MIDWESTERN MARX INSTITUTE
  • Home
  • Online Articles
    • Articles >
      • All
      • News
      • Politics
      • Theory
      • Book Reviews
      • Chinese Philosophy Dialogues
    • American Socialism Travels
    • Youth League
  • Dr. Riggins' Book Series
    • Eurocommunism and the State
    • Debunking Russiagate
    • The Weather Makers
    • Essays on Bertrand Russell and Marxism
    • The Truth Behind Polls
    • Piketty's Capital in the 21st Century
    • Lenin's Materialism & Empirio-Criticism
    • Mao's Life
    • Lenin's State and Rev
    • Lenin's LWC Series
    • Anti-Dühring Series
  • Store
    • Books
    • Merchandise
  • YouTube
  • Journal of American Socialist Studies (JASS)
  • Contact
    • Article Submissions
    • The Marks of Capital
  • Online Library
  • Staff

12/6/2022

Could China Help Brazil to Overcome Its Economic Crisis?By: Marco Fernandes

0 Comments

Read Now
 
Picture
The election victory of Luiz Inácio Lula da Silva as the president of Brazil for a third term on October 30 is expected to revise the relations between Brasília and Beijing. Brazil is going through a serious economic, political, social, and environmental crisis. Fighting poverty, resuming economic growth with income redistribution, reindustrializing the country, and reversing environmental abuses are urgent tasks, which will demand unprecedented national and international finesse from the new government. The economic partnership between Brazil and China, which has advanced greatly in the last two decades, may be one of the keys to reversing the crisis that Brazil faces. But some challenges will need to be faced with diplomacy and strategic planning.
​

Despite the “insults” directed by the government under former Brazilian President Jair Bolsonaro toward China, especially during the pandemic, and the inevitable distancing of diplomatic relations between the two countries, bilateral trade between Brazil and China has increased. In 2021, bilateral trade between the two countries reached $135.4 billion with Brazil recording a trade surplus of $40 billion with China, which was only surpassed by the region of Taiwan and two countries, Australia and South Korea. China has been Brazil’s largest trading partner since 2009, accounting for almost double the trade volume that Brazil imported from its second largest partner in 2021, the U.S. ($70.5 billion), with which it recorded a deficit of $8.3 billion.

A Profitable, but Unbalanced Trade Relationship

Brazil’s export mix, however, is vulnerable in the long term: it is not very diversified and based on products of low aggregate value. The four main products it exports (iron ore, soy, crude oil, and animal protein) accounted for 87.7 percent of total exports to China in 2021. Meanwhile, the imports of Chinese products to Brazil are highly diversified, with a predominance of manufactured products, and with a high technological index. For example, the main import item from China to Brazil (telecommunications equipment) accounted for only 5.9 percent of imports.
​

The Brazilian commodities sector, which is an important component of the economy, represented 68.3 percent of exports by Brazil in the first half of 2022 and has contributed for years to the increase in international reserves. On the other hand, the commodities sector has a high concentration of wealth, pays few taxes, generates relatively few and low-skill jobs, is subject to cyclical price changes, and, in many cases, causes environmental damage, which needs to be better controlled by the state. In this sense, the initiative announced by COFCO International—the largest buyer of Brazilian food in China—to monitor and prohibit the purchase of soybeans planted in areas of illegal deforestation in Brazil beginning from 2023 was important.

But it will also require the Brazilian state—which has become notorious in recent years for encouraging deforestation and the invasion of Indigenous reserves—to guarantee the effectiveness of the initiative. China needs Brazil’s natural resources for its development, and Brazil needs the Chinese market for its commodities. But in the medium and long term, Brazil will need to seek greater balance in its trade agenda if it wants to return to being a solid economy. Let’s remember that in 2000, the main Brazilian export product was Embraer’s jet planes, while in 2021, the main exports were iron ore and soybeans. This is just one of the many symptoms of chronic deindustrialization.

Investing Is Necessary but so Is Diversifying

Chinese investments in Brazil have a similar profile to its exports: robust, but not very diversified. In 2021, Brazil received the most Chinese investments in the world, amounting to $5.9 billion (13.6 percent of the global total). Between 2005 and 2021, Brazil was the fourth-largest global recipient of Chinese investments (4.8 percent of the total), only behind the U.S. (14.3 percent), Australia (7.8 percent), and the United Kingdom (7.4 percent). These investments by China have resulted in a fundamental contribution of resources to the Brazilian economy but have not come without its set of challenges. From 2007 to 2021, 76.4 percent of the Chinese investments were concentrated in the energy sector (electricity, and oil and gas extraction), while only 5.5 percent went to the manufacturing industry and 4.5 percent went to infrastructure works, among other greatest needs of Brazil’s economy.
​

The Brazilian electricity sector was the largest destination for Chinese investments (45.5 percent of the total), but part of this corresponded to the purchase of Brazilian state-owned companies by Chinese state-owned companies. In 2017, the Chinese company State Grid acquired a controlling interest in CPFL Energia, a state-owned company in the state of São Paulo, and in 2021, CPFL Energia bought control of CEEE-Transmissão, a state-owned company in the state of Rio Grande do Sul. For Brazil, these were not good deals and demonstrated the irresponsibility of neoliberal state governments of the Brazilian Social Democratic Party (PSDB), which privatized strategic public assets. China—which would never sell a state-owned energy company to foreigners—took care of its own interests and took advantage of a business opportunity offered by the market. It was not a privatization package imposed by the International Monetary Fund. But would Beijing be willing to accept other investment models that would bring more benefits to both countries?

