Brazilian Leader Lula In China: Heralding A New Multipolar Era – Analysis

The April four-day visit of Brazilian President Luiz Inácio Lula da Silva to China marked a kind of “reset” of relations between the People’s Republic of China and the Federal Republic of Brazil.

The two countries are the two largest developing economies and their cooperation is mutually beneficial as it brings peace, stability and prosperity to both the Brazilians and the Chinese, and consequently to the whole world. “Friendship is like a bottle of wine, the older the better”, was a quote from Xi Jinping during his visit to Brazil in 2014, which was repeated on April 13 by Lula, who described the relationship between the two countries as “extraordinary”.

Historical context

Bilateral relations between Beijing and Brazil have a long history. Brazilian-Chinese ties were initiated at the beginning of the 19th century and continued until 1949, when they were interrupted by the coming of the Communists to power and the creation of the People’s Republic of China. Diplomatic relations between the Republic of China and the Republic of Brazil were officially established in 1974, when embassies were opened in Beijing and Brazil. Since then, relations have developed on the principles of non-interference in the internal affairs of other countries, equality and mutual benefit.

In 1993, Brazil became the first developing country to establish a strategic partnership with China, and in 2012, the relationship between the two countries was further enhanced and formally acquired the character of a “comprehensive strategic partnership”. From 2006 to 2022, the China-Brazil High-Level Coordination and Cooperation Committee held six meetings, advocating for continuous progress in comprehensive practical cooperation. Agricultural products, minerals and oil were at the center of economic cooperation. Chinese investments in Brazilian infrastructure and public projects have benefited millions of Brazilians. In July 2014, Xi arrived in Brazil to attend the 6th BRICS Summit and meet with leaders of the Community of Latin American and Caribbean States (CELAC). High-level visits have also become more frequent in recent years.

Lula in China – a visit of great potential

Lula has proven to be a sincere friend of the Chinese people, so this year’s visit to China is his fifth in a row and his first outside America. This shows how important China is to him as a country and partner in the efforts for Brazil to find a suitable place at the table within the multipolar global order. It was recently reported on the Chinese portal China Daily that Lula’s meeting with US President Joe Biden in February “did not produce significant results”, while Lula’s visit to China in April has great potential for deepening “win-win” cooperation. Indeed, Lula’s visit to the US was largely symbolic, with the Brazilian president thanking his American counterpart for helping defend Brazilian democracy during street protests following the Brazilian presidential election. Despite the courtesies, the visit was ultimately frustrating because the two sides failed to agree on how much money to donate to the US to fight deforestation in the Amazon rainforest and because of US skepticism about Brazil’s calls to end the war in Ukraine.

On April 14, Xi and Lula had a closed-door meeting that lasted three hours, far longer than planned. “The duration of the meeting speaks for itself,” said Brazilian Ambassador Marcos Galvão at a late-night press conference. Xi greeted Lulu with military honors, including the firing of 21 honorary volleys near Tiananmen Square in the heart of Beijing. The two leaders walked to the sounds of the Brazilian song “Novo Tempo” (“New Time”). The meeting was held in the Great Hall of the People. Emphasizing that China always sees its relationship with Brazil as a high priority on its diplomatic agenda, Xi said that “welcomes more high-quality Brazilian products on his market. China will actively seek to achieve greater synergy between its New Silk Road initiative and Brazil’s reindustrialization strategy.”

Xi stressed that the two countries have an important role to play in the unpredictable 21st century, closely cooperating and coordinating their initiatives within multilateral frameworks such as the UN, BRICS, G-20 and the World Trade Organization. “In the face of unprecedented global changes in this century, China and Brazil are determined to practice true multilateralism, uphold the common values of humanity, work for a fairer and more equitable system of international governance, truly protect the common interests of developing countries and international justice and equality, and build a community with a common future for humanity,” Xi said. He also pointed out that China will cooperate with Brazil in order to ensure the continued success of the China-CELAC Forum, to raise cooperation between China and Latin American countries with special emphasis on the trade blocs Mercosur and UNASUR.

Lula, on the other hand, said that Brazil is ready to work with China to contribute to the efforts of developing countries to get rid of unfair rules and achieve fairer and more balanced development. After the talks between Xi and Lula, the two presidents witnessed the signing of 15 different documents on bilateral cooperation in the fields of trade and investment, digital economy, scientific and technological innovation, information and communication technologies, poverty alleviation, space exploration, etc. The total value of the agreement is 50 billion USD. The new focus of bilateral relations is the desire to strengthen cooperation in environmental protection and dealing with climate change, for which a special commission will be established. They agreed to act together with developing countries in international forums on climate issues, calling for increased funding for sustainable development projects. China has pledged to support clean energy and green hydrogen production in Brazil, but there has been no agreement on a bilateral green investment fund that Brazil had hoped would subsidize renewable energy development.

