“Brazilian and Chinese interests…align at present in some important areas, the most important being an investment in a multipolar world order.”
Today (March 28), Brazil’s President Luiz Inácio Lula da Silva (aka Lula) was supposed to be meeting the President of the People’s Republic of China Xi Jinping for the first time in over a decade. There was a lot riding on the outcome. After four years of strained relations with the government of Brazil’s former premier Jair Bolsonaro, currently still laying low in Florida, China is keen to get back on friendly terms with the fellow BRICS member. But the visit had to be “indefinitely postponed” at the last minute after Lula was admitted to hospital with a “bacterial and viral bronchopneumonia.”
Lula is apparently making a strong recovery and Brasilia has conveyed to Beijing his desire to reschedule the visit but it is unclear when that will happen. In the meantime, 240 Brazilian officials and business figures, many from the country’s burgeoning agricultural industry, are in Beijing trying to hash out new deals in Brazil’s biggest export market. From Bloomberg:
Brazil’s Agriculture Minister Carlos Favaro, who landed on Wednesday alongside the unusually large business delegation, has been laying the groundwork for several potential agreements between the two countries. In an interview on Friday, he said his mission is to re-establish warm ties between the countries, and refrained from giving explicit targets for bilateral commerce.
Trade and investment are the key drivers for any deepening of relations between the two countries. Lula wants to boost sales to China, which is already the biggest destination of Brazilian exports, and lure investment to upgrade the country’s infrastructure.
The South American nation is already the main supplier of agricultural goods to China, accounting for 60% of its soybean imports and 40% of its beef purchases. Now Brazil wants to push those numbers even higher while also working with Beijing on strategies to keep agricultural expansion from harming the environment.
A Win-Win for Both Countries
China has been Brazil’s largest trade partner for the past 14 years. Last year, the two countries’ bilateral trade was worth $172 billion — more than twice the size of Brazil’s bilateral trade with the US. The Lula government is also looking to expand Brazil’s exports of both corn and cotton to China — two sectors that have been traditionally dominated by the US. It would be a win-win for both BRICS economies: China would get to reduce its dependence on US food exports as US sanctions loom while Brazil would get to expand its already huge agricultural industry — ideally not at the expense of the Amazon rain forest.
Also no doubt on the agenda when the two presidents finally meet will be the unanimous decision last Friday to appoint Brazil’s former President (and former vice president under Lula) Dilma Rousseff as president of the New Development Bank (NDB), formerly known as the BRICS bank. Founded on the first day of the 6th BRICS summit in 2014, with $50 billion of seed funds, the bank’s purpose is to mobilise resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).
Its founders harboured dreams of finally breaking the grip of the Bretton Woods institutes, the International Monetary Fund (IMF) and World Bank. But the NDB has so far failed to live up to its early promise. But that could change. There is likely to be plenty of demand for emergency financial support in the coming months and years as countries in the Global South struggle to service their debts. Russia’s decision last week to write off $20 billion of debt owed by African nations suggests a willingness to take on a larger, more active role in this area.
Membership of the bank is also growing. In 2021, Egypt, the United Arab Emirates, Uruguay and Bangladesh took up shares albeit of smaller size than the respective $10 billion investments made by the bank’s founding members. Worldwide interest in joining the BRICS group is also “huge,” according to South Africa’s Foreign Minister Naledi Pandor. In early March, she said she had 12 letters from interested countries sitting on her desk. They apparently include Saudi Arabia, United Arab Emirates, Egypt, Algeria, Argentina, Nigeria and Mexico.
It is hard to imagine Mexico, long part of the North American free trade bloc NAFTA, now supplanted by the United States-Mexico-Canada Agreement (USMCA) agreement, taking such a bold step — even as tensions rise between parts of the Biden Administration, particularly the State Department, and Mexico’s AMLO government. As Silk Road Briefing notes, such a move would be seen as “a direct affront to Mexico’s US relations and a sign that global economies, even on America’s border, are having serious doubts about the US ability to trade on fair and equal terms.”
Other big items likely to be on the agenda of a future meeting between Lula and Xi will include fleshing out recently announced plans to set up yuan clearing arrangements in Brazil, as well as Brazil’s prospective membership of China’s Belt and Road Initiative (BRI). That’s right, folks: Brazil, one of the four founding members of the original BRIC grouping (the “S” for South Africa came later), is one of 50 or so countries yet to join China’s flagship global infrastructure project. Not that it has made much of a difference: even outside the BRI, Brazil placed fourth among the countries that received the largest amount of inward Chinese investment between 2006 and 2021.
The ongoing war in Ukraine is also likely to feature in any future discussions between the two presidents. Based on their public statements, both want to see the war come to an end. Since taking office for an unprecedented third term in January, Lula has proposed creating a small group of countries totally uninvolved in the Ukrainian conflict — including, for example, China, India, Brazil, among others — to mediate a negotiated settlement. He even discussed the idea with Biden during his visit to Washington in January, but it was unceremoniously shot down.
Toward A More Strategic Relationship
Most importantly, as a piece in Global Voices notes, if the meeting had gone ahead, which it presumably will do shortly, it would have provided “an opportunity for the relationship to develop and take on a more strategic character under the incoming Lula government.” If, or rather when, this happens, it could “significantly impact” the United States and the American continent as a whole…
Read the full article on Naked Capitalism
Nick Corbishley 