- Introduction
Brazil is the largest country in Latin America, in size and population. It is the world’s largest producer of food and leader in the production of several strategic commodities given its fantastic biodiversity. China, currently, is the second largest Gross Domestic Product (GDP) in the world economy, and the main emitter of greenhouse gases. They have had a long-standing partnership defending their countries’ right to development, at multiple forums, according to the principle of “common but differentiated responsibilities”, under the argument that: developed countries have historical responsibilities for climate change and must take the lead in substantially reducing emissions, providing financial and technical support to developing economies so that they can grow searching for more sustainable ways to combat climate change, without harming the growth of their economies and the well-being of their citizens. Both are challenged by the urgency of poverty eradication and are aware of the need to confront climate changes resulting from the acceleration of growth.
The world economic order that emerges in the post-covid-19 pandemic requires the search for more sustainable models of consumption, production, and distribution under four pillars: economic, social, environmental, and political.
What to expect from Brazil-China partnership in the context of the new green world economic order?
2. The Strategic Partnership between Brazil and China
Brazil’s strategic partnership with China has lasted more than 50 years. In the early 1970s, during the military government, there was an attempt at a rather timid commercial approach with the sale of Brazilian sugar to the Chinese. Agricultural Minister Pratini de Morais probably had a hard time convincing the militaries that the sale of sugar was not ideological. It was a necessity for a growing country to establish trade relations in a more pragmatic way.
With the end of the Cold War in December 1991, political and economic changes followed, and Brazil re-dimensioned its international insertion strategy, prioritizing a more intense relationship with the Asia-Pacific region, envisioning potential possibilities for complementarities and partnerships. The success of the scientific and technological development models of countless Asian countries – China and the old and new Asian tigers in addition to the traditional partner, Japan, drew the attention of our rulers. In 1993, during the Itamar Franco’s government, Asia was defined as one of the priorities of Brazilian diplomacy due to its cooperative potential in the scientific and technological fields, but also as a market for bilateral trade – exports and imports. Presidents Fernando Henrique Cardoso (1995), Lula (2003), and Dilma Rousseff (2011) defined Asia as a priority in their foreign policies, paying particular attention to what was happening in China and later in India. In other words, from the 1990s onwards, there has been a deepening of the Brazilian relationship with Asia, with notable differences if compared to previous periods. Japan loses its position as the most important partner in the field of trade and investment among Asian countries while relations with China, South Korea and the Association of Southeast Asian Nations (Asean) are significantly expanded and survive the turmoil of the Asian crises, and of Brazil itself, at the end of the last century. Michel Temer’s (2016) government does not change Brazilian foreign policy and that of Jair Bolsonaro (2019), although not making any real change, modifies the tone of the speech showing an ostensible alignment with Donald Trump’s US government, anchored basically on ideological grounds and denial positions regarding the effects of greenhouse gas emissions and the resulting climate change on world warming.
In the beginning of 2020, when the world plunges into the biggest systemic world crisis since 1930, resulting from the health crisis caused by the Covid-19 pandemic, it is necessary to chart new paths towards a resumption of the world economy at the global level and at national level, encompassing all countries given the way everyone was affected by the pandemic.
- New World Order
Many specialists are discussing the aftermath of the post-Covid-19 pandemic and the challenges of the New World Order. All highlight its complexity, and many converge on some concerns that point to new challenges. We highlight the following:
- Pandemic Control
A fundamental condition for the safe reestablishment of the flows of people, goods, and services and for boosting a new cycle of growth, in the world economy, is the control of the pandemic.
- Leadership and competition in the world economic order
A kind of new Cold War is taking shape in the 21st century between the USA and the new, but millenary, Asian power, the People’s Republic of China, generating a dispute for leadership that pushes countries to take positions between one and the other and seek alliances that may threaten desired autonomous and sovereign insertion of developing economies in the world economy. There is growing fear of “communism” (now personified by China) and of right-wing extremist positions putting under risk the survival of solid democratic regimes and others in the consolidation phase of their fragile democracies (the case of Brazil). In the field of technology, this competition for leadership is notorious in the US attempt to discourage the acquisition of 5G technology – the new generation of communication networks – developed by China, by countries such as Brazil. China’s Huawei apparently is winning the race. United States officials have frequently claimed that Huawei is an extension of the Chinese Communist Party (not much difference of attitude under Trump or Biden). In addition, restrictions were put in place in the European Union area as well as in Hong Kong to prevent technology transfers. Recently, the dispute is even in the race for the supply of vaccines that could rid the world of the Covid 19 pandemic.