The Lula-Xi talks touched upon the conflict in Ukraine. The leaders agreed that an amicable solution was needed. Lula’s proposal is for Brazil and other developing countries, including China, to broker a ceasefire and peace treaty. However, Lula’s earlier proposal that Ukraine cede Crimea to Russia angered Kiev and its western allies. Lula said on April 15, the last day of the visit, that China and the US have an important role to play in the discussion on Ukraine, but added: “It is necessary for the US to stop inciting war and talk about peace.” One of the confidential documents published on the Discord platform claims that in late February the Russian Foreign Ministry supported Lula’s plan to establish a club of impartial mediators to end the war in Ukraine. Such a plan rejects the “aggressor-victim” paradigm. China is also seeking to play a role in ending the conflict, albeit in a way that favors Moscow more strongly.

Economic cooperation

In the last 20 years, trade between the two countries has increased 21 times, and today China is Brazil’s main trading partner. China has been Brazil’s largest trading partner for 14 consecutive years, and Brazil is the first Latin American country to reach over 100 billion US dollars in trade with China. Over the years, Brazil has become a major exporter of raw materials, while China consumes them insatiably.

Last year, trade was 171.35 billion dollars. China imported 54.4 million tons of soybeans and 1.11 million tons of frozen beef. Among other goods, Brazil exports frozen poultry, iron ore, cellulose, sugar cane, cotton and crude oil to China in large quantities. Exporting crude oil and iron ore to China has been one of the core businesses of the Rio De Janeiro seaport since 2014. “The value of our exports to China is greater than our exports to the United States and the European Union combined. China is a big engine for the Brazilian agro-industry,” said Lula. “China is not only the largest export market for Brazil, but also a key supplier of mining equipment, infrastructure and logistics,” he added. Furthermore, it is expected that the new air cargo line, which opened in early April, connecting the southern Chinese metropolis of Shenzhen with Sao Paulo, Brazil’s largest city, will further boost bilateral trade.

Lula’s plan to revitalize the Brazilian economy with the assistance of the Chinese

Sino-Brazilian relations in the last four years during Bolsonaro’s mandate were slowed down due to Bolsonaro’s pro-American orientation, but now that a largely anti-American president is in power in Brazil, the main obstacle to normal cooperation has been removed. Industrial policy is important to Lula, who was once a worker at a steel mill where he became a union leader. Decades later, he began his campaign for a third presidential term in a bleak suburb of Sao Paulo outside a car factory.

In recent years, Brazil has been producing less and less industrial goods. Brazil’s National Bureau of Statistics announced in July 2022 that Brazil had lost one million industrial jobs over the previous decade, a decline of 11.6%. In 2021, the same institution announced that the country’s industrial sector represented 18.9% of national GDP, a significant drop from 38% three decades ago. This is an indication that Lula’s successors at the head of Brazil, Dilma Rousseff, Michel Temer and Jair Bolsonaro, were not up to the challenge and duties of the president of such a large and complex country as the Federal Republic of Brazil.

Lula has made it clear that he is counting on China to help revitalize Brazil’s ailing industrial sector, particularly by replacing American companies leaving the country. Brazilian Finance Minister Fernando Haddad told reporters that the countries were planning a “step forward” in their relations. “President Lula wants a reindustrialization policy. This visit represents a new challenge for Brazil: bringing in direct investment from China,” said Haddad. He added that Brazil also wants strong ties with the US, but noted with regret that recently “some American companies have decided to leave the country”. During the visit, Lula met with the CEO of the Chinese company BYD, which produces electric buses, and discussed the construction of a factory in the Brazilian state of Bahia. The previous owner, Ford Motor Co., announced in 2021 that it was closing the plant, along with two other plants in the country. In addition, the two sides agreed to establish a working group to continue cooperation in the field of semiconductors. Brazil is open to the construction of a Chinese semiconductor factory.

