing further studies at the US Naval Post Graduate School.