Xi Jinping's visit strengthens Sino-Brazil trade partnership

Xi Jinping's visit to Brasilia last week marked a new rapprochement between Brazil and China. The 37 cooperation agreements signed at the Palácio da Alvorada promise to boost Brazil's development with a large volume of investments in areas such as industrialization, agro-industry and infrastructure. Thanks to the elevation of its diplomatic status, it can also progress in the ranking of the largest investors, with a particular eye on major infrastructure projects.

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China has been Brazil's largest trading partner since 2009, with a flow of $157 billion last year, of which $51.1 billion represents a surplus for the Brazilian side. The majority of Brazilian exports come from agro-industry and imports are mainly electronic components and industrialized products.

The highlight of Xi's visit was certainly the announcement of a “synergy” between Brazilian development projects and the Belt and Road initiative, the “new Silk Road”, which brings together investments of around 1,000 billion dollars in 120 different countries. Brazil refused to formally join the initiative, but reached a diplomatic agreement in which it retains its autonomy to decide on a case-by-case basis which projects will receive investments and overcomes possible unease with the United States.

Authorities of Brazil and China will jointly discuss the work of the New Growth Acceleration Program (PAC), the New Brazilian Industry (NIB), the Ecological Transformation Plan and the South American Integration Routes Program who will receive contributions, and the first results should be defined in two months. In this latest program, Asians will cooperate with Brazil's initiative to connect South American countries, including access to the megaport of Chancay, Peru, recently opened by Xi Jinping's government. Once the work is completed, Brazilian exports to China will have to travel a much shorter distance.

Still in the field of investments, another step was taken: the National Bank for Economic and Social Development (BNDES) and the Chinese Development Bank (CDB) concluded the first loan in Chinese currency, the renminbi, and not in dollars . The CDB contributed 5 billion RMB, or around 4 billion reais, with a payment term of up to three years. The value was added to the BNDES investment portfolio. Reducing dependence on the dollar for financial transactions is one of the goals of Brazil and China, as well as other Brics members.

Agro-industry, the main economic sector in relations between the two countries, has also benefited from these agreements. These include the opening of the Chinese market — with 1.4 billion consumers — to four new products: grapes; sesame; fish meal and oil, as well as other fish proteins and fats for animal feed; and sorghum. The documents define the phytosanitary requirements for the sale of the products, that is, the safety protocols and standards that must be followed. Two other pacts include cooperation on pesticide regulation and technology, as well as technical, scientific and commercial cooperation in the agricultural sector.

According to the Ministry of Agriculture and Livestock (Mapa), the new markets, with the release of pecan sales to China, could bring in up to $500 million more per year. Currently, the Asian country is the main destination for Brazilian agriculture, and in 2023 it imported $60.24 billion worth of products, including soybeans, corn, sugar, beef, pork and chicken , cellulose and cotton. Mapa also highlighted the agreement reached with the Chinese coffee company Luckin Coffee the day before President Xi's visit, which provides for the purchase of 240 thousand tons of Brazilian coffee between 2025 and 2029, for an estimated value of 2.5 billion dollars.

In the technological field, cooperation agreements cover areas such as the photovoltaic industry, nuclear technology for peaceful purposes – such as the production of medicines –, particle accelerators, artificial intelligence, mechanization and AI for family farming, the digital economy and satellite internet. The latter includes an agreement with SpaceSail, a Chinese competitor to the American Starlink, owned by billionaire Elon Musk, which currently provides Internet to public agencies located in remote areas. Other areas covered by the agreements were sport, tourism, culture, health, mining and state media.

Good timing

Leonardo Paz, researcher at the FGV International Center for Prospecting and Intelligence, points out that Brazil has always struggled to invest in structural projects, such as industrial parks and infrastructure, with its own resources, and ends up depending of external contributions. He cites as limitations high interest rates, low savings and the “madness” of public administration, such as the secret budget – which ended the transparency of a share of the billion-dollar Treasury. of dollars. The rapprochement with China can thus help to overcome these obstacles to development.

“Basically, China is the only country today that has a reserve of dollars to be able to invest in various parts of the world. Brazil is relatively stable, there is no civil war, it enjoys a certain political and institutional stability. destination for this investment,” commented the expert.

Paz also considers “very positive” the diversification of the agreements signed on Wednesday, which include cooperation in cutting-edge areas, such as artificial intelligence and particle accelerators, as well as in industry and infrastructure. “Brazil has an extreme need to invest in industry. If you say you are going to create the Safra plan, worth 500 billion reais, everyone thinks that is reasonable. If you say that you are going to give 100 billion reais to the industry, it becomes an outcry,” he lamented. .

International business law specialist Marcelo Godke points out that the agreements are beneficial not only for Brazil, but also for China, which is facing a cooling of its economy and predicts a loss of its commercial power in the United States under the government of Donald Trump. , starting next year. The Republican promises to heavily tax imported products.

“So these agreements come at the right time. The Chinese economy has cooled, the growth rate has fallen. The possibility of investing in infrastructure in Brazil in some way reflects this need to put the money where it will be the most return,” he said. . Regarding cooperation in the field of high technology, Godke believes that, initially, China will be the biggest beneficiary of the sale of its products to Brazil. However, in the long term, Brazil also tends to benefit from increased productivity, or even the development of its own technologies.

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