Speaking to reporters before leaving China, Lula revealed to reporters on the morning of April 15 that Brazil’s relationship with the Asian giant “goes beyond the phase of commodity exports.” He added that he visited the headquarters of the Chinese telecommunications company Huawei in Shanghai because he intends to promote the “digital revolution” in his homeland. China is the largest foreign investor in Brazil, but Lula does not just want more investment, he is asking the Chinese for a partnership that will undermine Western economic hegemony. In keeping with that attitude, Lula’s visit included attending the swearing-in of former Brazilian President Rousseff as head of the New Development Bank (I guess she’ll do the job successfully this time)—a BRICS development bank that finances infrastructure projects in Brazil and other developing countries. The bank presents itself as an alternative to Western banking institutions, the IMF and the World Bank, which often impose loan conditions that countries cannot repay. Lula condemned both the IMF and the dominance of the US dollar in international trade, hailing agreements in February and March between the central banks of Brazil and China to use the Chinese yuan and the Brazilian real in their trade.

Excellent cooperation between the Brazilian and Chinese people

It is not only about the excellent relations between the two countries, but also the excellent relations between the Brazilian and Chinese people have become a reality and the intention of development. Cultural, student and other exchanges between the two countries have seen a boom over the years, especially in sports, medicine and the arts.

A total of 14 Confucius Institutes have been established in Brazil, the most among Latin American countries, and Brazil has established a national festival that celebrates the arrival of Chinese immigrants who enriched the multicultural Brazilian nation every August. Last September, the Brazilian city of Recife approved a decree to celebrate the Chinese New Year as an official city holiday. In early February this year, the city of Foz do Iguacu in southern Brazil also decided to make the Chinese New Year celebration an official holiday. In February 2021, the first Chinese school was opened in Rio. Two years later, the two countries launched virtual courses to teach Mandarin and Chinese culture.

Conclusion

This year, China and Brazil are celebrating the 30th anniversary of the establishment of a strategic partnership, and next year will be the 50th anniversary of the establishment of diplomatic relations. According to the announcements of the two presidents, it is to be expected that the cooperation will be further deepened for mutual benefit. From Brazil’s point of view, Lula’s pompous and successful visit to China will signal to the Americans that Brazil has other foreign policy options on the table and is not dependent on America’s will. The stronger Brazil’s ties with China, the greater Brazil’s influence in international relations, and Brazil gains a better position in relation to the US. This relationship was often that of tutor and student, especially during military dictatorships in the 20th century. It is certain that the strengthening of relations with Beijing worries policy makers not only in Washington but also in Brussels. The further strengthening of Brazilian-Chinese relations will give new impetus to initiatives for the EU to soon conclude an agreement with the South American trade bloc Mercosur to put an end to its declining influence in the Latin American region. The agreement between the EU and Mercosur would abolish customs duties, facilitate the export of European industrial products to the South. America and the export of South American agricultural goods to Europe. Although the negotiations ended in 2019, the agreement has not yet been signed. The biggest stumbling block is the protection of the Amazon rainforest and the granting of concessions to South American agricultural companies.

Strengthening ties with Beijing is a unique opportunity for Brazil’s leftist president to build a relationship with leaders of the agricultural sector, the vast majority of whom have been staunch Bolsonaro supporters. Lula faces economic difficulties and a growing consensus among economists that things will get worse before they get better. An improvement is expected sometime next year. Such an unenviable economic perspective explains why Lula wants to announce good news on the economic front as soon as possible. The alliance with China definitely gives the Brazilian economy a boost to overcome the challenges.

From China’s point of view, it is difficult to overestimate the importance of a comprehensive strategic partnership with Brazil. Brazil is a huge country that occupies half the surface of South America and has more than 215 million inhabitants. In addition, it is located in the Western Hemisphere in the backyard of the USA, China’s biggest rival.

The alliance with Brazil brings China the satisfaction of its grandiose needs for energy and other resources that Brazil abounds in. The Brazilian market is huge and on it China can market its many (often cheap) products as well as the high technology that is needed for the Brazilian economy to function on the principles of sustainable development. Whoever invests in Brazil cannot be wrong, because it is a country of wonder and incredible potential that many in the world, especially Europeans, cannot recognize (they naively think that Brazil cannot offer more than football). They are hard to deceive. In Chinese foreign policy conceptions, a comprehensive alliance with Brazil somewhat resembles an alliance with African states that Beijing conquers economically in order to bring them into its political zone of interest. However, Brazil is incomparably more powerful and insists on the reciprocity it can provide. It is the leader of South America and will eventually become an important global power. The first letter in the BRICS organization symbolically says that multipolarity is starting to be built from Brazil since its potential has yet to be realized.