China trade vs economic growth: the dilemma for Brazil’s new Trump-style president

Brazil’s far-right president-elect could struggle with his twin commitments to cut Chinese investment in his country and accelerate its economic development, given that China is – and is likely to remain – Brazil’s biggest trading partner, diplomatic observers said.

Sixty-three-year-old president-elect Jair Bolsonaro campaigned on a Trump-style platform that included warning against Beijing’s growing influence and amplifying fears about Chinese investment in Brazil’s energy and infrastructure sectors.

“China isn’t buying in Brazil. China is buying Brazil. This is a big problem that we should be worried about … Are you willing to leave Brazil in the hands of the Chinese?” Bolsonaro said in the months leading up to the election.

He vowed to reshape Brazil’s foreign policy and improve ties with Washington, overturning the country’s decade-long policy.

On Monday, Chinese foreign ministry spokesman Lu Kang congratulated Bolsonaro and said China would deepen cooperation with Brazil.

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Analysts said Bolsonaro’s presidency would bring a dramatic shift in China-Brazil relations, and the power politics of BRICS, the association of the five major emerging markets of Brazil, Russia, India, China and South Africa.

“Bolsonaro’s rhetoric has also largely been about reducing China’s investment [and] this is likely to cause tensions between both Beijing and the new Brazilian government,” James Floyd Downes, a lecturer in comparative politics at the Chinese University of Hong Kong, said.

Downes said Bolsonaro’s administration might reduce funding that was originally earmarked for areas such as railways and infrastructure, which Beijing has promoted.

Roland Vogt, an international relations specialist at the University of Hong Kong, said the incoming president’s lack of international experience could also create uncertainty for China’s ties with Brazil.

“Bolsonaro is not only very controversial and divisive both in his political rhetoric and posture, but also very inexperienced in matters of foreign affairs and trade,” Vogt said.

Bolsonaro has pledged to reduce Brazil’s engagement with regional blocs such as BRICS, which was formed as a counterweight to Western dominance of international institutions.

“A succession of presidents from the political left of Brazil has shared that agenda [of strengthening its involvement in BRICs]. But, The new president, by being pro-US, may decide to limit Brazil’s involvement with BRICS,” said Zhang Baohui, director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong.

Chinese diplomats based in Brasilia have sought to highlight the need for bilateral cooperation in meetings with top Bolsonaro advisers in recent weeks, according to Reuters.

China remains a major investor in Brazil, ploughing US$124 billion into the country since 2003, mostly in the oil, mining and energy sectors. China is also eager to bankroll railway, port and other infrastructure projects here to speed the movement of its Brazilian grain.

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Trade between China and Brazil stood at US$75 billion last year, according to Brazilian government data. And as the US trade conflict with China intensifies, Brazil became one of China’s major investment destinations.

This relationship could continue, given that China’s investment is needed to meet another of Bolsonaro’s campaign pledges – to speed up Brazil’s economic development.

“It is a paradox,” Downes said.

“Brazil is now heavily reliant on China’s economy for its future economic development. Thus, there is likely to be a disconnect between the new Brazilian president’s rhetoric and overall policy once in office, and that could upset the core supporters who voted for him.

Vogt said diplomatic ties with China were likely to be cooler “but trade will continue … China, after all, is one of Brazil’s most lucrative customers”.