- Search for growth engines for the post-pandemic world economy
This confrontation reverberates for the world economy hurt by the pandemic and without a coordinated project to overcome the crisis as it was in the post-World War II period, with the Marshall Plan, under the leadership of the US, today concerned with saving its own skin and stopping the escalation of Chinese economic success. China emerges in advantageous conditions to play this role already in the race to become the number one economy in the world, in terms of GDP, and with the pandemic practically under control with more than a billion people vaccinated. Obviously, this greatly bothers the United States, a hegemonic power since the early 1940s.
The influence of China’s growth on the world economy was already a fact over the last decades of the 20th century, but it increased over the first two decades of the 21st century. As the world’s largest importer of food and raw materials of all kinds, the global demand for commodities boosts and increases their prices, with dynamic effects on economies with surplus production of food and other agricultural products and rich in fuels and mineral products, as it is the case of Brazil.
- Combating income and wealth inequalities
In the 21st century, the already dramatic concentration of income and wealth in the world has expanded. French Economist Thomas Piketty, warned of the seriousness of the problem, with the publication of his book Capital in the 21st Century in 2013 – the shameful inequity in the distribution of wealth was growing, both in the developed world and in the developing world.
In the case of Brazil, the pandemic sharply aggravated income and wealth inequalities and deepened social imbalances. According to IBGE, in 2018, before the pandemic, the group of the poorest 10% of the Brazilian population appropriated 0.8% of the income, while the richest 10% received 43% of the total income. The comparison of family income revealed that the richest 1% of the population and those representing the top of the distribution received an income 38 times greater than the poorest 50% of the population. At the end of 2019, Brazil had been featured in the human development report released by the United Nations Development Program (UNDP). According to the study, the country was the seventh most unequal in the world, behind only African nations. Also in 2019, a study by the World Bank showed that Brazil had 51.7 million Brazilians below the poverty line, 24.7% of the total population survived on a monthly income of R$ 387.07, something around 77 dollars. The concentration of income has always been something that shamed us, and the pandemic only deepened. According to recent data from the Getúlio Vargas Foundation (FGV), in a study by FGV Social, the pandemic threw around 17.7 million Brazilians to the poverty line, which added to the 9.5 million previously existing, totaling 27.2 million in February 2021, which is equivalent to 12.8% of a population of 213.4 million people. The calculations show the devastating role of Covid-19 in the country, which also aggravated the historical regional disparities.1
China’s recent history is surprising. It is the fastest growing economy in the last three decades and is now the second largest economy in the world with the possibility of surpassing the US by 2030. It is a phenomenal success story. With 1.41 billion inhabitants, in the last five years, China has managed to eradicate extreme poverty from its territory and is now seeking to improve the living conditions of about 1/3 of the population that remains poor. Changes in the development model with an emphasis more on quality and less on the magnitude of growth rates, strengthening of its internal market, reduction of technological dependence and commitment to the international environmental agenda are some of the dimensions explained in its 14th Five-Year Plan for 2021/2025 and that point to a shift in the way China will act in the coming years.
- Planet Warming and the need to adopt sustainable development models
The publication of the IPCC (United Nation International Panel on Climate Change) report in August 2021 highlights the direct relationship between the increase in global warming and extreme climate events of heat, drought, floods, fires, hurricanes, tornados, melting glaciers, elevations in the level of the sea, etc . It seems to be clear that either we act now, or the impacts of the climate crisis will be dramatic and affect the lives of all of us inhabitants of planet Earth. Any new world order will include development models aimed at reducing the emission of greenhouse gases. The solutions are known: i) it is urgent to reduce the use of fossil fuels, ii) to invest in clean energy, iii) to produce clean, iv) to fight deforestation and recover forests. The Climate Observatory has warned that, under President Jair Bolsonaro, the largest tropical forest in the world, the Amazon Forest, has been losing, on average, something around 8,800 square kilometers of area per year due to deforestation. It is an embarrassing fact to be taken to Glasgow, Scotland, at the end of 2021, on the Conference on Climate Change, COP-26.
- Brazil and China: opportunity for a joint agenda
In this context of challenges in the political, economic, social, and environmental scenario, the opportunities that open for Brazil in its relations with China are very wide if we know how to explore them with the same pragmatism with which the Chinese act. The goals are the same: to seek sustainable economic growth, with gains in productivity and social inclusion. The recognized existence of complementarities between the two economies can favor them to achieve together these goals.
On the Chinese side, its economic initiatives, beyond its borders, gain muscle in the 21st century for various reasons: International leadership, search for new markets, diversification of commercial partners and alliances, access to more modern technologies, acquisition of raw materials and inputs, food security, diversification, and expansion of investments in infrastructure (Belt and Road Initiative) and good business deals are just a few. Brazil presents itself as a very interesting partner.
