Relations with China support Brazil’s rise as regional power

12 October 2009

Washington, USA, 12 Oct – Expanding political and economic relations between China and Brazil are sustaining the growth of the biggest south American country as a major regional power, with the global recession boosting the importance of trade with Beijing.

In the study “Strategic implications of Chinese aid and investment in Latin America,” published last week by the Jamestown Foundation, researcher Evan Ellis says that Brasilia’s ascendancy is one of the main consequences of Beijing’s investment in the region over recent years.

“China has been contributing to Brazil’s rise as a regional power. Brazil’s economic performance has been driven, in part, by its export industries of iron ore and soya, for which China is a key client,” says the study.

According to Ellis, the recession has “emphasized and magnified” the importance of China for Brazil, since Brazilian exports to the US have fallen sharply (37.8 percent in the first quarter of the year) while on the Chinese market demand for what is “made in Brazil” has not diminished, but rather risen 62.7 percent.

This evolution, he says, was achieved thanks to a Chinese stimulus package which included US$740 billion in infrastructure projects, “maintaining the high levels of Chinese demand for raw materials such as iron ore, purchased from Brazilian companies such as Vale.”

As a consequence, he says, in the first half of the year China became Brazil’s main export destination, overtaking the USA.

“China has also emerged as key financier at a time when Brazil is looking for the US$174 billion it needs to develop newly discovered deepwater oil reserves in the Santos and Campos basins,” says Ellis.

During talks with the China Development Bank over a US$10 billion loan, the president of Brazilian oil company Petrobras, Sérgio Gabrielli, said there was “no one in the US government with whom we could have the kinds of discussions we’re having with the Chinese.”

“China is an increasingly important partner in the transfer of technology for Brazil. The two countries are pursuing a number of important partnerships, including the joint manufacture of medium-sized jet planes, the China-Brazil Earth Research satellite (CBERS) programme and other space cooperation programmes,” he adds.

According to Ellis, the growing trade relations with China are also making Brazil take a growing interest in its neighbours and, in particular, in the construction of infrastructures linking interior cities such as Manaus with Pacific ports such as Paito and Ilo (Peru) and Manta (Equador).

All this, he adds, leads to a growing Brazilian interest “in the trade policy and political stability of its Pacific neighbours” and in “major infrastructure projects which affect the economics of that trade, such as the expansion of the Panama Canal.”

The growing Chinese influence, also visible in the support of socialist leaders in Venezuela and Bolivia, is also “undermining the primacy of the United States’ role as an economic and social actor in the region,” he says.

“This can be seen in the re-orientation of Latin America’s trade structure away from the United States, in Latin America’s efforts to please or avoid offending China and in the declining power of the United States as a reference model for economic and democratic development,” says the study published by the Jamestown Foundation. (macauhub)