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Ralph Jennings

Brazilian President Luiz Inácio Lula da Silva is expected to arrive in China next week for his first visit since being elected in October, with business leading the agenda.
The world’s No 2 economy is trying to expand its trade and economic partners amid spiralling tensions with the United States and a gloomy global trade outlook.
Brazil, South America’s largest economy, is looking to sell more oil, iron-ore and farm goods while bucking up its manufacturing sector. Some 240 businesspeople will accompany Lula on his trip.
Ahead of his arrival, Beijing announced on Thursday it would resume Brazilian beef exports, which were halted last month after discovery of a mad cow disease case.
What is the trade, investment relationship between China and Russia?
Zhang Zhiwei, chief economist at Pinpoint Asset Management in Hong Kong, said the two economies compliment each other quite well.
“Brazil is a big commodity exporter while Chinese exports of manufactured goods are highly competitive in the global market.”
Here are the three biggest reasons why China and Brazil are looking to deepen trade and economic cooperation.
1. Commodities trade
China is Brazil’s top export destination for its signature commodities, most notably iron ore, soybeans and oil.
Brazilian iron ore shipped to China reached US$1.11 billion in value last year, soybeans were worth US$997 million, crude petroleum came to US$972 million and beef was worth $329 million, according to figures compiled by the international business advisory Dezan Shira & Associates.
Brazil is the top exporter of soybeans to China and the second-largest exporter of iron ore after Australia, Moody’s Analytics economists Sarah Tan and Jesse Rogers estimate.
Brazil’s exports of these commodities to China took off around 2000 and have allowed for “the leveraging of businesses” in oil, iron ore and soybeans, the Carnegie Endowment for International Peace said in an October 2022 study.


2. Electronics
China is Brazil’s primary source of manufactured goods, with Chinese exporters capitalising on the country’s 215 million-strong population.
Key exports are mobile phones and steel, with Chinese cars also on the up, Zhang said. Chinese PCs and tech hardware components are reaching Brazil, too.
“From the China side, given the growth of the electronics sector in China, it’s likely that phones will continue to be in high demand, as well as semiconductor devices, assuming China makes more breakthroughs in this area,” said Guilherme Campos, Dezan Shira’s manager of international business advisory in Shenzhen.
China exported about US$18.1 billion in electronic and electrical machinery goods last year, plus another US$8.8 billion in computers, machinery and parts, according to Brazilian government data.


3. BRICS cooperation
Both countries are part of the BRICS bloc of five major emerging national economies, which also includes Russia, India and South Africa.
The organisation, created in 2006, provides the nations with special access to each other’s markets and has helped Brazil shift away from US influence in the trade realm without confronting Washington, the Carnegie think tank said in a 2015 study.
China’s efforts to secure partnerships “on all fronts” extends President Xi Jinping’s objective of bolstering his country’s international standing and doing more in terms of world governance, the study said.


What are the possible sticking points?
Issues between the two developing economies come and go. For example, Brazil cut off beef exports to China in February because of a mad-cow disease outbreak and Lula’s predecessor Jair Bolsonaro took an anti-China stance early in his four-year term.
Long-term, however, the two nations are likely to compete increasingly in sales of manufactured goods, especially on prices of common household items sold in Latin America including in Brazil’s own market.
Chinese products, such as shoes, sell well due to relatively high production costs in Brazil, said Evan Ellis, a research professor of Latin American studies at the US Army War College’s Strategic Studies Institute.
“When you say competition, probably the biggest is in the manufactured sectors,” Ellis said.


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Brazilian President Luiz Inácio Lula da Silva will meet Chinese President Xi Jinping in Beijing next week
Trade in commodities and electronics, manufacturing and BRICS cooperation are likely to be on the agenda


Brazilian President Luiz Inácio Lula da Silva will meet Chinese President Xi Jinping next week in Beijing, where the leaders are expected to discuss expanding trade and economic ties.


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