The Chinese government is trying to make peace with Brazil’s leading presidential candidate, Jair Bolsonaro, whose China-bashing threatens to chill a profitable trading relationship that has benefited both countries. Brazil, in South America, is one of the world’s biggest democracies. From 2000…
The Chinese government is trying to make peace with Brazil’s leading presidential candidate, Jair Bolsonaro, whose China-bashing threatens to chill a profitable trading relationship that has benefited both countries.
Background
Brazil, in South America, is one of the world’s biggest democracies. From 2000 to 2012, the country’s average annual GDP grew at a rate of over 5%. In 2012, the economy surpassed that of the United Kingdom, temporarily making it the sixth largest economy in the world. In 2017, it was reported to be in the midst of its worst ever recession. The growth rate is now lesser than it was in December 2014. However, it still remains one of the most influential countries in the region.
Jair Messias Bolsonaro is a Brazilian politician who has served as a member of the Chamber of Deputies, representing the state of Rio de Janeiro, since 1991. He is a member of the Social Liberal Party (PSL). Bolsonaro announced his pre-candidacy for president in March 2016 as a member of the Social Christian Party. However, he left the party in 2018 and joined the Social Liberal Party, which launched his presidential campaign in August 2018 with retired general Hamilton Mourão as his running mate.
He portrays himself as an outsider and a supporter of family values. Bolsonaro came in first place in the first round of the general election on 7 October 2018, with PT candidate Fernando Haddad coming in second place.
Analysis
The Chinese government is trying to make peace with Brazil’s leading presidential candidate, Jair Bolsonaro, whose China-bashing threatens to chill a profitable trading relationship that has benefited both countries.
Chinese diplomats based in Brasilia have met twice with top Bolsonaro advisers in recent weeks, according to participants in the meetings. Their aim is to highlight cooperation with Latin America’s largest country, whose grain and minerals have fueled China’s rise while lifting millions of Brazilians from poverty in the resulting commodities boom.
Bolsonaro has portrayed China, its largest trading partner, as a predator looking to dominate key sectors of its economy.
With its own economy slowing, China cannot afford to become embroiled in another costly trade war like that which has erupted between Beijing and Washington.
Two-way trade between China and Brazil stood at $75 billion last year, according to Brazilian government statistics. China has invested $124 billion in Brazil since 2003, mostly in the oil, mining and energy sectors. China is eager to bankroll railway, port and other infrastructure projects here to speed the movement of its Brazilian grain.
However, the far-right Bolsonaro, much like U.S. President Donald Trump, has criticized China repeatedly on the campaign trail, saying the Chinese should not be allowed to own Brazilian land or control key industries. An ardent nationalist, Bolsonaro is expected to win a landslide victory in balloting this Sunday.
Companies in the crosshairs include China Molybdenum Co., which bought a $1.7 billion niobium mine in 2016 that Bolsonaro says Brazil should develop itself.
Niobium is used as an additive to steel to make it stronger and lighter. It is used in cars, buildings, jet engines and a host of other applications. Brazil controls about 85 per cent of the world’s supply, and Bolsonaro wants his nation to reap the benefits.
Bolsonaro is also on record opposing a planned privatization of some assets of state-owned utility Centrais Eletricas Brasileiras SA (Eletrobras) on concerns that Chinese buyers would win the bid.
Bolsonaro’s friendly leanings toward Taiwan are likewise vexing to Beijing, which considers Taiwan a renegade province. Bolsonaro in February became the first Brazilian presidential candidate to visit Taiwan since Brazil recognized Beijing as the sole Chinese government under the “One China” policy in the 1970s.
Bolsonaro’s combative stance is in stark contrast to the rest of Latin America, whose leaders have welcomed Chinese investment, loans and commodities purchases.
Assessment
Our assessment is that Bolasanro’s stance on China will rattle his South American neighbours who flushed with Chinese investments and debts. Brazil needs dire foreign investments and shunning the world’s single largest investor leaves very few options for Brazil. We believe that the ongoing U.S.-China trade war has given Brazil leverage to choose the best source of foreign investment. However, we also feel that Brazil should not overplay its leverage otherwise it will lose investments from the US and China simultaneously.
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