Brazil is moving closer to China's Belt and Road Initiative. Why now? – The China-South project

By Matt Sandy

As China's Belt and Road Initiative enters its phasesecond decadethe country appears poised to persuade Brazil to make the important decision to finally sign on to its flagship overseas investment program.

Recent statements by Brazilian President Luiz Incio Lula da Silvaintensified speculationthat the country will join the broad infrastructure initiative. So what has changed and what would it mean for Brazil, China and the region's politics and economics?

Launched in 2013, the Belt and Road Initiative (BRI) was championed by Chinese leader Xi Jinping as a project to create modern trade routes echoing the historic Silk Road. Having significantly expanded the international presence of Chinese business and finance, the BRI has been seen as a strategic effort to increase China's global influence, while officials have sought to cultivate a narrative aimed at strengthening economic ties , political and cultural among its members.

Initially intended to connect Asia and Europe via Africa and the Middle East, the initiative expanded to Latin America in 2017. China has invested in nearly 150 countries, including 22 in Latin America and the Caribbeanwith total commitments exceeding $1 trillion in the first half of 2023. These investments mainly took the form of loans and contracts for large infrastructure projects, such as power plants, roads, airports, ports maritime areas and dams.

After a period of hesitation under presidents Michel Temer (2016-2018) and Jair Bolsonaro (2019-2022), Brazil, with its abundant resources and important position in South America, has once again returned to the forefront in discussions on the BRI.

Brazil sees itself in many ways as an emerging power, like China.

Margaret Myers, director of the Asia and Latin America program at the Inter-American Dialogue

Brazil has long understood that it is a key partner of China in Latin America, regardless of its decision to join the Belt and Road Initiative, says Margaret Myers, Asia and Latin America program director at the Dialogue inter-American. It is a preferred destination, even the first destination, for Chinese investors. This is unlikely to change.

At the same time, Brazil sees itself in many ways as an emerging power, like China, she adds. I don't know if joining the BRI would have in any way diminished Brazil's view of its interests in the region and the world, but it is potentially a consideration.

Lulas returns a key factor

While Brazilian diplomats remain skeptical about the benefits of joining the BRI, speculation that Brazil could sign a memorandum to join the initiative has been growing since Lula returned to the presidency in early 2023.

Recent visits to China by Lula And his vice-presidentGeraldo Alckmin, took place without any announcement on the Belt and Road. However, at an event in July, Lula made suggest Brazil could join: since China wants to discuss the Silk Road, we need to prepare a proposal to discuss what it will bring us, he said. What benefits can Brazil gain from its participation? What important role will Brazil play?

As Xi prepares to make a state visit to Brazil for the G20 conference in Rio de Janeiro in November and the two presidents also meet that month at the Asia-Pacific Economic Cooperation (APEC) summit ) in Peru, Chinese officials are eager to seal the deal. agreement during the 50th anniversary of Brazil-China relations.

There is a different perspective between the president's entourage and the Ministry of Foreign Affairs, explains Pablo Ibaez, professor of geopolitics at the Federal Rural University of Rio de Janeiro. Lula knows the value of growing relations with the Global South and prefers to foster relations outside the axis of the United States and Europe.

Ibaez, however, says the Foreign Ministry is very concerned about the implications. He adds: What can we learn from this? Could this lead to retaliation from the United States? The Belt and Road is another step in the expansion of Chinese power globally. It's huge and it's fundamental for the Chinese government.

According to experts interviewed by Dialogue Earth, Brazil is carefully weighing the potential benefits of membership with the aim of extracting maximum influence from Chinese negotiators.

A few years ago, I think Brazil did not clearly understand the strategic reasons for joining the BRI, says Joo Cumar, a researcher at Plataforma CIP, a climate and foreign affairs NGO. But today, some members of the Lulas government are starting to think strategically about what Brazil should ask for in return for its involvement.

Details are uncertain, but experts say Brazil is likely seeking support beyond exporting raw materials to China and importing finished goods in return.