The Example of the Southern Hermanos

Since 2021, Buenos Aires and Beijing have entered into a series of strategic investment agreements. In February 2022, Argentina joined the Belt and Road Initiative, which is expected to attract $23 billion in Chinese investments for Argentina. Before that, other investments and projects by Chinese companies included the reform of the Argentine railway system ($4.69 billion), and, voluminous investments in the electric sector, such as 1) the expansion of the Cauchari Park, Latin America’s largest solar power plant, which was originally a Sino-Argentinian partnership, 2) the construction of the “Kirchner-Cepernic” hydroelectric complex in Patagonia (costing more than $4 billion), and 3) the construction of the “Atucha III” nuclear plant (costing $8.3 billion), whose financing has an approximately eight-year grace period and, most importantly, it provides for the transfer of Chinese Hualong nuclear technology—mastered in 2021—to the Argentine state, which will control the plant.

Brazil can propose partnerships similar to those by Argentina that are just as or even more strategic, with mutual benefits. Why not propose to exchange commodities (oil and gas) for infrastructure and technology with China, as countries like Iran have already proposed? Or the formation of more Sino-Brazilian joint ventures—which received only 6 percent of Chinese investments (2005-2020), while mergers and acquisitions received 70 percent—that provide for technology transfer to Brazil?
​

Brazil will need a gigantic effort to reindustrialize its economy at several levels, such as investment in research and development, training of skilled labor, financing, and technology transfer. No other country, such as China, has the financial, industrial, and technological conditions to cooperate with Brazil in numerous promising sectors, like electric vehicles, information technology, 5G, renewable energy, aerospace, biomedicine, and semiconductors. It is up to Brazil to propose a high-level strategic dialogue with China, which reaffirmed in the report of the 20th National Congress of the Communist Party of China that it is committed to helping to accelerate the development of Global South countries. “China is prepared to invest more resources in global development cooperation. It is committed to narrowing the North-South gap and supporting and assisting other developing countries in accelerating development,” President of China Xi Jinping said during the congress.

Author

Marco Fernandes is a researcher at Tricontinental: Institute for Social Research. He is the co-editor of Dongsheng. He is a member of the No Cold War collective. He lives in Beijing.


This article was produced by Globetrotter.

Archives

December 2022
November 2022
October 2022
September 2022
August 2022
July 2022
June 2022
May 2022
April 2022
March 2022
February 2022
January 2022
December 2021
November 2021
October 2021
September 2021
August 2021
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
November 2020
October 2020
September 2020
August 2020
July 2020

Share

0 Comments



Leave a Reply.

Details

    RSS Feed

    Archives

    May 2025
    April 2025
    March 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020

    Categories

    All
    Aesthetics
    Afghanistan
    Althusser
    American Civil War
    American Socialism
    American Socialism Travels
    Anti Imperialism
    Anti-Imperialism
    Art
    August Willich
    Berlin Wall
    Bolivia
    Book Review
    Brazil
    Capitalism
    Censorship
    Chile
    China
    Chinese Philosophy Dialogue
    Christianity
    CIA
    Class
    Climate Change
    COINTELPRO
    Communism
    Confucius
    Cuba
    Debunking Russiagate
    Democracy
    Democrats
    DPRK
    Eco Socialism
    Ecuador
    Egypt
    Elections
    Engels
    Eurocommunism
    Feminism
    Frederick Douglass
    Germany
    Ghandi
    Global Capitalism
    Gramsci
    History
    Hunger
    Immigration
    Imperialism
    Incarceration
    Interview
    Joe Biden
    Labor
    Labour
    Lenin
    Liberalism
    Lincoln
    Linke
    Literature
    Lula Da Silva
    Malcolm X
    Mao
    Marx
    Marxism
    May Day
    Media
    Medicare For All
    Mencius
    Militarism
    MKULTRA
    Mozi
    National Affairs
    Nelson Mandela
    Neoliberalism
    New Left
    News
    Nina Turner
    Novel
    Palestine
    Pandemic
    Paris Commune
    Pentagon
    Peru Libre
    Phillip-bonosky
    Philosophy
    Political-economy
    Politics
    Pol Pot
    Proletarian
    Putin
    Race
    Religion
    Russia
    Settlercolonialism
    Slavery
    Slavoj-zizek
    Slavoj-zizek
    Social-democracy
    Socialism
    South-africa
    Soviet-union
    Summer-2020-protests
    Syria
    Theory
    The-weather-makers
    Trump
    Venezuela
    War-on-drugs
    Whatistobedone...now...likenow-now
    Wilfrid-sellers
    Worker-cooperatives
    Xunzi

All ORIGINAL Midwestern Marx content is under Creative Commons
(CC BY-ND 4.0) which means you can republish our work only if it is attributed properly (link the original publication to the republication) and not modified. 
Proudly powered by Weebly
Photos from U.S. Secretary of Defense, ben.kaden
  • Home
  • Online Articles
    • Articles >
      • All
      • News
      • Politics
      • Theory
      • Book Reviews
      • Chinese Philosophy Dialogues
    • American Socialism Travels
    • Youth League
  • Dr. Riggins' Book Series
    • Eurocommunism and the State
    • Debunking Russiagate
    • The Weather Makers
    • Essays on Bertrand Russell and Marxism
    • The Truth Behind Polls
    • Piketty's Capital in the 21st Century
    • Lenin's Materialism & Empirio-Criticism
    • Mao's Life
    • Lenin's State and Rev
    • Lenin's LWC Series
    • Anti-Dühring Series
  • Store
    • Books
    • Merchandise
  • YouTube
  • Journal of American Socialist Studies (JASS)
  • Contact
    • Article Submissions
    • The Marks of Capital
  • Online Library
  • Staff