By JIANG SHIXUE*

Economic cooperation, investments in infrastructure and high technology, and the possibility of a Free Trade Agreement between Brazil and China

On November 21, 2024, Chinese President Xi Jinping and Brazilian President Luiz Inácio Lula da Silva announced the elevation of bilateral ties between the two countries to “a community with a shared future for a fairer world and a more sustainable planet.” This is the third time the relationship has been elevated since the establishment of diplomatic ties in 1974. The first was the strategic partnership in 1993, and the second was the comprehensive strategic partnership in 2012.

“A community with a shared future for a fairer world and a more sustainable planet” for China and Brazil means, in practical terms, that both countries will join hands more closely to contribute to building “a community with a shared future for humanity,” an ambitious goal proposed by President Xi Jinping in 2013. At the same time, the two countries will redouble their efforts to enhance cooperation in the political and economic fields, as well as promote cultural exchanges, in order to strengthen mutual understanding.

The world is currently undergoing major changes that have not been seen in a century. In particular, after Donald Trump takes office, U.S. foreign policy is expected to more clearly display the characteristics of the four “isms”: hegemonism, unilateralism, protectionism and interventionism, which are deeply rooted in American diplomacy. Together with other developing countries, China and Brazil need to strengthen political consensus in an effort to resist these four “isms.”

Reports indicate that the US will impose high tariffs on several countries, including China and Brazil. To counter this protectionist action, China and Brazil need to expand economic cooperation.

Brazil lacks investment in infrastructure, manufacturing and agriculture, while China is able to meet this capital need. To date, the total stock of Chinese investment in Brazil has reached US$70 billion. This win-win cooperation has yielded significant results. For example, the Belo Monte Hydroelectric Power Plant is often referred to as the “project of the century” in Brazil. In February 2014, State Grid of China, in partnership with the Brazilian company Eletrobras, won the bid for the first phase of the ultra-high voltage transmission project at the Belo Monte Hydroelectric Plant. In July 2015, the Chinese company independently won the bid for the second phase of the project. It is estimated that this initiative has benefited 22 million people, equivalent to 10% of the Brazilian population.

In recent years, more high-tech investments have been directed to Brazil. For example, Chinese automaker BYD will build a large industrial complex with three factories in the state of Bahia.

In August 2023, President Lula launched the Growth Acceleration Program (PAC), which foresees the investment of more than R$1 trillion in infrastructure, energy and transportation over the next four years. China introduced the Belt and Road Initiative in 2013. During President Xi Jinping's visit to Brazil in mid-November last year, China and Brazil decided to align the Belt and Road Initiative with the PAC and other development strategies. Therefore, more Chinese investments are expected to be directed to Brazil.

In the area of ​​trade, China and Brazil have many comparative advantages. This explains the accelerated growth in the value of bilateral trade, which reached US$188 billion in 2024, compared to US$87 billion ten years ago. This increase in trade between the two countries could be boosted if the US continues to use tariffs as an instrument of pressure. In this context, China could divert part of its imports from the US, seeking new suppliers in Brazil and other countries. The same applies to Brazilian exports. For example, China is already willing to buy more soybeans and other Brazilian products.

To further boost bilateral trade, Brazil and China should consider the possibility of signing a Free Trade Agreement (FTA). Brazil is a member of the Southern Common Market (Mercosur). According to some research, the signing of a free trade agreement between Mercosur and China could add up to 1,43% to Brazil’s GDP, increase foreign investment by 7,2% and boost exports by 7% by 2035.

More than two hundred years ago, the Camellia sinensis, or tea, arrived in Brazil when Emperor Dom João VI brought 500 Chinese tea producers from Macau to the country. German biologist Johann Baptist Spix and botanist Carl von Martius wrote in their book Travels to Brazil (1817-1821), published in 1824: “The tea grown here (in Brazil) is harvested and processed using the same methods as in China.” Today, the barbecue meat served in many Chinese restaurants is prepared following Brazilian methods. However, the future bilateral relationship between China and Brazil, in this new era, will not be a mere repetition of the past. Upgraded from a comprehensive strategic partnership to “a community with a shared future for a more just world and a more sustainable planet,” the relationship will be marked by greater political consensus, more win-win economic cooperation, and deeper mutual understanding.

*Jiang Shixue is a professor at the Macau University of Science and Technology.

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