In this writing, strategic cooperation between China and Brazil will be examined as Brazil, among the developing states, has the ambition on leading the so-called South-South cooperation and furthermore has been among the top 10 economies of the world in the past 10 years. The trade policy of Brazil has been mainly based on supporting domestic commodities and expanding commerce with the third world. Therefore, understanding the strategic relation between China and Brazil as the two emerging economic powers of the world could help identify the dimensions and interests of the strategic cooperation agreement recently signed between Iran and China from the economic point of view.

Trade diplomacy between Brazil and China

Brazil enjoys the highest GDP and population among the Latin American countries and is considered a developing state with huge economic potential. China, as the ally of Brazil in the group of emerging economies called BRICS attaches great significance to its friendly relations and cooperation with Brazil. China considers such ties merely within the framework of South-South cooperation. Since the establishment of relations between China and Brazil in 1974, the two countries have gradually developed bilateral relations in political, economic, scientific and cultural domains and share similar views in many important international issues.

Figures of trade between Brazil and China indicate that in the past decade, China has turned into a strategic partner and not merely a trade partner for Brazil in commerce and economy. The main five export commodities of Brazil in 2019 included soya (26 billion dollars), crude oil (24 billion dollars), iron ore (23 billion dollars), corn (7 billion dollars) and sulfate and fertilizers (7 billion dollars).

Interesting to mention here that from the total 230 billion dollars of commerce of Brazil commodities, 63.5 billion dollars are Brazil’s exports to China. This means that 27.6 percent of Brazil’s exports enter China’s ports. This is twice the Brazil’s export to the US.

A similar trend can be traces in Brazil’s imports. The five main import goods in Brazil are petrochemical products (12 billion dollars), auto spare parts (6.19 billion dollars), crude oil (4 billion dollars), ICT devices (3.83 billion dollars) and chemical pests (3.75 billion dollars).

From amongst the 177 billion dollars of imported goods to Brazil, 20.5 percent are supplied by China, accounting for about 36 billion dollars. It is necessary to mention that such figures and percentages have been partly constant in the past decade and despite changes in the level of bilateral trade between China and Brazil, China remains Brazil’s main trade partner.

 

Continued trade and cooperation with China despite changing governments in Brasilia

The constant movement of trade between China and Brazil indicates that the two countries enjoy relations on the basis of strategic cooperation because despite changes in the government in Brasilia from center-left governments of Lula da Silva and Dilma Rousseff to the incumbent rightist government of Jair Bolsonaro, trade and commerce between Brazil and China has followed a similar pattern without any change.

In order to demonstrate it, one should refer to the turning point in 2012 in relations between China and Brazil. In 2012, the level of relations between the two countries was upgraded to the “comprehensive strategic partnership”. Then the foreign ministers of the two countries held the so-called strategic international dialog which finally led to the conclusion of a 10-year cooperation plan (2012-2021)—a document which was welcomed even by the incumbent rightist government in Brasilia that took note of its significance for Brazil and the damage it could inflict on Brazil’s economy should it keep distance from its biggest trade partner. In a general trend, the total value of trade between Brazil and China has increased rapidly in the 21st century and reached 9839 billion dollars in 2018 from 3.2 billion dollars in 2001.

 

China’s direct investment in Brazil

Brazil considered cooperation with China in all areas as being necessary for improving its economic growth, especially in developing infrastructure such as the production of energy, ports and railways and the oil and gas sectors.

Table 1. China’s foreign direct investment in selected countries in 2018

Country In billion dollars Percentage (of total)
United States 169.86 15.75%
Australia 90.82 8.42%
United Kingdom 76.94 7.13%
Switzerland 60.89 5.65%
Brazil 57.04 5.29%
Canada 53.17 4.93%
Germany 41.11 3.81%
Singapore 32.07 2.97%
France 24.31 2.25%
Russia 23.75 2.20%
Total FDI of China in above countries 629.96 58.41%
Total FDI of China 1078.47 100.00%

Source: https://www.aei.org/china-global-investment-tracker/

 

Financial cooperation between China and Brazil has been also on the rise in the past decades. There are several Chinese banks in Brazil now and in June 2015, the two countries decided to establish a cooperation fund to strengthen the capacity of production. The fund was set up with the primary budget of 20 billion dollars with the goal of improving investment in infrastructure, logistics, energy, mine, manufacturing and agriculture.

 

Long-term benefits of strategic cooperation between China and Brazil

Despite being a traditional ally of the United States and Europe, Brazil faced a serious economic crisis in 1999 which resulted in a change in the economic diplomacy of Brazil by the then President Henrique Cardoso. He believed in diversifying Brazil’s trade partners and developing commercial cooperation with the big developing states as the main foreign policy issue of his government. Cardoso’s ambition was pursued by da Silva during 2003 and 2011 when he preferred China to other developing economies and consolidated relations between the two countries. He believed that such close relations with Beijing would enable Brasilia to realize its dream and cause of the creation of a multipolar global order championed by a coalition among developing states in the world’s main multilateral institutes. Such strategic cooperation could be considered as a step in line with improving South-South cooperation and cementing independence of Brazil’s policies at the global levels.

The link between China and Brazil was different from other BRICS members such as Russia and India. Brazil is the largest developing state in the Western Hemisphere while China is the world’s biggest and fasters developing economy. From the geographical viewpoint, Brazil may be far from China while there is no historical, security or territorial disputes between the two. China and Brazil established official diplomatic relations in 1974 and promoted such relations twice: one in 1993 to strategic cooperation and the other in 2004 to all-out and permanent strategic partnership—a partnership in which China would provide support for Brazil under any circumstances. The comprehensive strategic partnership agreement between China and Brazil was signed in 2012.

 

Conclusion

As one of the biggest developing states in the Western Hemisphere, Brazil is the first Latin American state which entered into comprehensive strategic partnership with China. Moreover, these two developing states are in cooperation in many multilateral international mechanisms such as the United Nations, BRICS and G20.

China, on the other hand, is in need of natural resources in order to maintain its economic development because it needs to feed a large population and for this to happen, it can count on Brazil for the importation of primary food and agricultural products. In this respect, Brazil’s untouched natural resources are the key to China’s economic life and survival. At the global lever, China is interested in expanding South-South cooperation so that it can establish a strong network of allies as a force against the domination of the United States.

In sum, Brazil and Russia, due to having distinguished political and economic features, are of significance for China. The reality that this vast country is a big force of agriculture and enjoys huge mineral resources and domestic market and more importantly remarkable regional influence has turned Brazil into a strategic ally of China. The comprehensive strategic partnership agreement between China and Brazil, signed in 2012, would act as a tool to increase the political and economic power of the two big countries in the 21st century—a development which could also be repeated for the Islamic Republic of Iran as a big, rich and powerful country in the Middle East and constitute a positive and important step to change the political and commercial domination of the West on the south or third world countries.