Lula’s China trip showcases friendly, predictable business environment

Editor’s note: Pan Deng is a member of the Academic Committee at the Charhar Institute and the Executive Director of the Latin America and Caribbean Region Law Center of China University of Political Science and Law. The article reflects the author’s opinions and not necessarily the views of CGTN.

Brazilian President Luiz Inacio Lula da Silva’s comeback to politics will lead to a comprehensive reset in China-Brazil relations. But as there is still plenty of time for him, he may focus more on trade and investment during this visit so that his “Samba nation” can recover its economy as soon as possible.

Trade has become the cornerstone for bilateral ties

Although an unexpected flu disrupted Lula’s earlier plan to visit China, he fulfilled his promise once he recovered, aiming to convey a clear message and remove all obstacles created by his predecessor Jair Bolsonaro in China-Brazil relations.

As a Donald Trump loyalist, Bolsonaro followed a close step after Washington’s policies towards China and has been hostile to China in diplomacy.

Thanks to a group of visionary Brazilian politicians and local scholars, and the Chinese government that has always viewed Brazil’s role in global politics and international relations from a strategic and long-term perspective, China-Brazil relations basically went on the right path during Bolsonaro’s presidency. Despite challenges, the trade between the two countries, especially China’s imports from Brazil, has remained high.

As of today, China has been Brazil’s largest trading partner for 14 consecutive years. Brazil is also China’s largest source of many agricultural products such as soybeans, chicken, and sugar while China is Brazil’s main source of foreign investment.

In a sense, economic and trade relations have become the cornerstone of mutual exchanges between the largest countries in Asia and South America, with the ability to achieve self-development despite unfavorable political factors.

China is an answer to the economy

Lula’s stance on China was apparent from the start of his presidential campaign. When asked about China in a TV interview, he promised to devote the first half of his presidency to repairing Brazil’s good relations with China.

At that time, perhaps more people interpreted this statement from Lula’s left-wing identity and his personal sentiments pushed for “labor socialism,” or to show his utterly different position from Bolsonaro.

However, the fact is that the unemployment rate and the poverty rate in Brazil have been on a rise with production orders disrupted due to the COVID-19 pandemic. Faced with such a country, any new “ruling figure” will prioritize economic development and improvements in people’s livelihoods as the most urgent policy issues.

As he did in his previous visit to the United States and when receiving the visiting German Chancellor Olaf Scholz, he also made expanding exports and attracting investment the main topics. However, seeking incremental growth with the largest trading partner is inevitably the most feasible path.

Confidence and a friendly business environment must go hand in hand

Lula’s tenure from 2003 to 2010 left an impression on the Chinese, and this senior politician from the Workers’ Party has a similar political background and governance logic to his Chinese peers. This provides a basis for him to receive a positive response during his visit to China.

On March 23, China lifted the ban on Brazilian beef imports set due to disease, just weeks before Lula’s scheduled visit in April. Some time ago, the Chinese government was also creating an atmosphere for diversified investment in Brazil.

During Bolsonaro’s presidency, many Chinese companies suspended their cooperation plans with Brazil due to uncertain policy environments. Some of the local businessmen who have deep roots in the area turned to promote cooperation with state governments. Coincidentally, most of them are from the Workers’ Party that Lula belongs to. Currently, many Chinese business communities believe that the spring for doing business in Brazil has come.

However, we must be aware that Brazil’s exports to China still mainly focus on primary products such as soybeans, beef, crude oil, iron ore, and pulp, while China’s investment in Brazil is concentrated in conventional fields such as manufacturing, energy and mining, and agricultural facilities. Lula hopes that sustainable growth in trade and investment between the two countries will not only increase in numbers, and China also hopes to extend cooperation to high-end areas to achieve diversification and balance.

Both countries are focusing on upgrading traditional industries and developing emerging industries driven by the new technology revolution, and their companies have a strong willingness to cooperate in the fields of 5G communications, clean energy, modern agriculture, and the online economy.

However, the recovery of China’s investment enthusiasm in Brazil also depends on Brazil’s ability to withstand pressure from internal and external sources, eliminate tangible and intangible obstacles, and create a friendly business environment from a structural and institutional perspective.

This is the ambition that the “Son of Brazil” hopes to showcase to the business communities during his first visit to China since returning to power.

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