Brazil to discuss export diversification to China at high-level Commission meeting

Brasília – The Sino-Brazilian High Level Commission for Coordination and Cooperation (Cosban) will meet in virtual form on May 23 and should be characterized by the defense, on the Brazilian side, of the need to greatly diversify the national export agenda, concentrated in basic products with a lower added value. China, Brazil’s main trading partner, concentrates its imports on commodities, and only three of them – soy, oil and iron ore – accounted for 79% of the total volume shipped by Brazilian companies to the Asian country in the first four months of 2022. .

José Ricardo dos Santos Luz Junior, CEO of LIDE China

Increasing the share of industrialized goods in shipments to China is considered by the Brazilian government as one of the main priorities to be addressed at the Cosban meeting and according to José Ricardo dos Santos Luz Júnior (CEO of LIDE China), the Asian country has always been willing to talk about this topic. According to him, “we all know that there is a shortage regarding the quality of the Sino-Brazilian trade balance and in recent years these three products accounted for 90% of the total exports to the Chinese market. Brazil has made this request and China is in favor of improving this relationship”.

To coordinate pro-diversification of the Brazilian export agenda

The CEO of LIDE China emphasizes that the minutes of the 5th. Cosban plenary meeting of May 23, 2019 informs that “the parties have agreed to strengthen bilateral exchanges and cooperation in all areas. Promote trade facilitation, pursue high-quality bilateral trade growth, expand cooperation and innovation, encourage new areas of economic trade cooperation. Recognizing the excessive concentration of Brazilian exports to China in a specific group of primary products, as well as Brazil’s surplus, they reaffirmed their commitment to create conditions for diversification and increasing the added value of the products exported by Brazil to China. are sold.” †

Having underlined the existence of the indispensable political will to diversify the export agenda to China, José Ricardo dos Santos Luiz Júnior argues that “for this to happen, Brazil must do its homework, say clearly what it wants from China. because China knows very well what it wants from Brazil. And I always repeat that China never sees Brazil through the prism of a four-year presidential term, but rather with a long-term view. China knows that Brazil is an important partner and is interested in long-term investment in the country.”

In his analysis of the Brazilian intention to increase the share of industrialized products in the context of sales to China, the specialist emphasizes that “we have to be very realistic. There is no point in talking about improving the trade agenda and thinking about exporting cars, televisions or mobile phones to China because we are not competitive in these sectors. We have added value in the field, in agribusiness. So we need to identify our strengths, our strengths, to see what can be done to improve and diversify the export agenda to China.”

The Cosban meeting, to be held within a week, “should light this flame between Brazil and China”. The main diplomatic mechanism for coordination and dialogue between the two countries, the Commission should promote the launch of two important documents. One of these is the strategic plan, which should give direction to bilateral cooperation over the next ten years. The other, with a duration of five years, is the executive plan that will serve to identify the items of a common agenda to be in force until 2027, specifying sectors and projects and commitments to be made, in addition to designating of the authorities responsible for their supervision.

An agenda marred by anti-Chinese statements and attitudes

Tito Sá, International Trade Consultant at BMJ Consultores Associados

According to Tito Sá, International Trade Consultant at BMJ Consultores Associados, “The launch of these plans, rather than intensifying ties between Brazil and China, aims to renew the previous versions, whose deadlines have already passed. The plans are expected to include investment programs in both countries, with a focus on the infrastructure sector.”

But the BMJ Consultant has one caveat: “the central question to be unraveled is whether these plans have economic and, above all, political viability. Brazil’s elections in October could certainly have a positive or negative impact on Brazil-China relations. On the basis of a historical analysis, if former president Lula da Silva wins, one can expect an attempt to strengthen relations with the Asian giant. In the event of an extension of President Jair Bolsonaro’s mandate, the uncertainties will increase.”

Tito Sá considers it “indisputable” that the strengthening of Sino-Brazilian relations mainly took place during the governments of the PT, “highly anchored by the new orientation of Brazilian foreign policy, focused on South-South cooperation, but it also found place in a period of greater trade opening on the part of China, the milestone of which is its accession to the World Trade Organization (WTO) in 2001”.

He also recalls that “it is essential to note that China’s foreign policy is guided by a long-term strategy, which is one of its basic features. In this sense, although relations with Brazil were strengthened during the governments of the PT, this relationship was not disrupted during the administration of former President Michel Temer.”

The analyst mentions as an example the establishment, in 2015, of the Brazil-China Fund, still during the reign of Dilma Rousseff, with the aim of expanding production capacity. The institutionalization of the Fund took place in 2017, during the government of Michel Temer. Some infrastructure projects were supposed to receive contributions from this mechanism, but this never happened. According to Tito Sá, “besides the economic crisis and the volatility of exchange rates, the political factor has certainly contributed to his inactivity”.

And if the climate was no longer favourable, the uncertainties only increased after Jair Bolsonaro assumed the presidency of the Republic in 2019. According to Tito Sá, Bolsonaro already took a position at the time of the elections, in 2018, by accusing them, for example, of a plan to buy Brazil. After the inauguration, members of the president’s family referred to the Covid-19 virus as the “Chinese virus,” causing signs of a diplomatic crisis. In an attitude of total and axiomatic alignment with the United States of Donald Trump, Brazil’s relations with the Asian giant have gone through difficult moments in recent years. If the long-term strategy had not been a hallmark of Beijing’s political achievements, relations between Brazil and China would have been much worse.”

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