China has been Brazil's largest trading partner since 2009, with bilateral trade between the countries reaching $80 billion in the first half of 2024, according to Brazilian foreign trade data. But around 80% of Brazilian exports to China consist of just three products: oil, iron ore and soybeans.

Last year, during his visit to BeijingLula signed 15 agreements, including on space technology, renewable energy, climate cooperation, electric mobility and green finance.

Cumar believes that there are three key areas where Brazil should seek to benefit from BRI membership: cooperation on green energy and technology, particularly in the context of the energy transition; reindustrialization efforts that seek to add value to our commodities by interpreting Chinese technologies for land reclamation and sustainable practices, as well as government-planned infrastructure projects, particularly with regard to integration of South America. [into] various transport routes.

The researcher added that during his conversations with Brazilian government figures, the dialogue with China on financial issues was another particularly interesting topic. They were studying how the Chinese could finance part of the federal government's new programs in industrialization, ecological transformation and energy transition. At that time, there was an initial idea that the BRI could be a financing route for these projects.

An evolving Belt and Road

The BRI has evolved significantly since its beginnings, and Chinese leaders have expressed a desire to steer the initiative toward small but interesting diversified investments in green or innovative sectorsrather than the major infrastructure projects emblematic of its first decade.

China is struggling to define the BRI in this new phase, says Myers. We're not going to see the same degree of large-scale infrastructure development as we have in the past.

On the Brazilian side, things are also complex. Potential China's investments in electric vehicles in Brazilfor example, have raised concerns within the domestic industry, Cumar says.

However, it would not be wise to rule out the possibility of significant investment in infrastructure to seal the deal, experts suggest. Brazil faces significant infrastructure investment gap, says World Bank report which suggests that the country needs to allocate $778 billion to close this gap by 2030, set by the United Nations Sustainable Development Goals.

Last year, Lula announced a new Growth Acceleration Program (PAC) dedicate BRL 1.7 trillion (around $300 billion) to infrastructure, energy and transport over four years.

China is trying to take this topic to a new level of negotiations, Ibaez says. The Chinese Ambassador to Brazil recently gave an interview to CNN Brasil, discussing the importance of investments in Brazil and the region. He mentioned that China could help Brazil with the PAC. This indicates that Brazil's involvement in the Belt and Road is increasingly becoming a reality.

Another point of interest is the long-discussed Central Bi-Oceanic Rail Corridor, a 3,750 kilometer railway project connecting the Pacific Ocean to the Atlantic Ocean via Peru, Bolivia and Brazil. I recently heard rumors that this project is still under study and is being discussed in relation to the development of the Chancay port, so it is not dead, says Myers. THE Port Chançay in central Peru, it is one of the largest investments in Latin America under the BRI, and is expected to be inaugurated in November, in a ceremony likely to be attended by Xi and Lula.

Chinese financing of the proposed railway would align well with Lulas' goal of greater integration among South American countries, led by Brazil. Last year he launched the Five Roads Initiative to better connect Brazil to its neighbors, thereby increasing trade within the continent.

Why now is a good question, Myers says. I don't know if there is a project that they are really trying to convince China to support at this particular time. Brazil hosts the G20; it could be that this is the time for the two countries to demonstrate a strong relationship.

That said, there is a risk of overinterpretation of the symbolism of such an announcement, she believes. In my opinion, [joining the BRI] is primarily symbolic in nature, representing a certain degree of support for China's global agenda as well as China's growing role and global outlook.

Sometimes, when countries join the initiative, agreements are announced in tandem. But these are usually one-off deals, Myers added. It’s not like we’re seeing an explosion in overall economic activity before or after the decision to join the BRI. We generally do not see a major change in overall membership dynamics before and after the BRI.

Matt Sandy

Matt Sandy is a British journalist who has covered the Amazon rainforest for various publications for almost a decade.

This article was originally published onEarth Dialogueunder theCreative Commons BY NC NDlicense.