On the Brazilian side, in the past, international trade and investment flows were only structured around the North-South axis. At present, it is evident that South-South relations are attractive and emerge as fruitful. China ranks first in trade flows with Brazil. The US ranks second, but the drop in our trade with Europe is notorious and with Mercosur itself there is a considerable shrinkage. The Chinese market for Brazilian agribusiness products is increasingly important and there are opportunities for expansion not only by incorporating new products and extending production areas without deforestations, but also by adding value to products in the current export basket.
China has become a strategic partner to leverage the recent growth of Brazil. The trade flow between Brazil and China has shown exceptional growth, from US$ 3.2 billion in 2001 to US$ 56.3 billion in 2010 and US$ 102.5 billion in 2020, with expectations of reaching more than US $120.0 billion in 2021. Exchanges continue to grow despite the recession that hit the world because of the Covid-19 pandemic. As of 2009, China became Brazil’s largest trading partner in the world and the main destination for our exports. Today, around 1/3 of Brazil’s total exports go to China. Commodity exports were an important driver of Brazilian GDP throughout most of the 2020s and in the first half of 2021.2
Brazil is the main destination for foreign direct investment (FDI) flows from China in Latin America. Between 2007 and 2021, China invested around US$ 66 billion in Brazil, in various sectors, including raw materials, machinery and equipment, energy, infrastructure, financial services, urban mobility and digital payment methods, among others, such that since 2010, China has become our biggest source of FDI.3
In addition to trade flows and FDI, we have several partnerships with China, from cooperation in launching satellites (a cooperation that has completed 31 years) to joint positions in international multilateral forums.
There is, without a doubt, a complementary agenda between the two countries, which includes trade relations – still focused on commodities with little added value –, our consumer markets and the potential to boost infrastructure and logistics sectors. Countless possibilities are open for Sino-Brazilian partnerships in high technology, steel, electronics, agricultural complex, food security, mineral complex, water resources management, renewable energies, generation and transmission of electricity, transport (high-speed trains), technology 5 G, health – production of pharmaceutical raw materials and vaccines.
Dialogue in the field of sustainability, increasingly important in the transition to a low-carbon economy, can create opportunities for investment in projects in all these areas. In fact, these fronts are highlighted pillars in the 14th Five-Year Plan of China approved for the period 2021/2025 by the Chinese PCC. They are crucial for Brazil too.
5. Final Considerations
Although we cannot yet speak of a post-pandemic period for Brazil, with around 584 thousand deaths and an average of more than a thousand deaths per day by Covid-19, and in the emergence of new increasingly aggressive variants, it is already possible to see that a new order for the world economy is being created and Brazil’s insertion will depend on the alliances made and the way we respond to the new challenges: health crises, inclusive and sustainable development, international alliances and partnerships.
China enjoys a much more comfortable situation. The pandemic also affected the Chinese initiatives underway at the beginning of the second decade of the 21st century. However, China built its rapid recovery and control of the pandemic. After GDP plummeted by 6.8% in the first quarter of 2020, it started to grow again with some vigor as of the second quarter, recording a 2.3% increase in GDP in the year, even in an adverse external context. China was the only country among the world’s major economies to register growth in the first year of the pandemic and managed to practically eradicate covid-19. The growth forecast for 2021 is around 8%.
China and Brazil are major trading partners, and their economies show unmistakable complementarities. We have always been long-term partners in multiple international forums. China’s 14th Five-Year Plan 2021-2025 points to several convergences with Brazil’s growth needs. We have a lot to gain if we join with it, if we know how to transform the primary-export model, which is unfolding in our relations with China, into a dynamic factor for the Brazilian economy. Not an easy task, but possible within the green post-pandemic recovery agenda that is opening.
For all economies, a sine qua non condition to participate in this new order, as a protagonist or supporter, requires boosting growth in a sustainable and inclusive way, defining new models of sustainable development and partners. Diplomacy will be essential. Pragmatism too.
UN Secretary-General António Guterres’ remarks to the Biodiversity pre-Conference of the Parties virtual meeting, held on August 30th 2021 goes in this direction:
Above all, we need commitment, ambition, and credibility. Science has given us the tools. Can diplomacy give us the wisdom to use them? We need a post-2020 Global Biodiversity Framework that will inspire action around the world by all — Governments, businesses, and citizens. We need everyone to act on the understanding that protecting nature will create a fairer, healthier, and more sustainable world.4
Notes:
(1) FGV Social, A Escalada da Desigualdade – Qual foi o Impacto da Crise sobre Distribuição de Renda e Pobreza? https://cps.fgv.br/desigualdade, novembro 2019.
(2) Contini, Elisio and Adalberto Aragão, O Agro Brasileiro Alimenta mais de 800 milhões de pessoas. https://www.embrapa.br/busca-de-noticias/-/noticia/59784047/o-agro-brasileiro-alimenta -800-million-people-says-study-of-embrapa, 2021.
(3) https://www.cebc.org.br/investimentos-chineses-no-brasil/