Trade and Investment

“Brazil and China will participate in the 21st century decision-making process”

CBBC Chairman sees no risk of dependence on China

“Brazil and China are regional powers that are emerging politically and have an unwritten alliance to obtain a revision of the rules of international governance. They open a space for participation in the decision-making process in 21st century institutions,” stated Brazil-China Business Council (CBBC) President Sérgio Amaral in an exclusive interview with Diálogo Chino.

Formerly the Brazilian Minister of Development, Industry and Foreign Trade, Secretary of Social Communication, and spokesman for the Brazilian president, Sérgio Amaral is a career diplomat and has also served as Brazil’s ambassador to the United Kingdom and France.

Diálogo Chino: What is China’s interest in Latin America?

Sérgio Amaral: The supply of inputs, raw materials, commodities. Since 2007, the Chinese have looked to Brazil for iron ore, soybeans, and oil, and this interest has gradually widened.

DC: To which areas?

SA: Between 2007 and 2012, they announced investments on the order of approximately US$ 60 billion in Brazil; not all of these investments actually came to pass but at least US$ 30 billion are effectively being carried out. Brazil-China trade in the ten-year period ending in 2012 has grown about 15 times. It grew from US$ 3 or US$ 4 billion to US$ 70 billion last year.

DC: With the drop in Chinese growth, won’t this relationship suffer?

SA: Chinese growth fell in a predictable and orderly manner to the level they had announced. The 12th Chinese five-year plan already stated that they would begin to slow down and adjust their economic plan, to depend more on their domestic trade and rely less on exports, to develop their own technology, and stimulate domestic consumption. And this is what happened.

DC: Is China is only trying to supply its domestic market?

SA: No, they are looking at the Brazilian consumer market, with cars, for instance. They invest in infrastructure. Argentina and the countries along the Pacific coast of South America have also received important investments in the area of infrastructure, in mining. China is not just expanding its economic presence, it is diversifying.

DC: Will this relationship continue or is it temporary?

SA: The relationship with China is increasingly important, since it has a huge economic base and is sustainable. The two economies complement each other greatly. There is harmony in their vision of the 21st century world.

DC: Today, is China Brazil’s political partner?

SA: Brazil and China are regional powers that are emerging politically and have an unwritten alliance to obtain a revision of the rules of international governance. They open a space for participation in the decision-making process in 21st century institutions.

DC: Did China replace the United States?

SA: No, I think China may not replace the United States as a global economic superpower. In my view, we are heading into a new world, a reorganized world that may possibly have two powers, which are two large economies, which are also politically important powers.

DC: With China becoming the major funder in Latin American countries, won’t the governments here be in the hands of the Chinese?

SA:  In the case of Brazil, I don’t know if this is true. China announced significant investments in Brazil, but other than Petrobras, I don’t know of any major elements or significant participation in funding, either from the government or in Brazilian projects. I know of Petrobras.

DC: Could this relationship turn into dependence?

SA: It is very unlikely. First, because the Brazilian government is not willing to accept a dependent relationship with China. Second, because we have a great diversity of partners. We have a strong partner in the United States, we have a strong partner in Europe. China is another of these partners. And its trade with Brazil is more or less comparable to our trade with the United States and Europe. So, it may vary from year to year, but we do not have a dependent relationship with them, in fact not with any of the economic blocs.

DC: Does the BRICS bank replace any international financial institutions such as the IMF?

SA: No, I don’t think this is a possibility, not least of all because our participation in the IMF is much greater than in the BRICS bank. It presents an alternative that should be explored, not in terms of replacement, but as a complement, a financing tool for growing trade in the Southern countries.

DC: Brazil will have a route to the Pacific with the railroad crossing Brazil and Peru, linking the Atlantic and Pacific Oceans…

SA: I hope so. This railroad is planned, but it is not yet an actual project; it is a project that reflects a willingness on the part of Brazil and the Andean countries to have this outlet to the Pacific and to China as well. I think it would be good for Brazil to move closer to the most important region, or the most dynamic area in the 21st century, which is Asia.

DC: Studies show that there would be US$ 3 reduction per ton of grain exported to China.

SA: I don’t have this information. But transport represents 100% of the value of producing soybeans, so if we have such high logistics costs, we can suppose that this would reduce these costs.

DC: Many environmentalists criticize the way China has extracted minerals and petroleum in Latin America. Is China making the same mistakes it made in Africa?

SA: Not that I know of. I know that in the case of Africa, there were problems in different countries, social problems, environmental problems, but here among us, none that I know of. China doesn’t undertake direct productive exploration, or mining, or infrastructure construction. It can, in partnership with Brazilian companies, but I am not aware that the Chinese presence among us has caused any distortions or social or environmental conflicts as of this time.

Add a comment