Lula goes to China, with loose ends over Xi’s project – 04/11/2023 – World

President Luiz Inacio Lula da Silva (PT) arrives in China this Wednesday (12) with ongoing trade and financial negotiations with the country of Xi Jinping. The two have a meeting scheduled on Friday, in Beijing. Earlier, on Thursday, Lula will attend the inauguration of former president Dilma Roussef at Banco do Brics, in Shanghai.

Lula wants investment in new productive assets and infrastructure, including railroads and hydroelectric plants, while his Chinese counterpart demands the country’s formal entry into the Belt and Road Initiative, which completes ten years in September.

Members of the Brazilian entourage gave signals both in the direction that Lula could sign a memorandum to join the Chinese program, which already covers 21 Latin American countries, and could be limited to symbolic support, without formal adherence.

Lula’s special advisor, Celso Amorim, does not confirm, but is no longer opposed to the BRI (acronym in English for the initiative). “It’s a label for the investment program aimed at infrastructure”, he says. “Several European countries and many in Latin America, especially South America, are part of the project. I see no reason for Brazil to be left out.” For Amorim, adherence will depend on what is “offered concretely, in real terms”, and there is “no harm in having the name, if it helps to include more investments”.

Another member of the entourage says that it is possible, if the Chinese counterpart in investment agreements is not of great weight, that Brazil supports BRI projects in other countries, as France would have done.

Brasilia wants to avoid a repeat of what happened to Huawei in the Jair Bolsonaro government, which initially fought against the Chinese 5G technology giant and in the end gave in without negotiating compensation.

“If accession means that China is willing to finance railroads or ports, this type of project that Brazil is unable to finance would have an obvious benefit and would make sense”, comments ambassador and former finance minister Rubens Ricupero. “During this visit, perhaps this point will be clarified.”

The founder of Frigoestrela and former deputy Etivaldo Vadão Gomes, who traveled to Beijing for negotiations involving the sector, defends adherence. “I’m in favor, I personally think it’s very important. China is the main buyer of everything from us. It is also the main investor in Brazilian infrastructure.”

Chinese state media has noted Brazil’s desire for greater investment not only in infrastructure, but in economic “diversification”. For example, he heard from Jianwei Chen, an executive in the machinery sector and professor at the University of Economics and Foreign Trade in Beijing, that “Brazil is taking advantage of this opportunity to attract Chinese investment and develop Brazilian industry”.

It is also gaining attention that the first step towards this would be for the country to enter the BRI. An article by Liang Haiming and Feng Da Hsuan, from the University of Hainan, was published in the same issue of China Daily as an article by the Brazilian Foreign Minister, Mauro Vieira. It is the newspaper most identified with Chinese foreign policy.

The text emphasizes that joining the BRI would be “a blessing for Brazil” and that “the international community is waiting”. He maintains that “Brazil needs to attract more investment to boost its economy, and China, as the second largest economy in the world, can lend a hand in this regard.”

Finally, he recalls that Lula achieved little in his recent visit to the President of the United States, Joe Biden, and in the negotiations that still have not progressed for the Mercosur trade agreement with the European Union.

On Monday, questioned at a press conference about Brazil’s entry into the BRI, the spokesman for the Chinese Ministry of Foreign Affairs, Wang Wenbin, avoided answering directly. “We are willing to work with all members of the international community,” he said.

For its part, the US publicly shows concern with Brazil’s adherence to the project. It was a focus of a hearing three weeks ago at the Senate Foreign Relations Committee, when the reluctance of Brazil, mistakenly treated as “the only country in Latin America that has not yet joined China’s Belt and Road Initiative”, was hailed as a new chance for the American government.

According to Democratic Senator Jeanne Shaheen, who is on the front line against Beijing in Washington, “this shows that there are still many opportunities for the US to advance in ways that we haven’t done so far, in terms of investment”, with Brazil. The hearing, once again, revealed nothing concrete in that direction.

Four days before the meeting with Xi, Lula was invited to participate in the G7 summit in Hiroshima next month, alongside Biden, after a few days of speculation surrounding the confirmation of the invitation.

Questioned before confirmation, Amorim commented: “Look, I’ll say it frankly, today’s G7 needs Brazil more than the G7’s Brazil. That’s why the G20 was created. In reality, it’s not me, [o ex-presidente Barack] Obama said that the G20 was the most important economic body.” Brazil assumes the presidency of the G20 in December.

AGREEMENTS

With negotiations still open regarding Chinese investments, rancher Vadão Gomes is turning to the most immediate agreements in the sector, which was the one that most brought together businessmen on his initial trip to China, two weeks ago.

Among other old demands to be announced, such as digital certification, he reports that “it was agreed that President Lula would give the news” that the 2015 Brazil-China protocol will be revised, “in the sense of both beef and pork” . He argues that the protocol “is very harmful to Brazil in relation to other suppliers, USA, Australia, Argentina, who can send meat on the bone, export any age, when we only have up to 30 months”.

Two other agreements postponed, until Lula’s meeting with Xi, would be the confirmation of the installation of the Chinese electric car factory BYD in Bahia and the sale to Chinese companies of 20 Embraer commercial jets, model E195-E2, with up to 144 seats. .

Two weeks ago, after the negative repercussions of the postponement of the agreements, part ended up being announced by the Brazilian Trade and Investment Promotion Agency (ApexBrasil), in Beijing.

Among them, the purchase of five ships from China’s Cosco by Brazil’s Suzano and an agreement between Vale and Chinese bank ICBC (Industrial and Commercial Bank of China) “for financial cooperation involving comprehensive lines of credit for mining in Brazil”.

ApexBrasil also informed on the occasion that the ICBC would start to act as a clearing bank for the Chinese currency in Brazil, taking another step in the memorandum signed by the two central banks at the beginning of the year. According to the agency, “reductions in restrictions on the use of the renminbi are aimed at further promoting bilateral trade and facilitating investment.”

The prospect of Sino-Brazil trade in renminbi or yuan, as the currency is also called, has achieved great repercussions in the US and other countries, being treated as a threat to the dollar.

In the Brazilian entourage, it is about containing expectations. The assessment is that the impact on trade will be defined by the use that Brazilian exporters want to make of the new resource, with the advantage of a single exchange operation and a single incidence of bank fees.

Under market conditions, the attractiveness of exports without the dollar will be defined by the exchange rate that the bank manages to establish, between the real and the renminbi, and also by the fee it charges. One factor that could change the picture would be an instruction from Beijing to its importers.

In addition to the events with Xi Jinping and Dilma Rousseff, meetings are scheduled for the Brazilian president, on Friday, with the president of the National People’s Congress, Zhao Leji, and with Prime Minister Li Qiang. On Saturday, he will meet in Abu Dhabi with the leader of the United Arab Emirates, Mohamed bin Zayed.