Brazil’s Agriculture Minister Carlos Favaro said the country should join China’s Belt and Road Initiative to counter a wave of protectionist policies in the US and the EU, speaking at the Bloomberg New Economy event in Sao Paulo earlier this week.
“We need to have a great relationship with the United States and the European Union, but also some protectionist measures must be fought with an expansion of the range of trading partners,” Favaro said.
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Taking steps to strengthen other trading relationships, such as the one with China, offer Brazil an “opportunity to overcome trade barriers.”
The idea of joining the BRI has divided President Lula’s left-wing government. Proponents of joining argue that it is necessary to attract significant new investments. Others, warn that it could damage Brazil’s relationship with the US and the EU, also important trading partners, at a time of global uncertainty.
At the same event in Sao Paulo, US Trade Representative Katherine Tai said she “would encourage our friends in Brazil to look at the risks in today’s economy” through “an objectivity lens, through a risk management lens.” She emphasized that the US respected the country’s sovereignty and that the decision was ultimately up to them.
Latin America and China
China is a major investor in Latin America and the Caribbean, where 22 countries are part of the BRI. This has raised alarms for the US, which is wary of the long-term economic relationships their neighbours are entering into with China. The country is a top trading partner for Peru, Chile and Brazil. China’s President Xi Jinping will travel to Latin America in November to inaugurate a port in Peru’s capital and then go to Brazil both for the G-20 Leader’s Summit and to meet with Brazil’s President Lula.
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By GlobalDataTai said that a main challenge for China’s stance in the global economy is “that very nebulous and often non-transparent connection between the state and the economic actor, and trying to understand that connection, to get to the issue of trust in an increasingly geopolitically tense world.”
According to a report by the Brazil-China Business Council (CBBC), Chinese investment in Brazil grew by 33% in 2023 reaching $1.73b. Of the confirmed projects, 72% were directed at green energy or related sectors.
Chinese investment in the auto sector also increased by 56% compared to the previous year.
“Both BYD, which took over the former Ford factory, and GWM, which acquired a Mercedes factory, have a clear desire to invest for the long term. And these are very significant amounts of capital,” according to the CBBC’s research director Tulio Cariello.
