China/Brazil: Complementary cooperation extends to economy with aim of greater international standing

25 May 2009

Washington, United States of America, 25 May – Today China and Brazil have “complementary” economies whose trade has doubled in value in just seven years and between which there is growing cooperation to strengthen international standing, according to Chinese expert Jiang Shixue.

The study made by Shixue, vice president of the Chinese Association for Latin American Studies and professor at the Chinese Academy of Social Sciences, is found in a report published in May by the Jamestown Foundation, on Brazilian president, Luiz Inácio Lula da Silva’s second visit to China.

“Against the backdrop of the global financial crisis, China and Brazil have realized that they can strengthen cooperation in both the economic sphere and other areas so as to reap mutual benefits and further strengthen ‘South-South’ cooperation. Therefore, the future of relations between the world’s largest developing nation and the Western Hemisphere’s largest developing nation seems promising and bright,” says the Chinese specialist in his report “The Panda Hugs the Tucano: China’s relations with Brazil.”

From his visit to China, where he met the country’s highest authorities, the Brazilian president secured a US$10 billion loan for the state-owned oil company Petrobras, another of US$800 million for the National Social and Economic Development Bank and another of US$100 million for Itaú, all from the China Development Bank, in addition to multiple cooperation agreements.

The leaders also reiterated the common position of the two countries: that greater standing for emerging powers within the big international institutions, the reform of which is now in the pipeline, should be the result of the current crisis.

“The ongoing financial crisis has created multiple fronts for China and Brazil to cooperate (…) to more systematically coordinate their positions on the issue of reforming the international financial system, so that their joint efforts, along with actions by other developing countries, may result in their having a bigger say in the World Bank and the International Monetary Fund,” according to the Chinese analyst.

Brazilian Finance minister, Guido Mantega, has declared himself to be one of the main defenders of the “new international financial architecture” based on a more important role for the BRIC countries – Brazil, Russia, India and China.

According to current estimates, in 2050 the standing of the BRIC economies would surpass that of western economies.

For Shixue, China and Brazil’s participation in the G-8 summits “symbolizes, in part, the rise of the developing world” and in the current climate of depression, which penalizes developed economies in particular, “the G-20 has emerged as the de facto political vehicle leading global economic recovery.”

“The realignment of power in the international system (…) has highlighted China’s relations with the developing world, and in particular, its relations with Brazil, which is considered the most important bilateral relationship in Beijing’s “South-South” strategy,” said the Chinese professor.

Lula’s second visit to China marked the 35th anniversary of the establishment of diplomatic relations between the two countries, strategic partners since 1993, when China’s ex-president Jiang Zemin went to Brazil.

The two countries, says Shixue, have “complementary economies and their respective comparative advantage plays a decisive role in helping both sides expand market share, develop economic relations and promote economic growth.”

While Brazil is rich in raw materials such as bauxite, gold, iron ore, phosphates, platinum, uranium and petroleum, the Chinese economy is resource-intensive and needs to ensure imports to sustain its high-pace growth.

However, says Shixue, further development of this relationship faces a “major hurdle”: increasing trade frictions, namely with the imposition of anti-dumping tariffs on Chinese products in Brazil.

Behind this measure, she says, could be the “sense of a ‘China threat’ which some Brazilians feel,” and which has been put into words on a number of occasions by the Industrial Federation of the State of São Paulo (FIESP), the country’s largest business association.

Despite these obstacles, figures from the Chinese Trade Ministry show that bilateral trade rose from US$3.7 billion in 2001 to US$42.5 billion in 2008, in Brazil’s favour.

Already in March this year, China overtook the United States to become Brazil’s biggest export market. (macauhub)