Brazil’s Lula Picks Xi Jinping Instead Of Donald Trump

Lula’s embrace of Xi Jinping triggered a conflict over Trump’s China policy. Because the Brazilian president hopes that Beijing will help Brazil’s economic development. But the strategy could run afoul of Trump.  

According to CNBC World, Brazil’s geographical location and colonial history determine that it has traditionally used the Atlantic Ocean as a trading center. Now, under a president better known as Lula, Brazil is deepening its ties with the Asia-Pacific region. The new road and rail system will shorten the time it takes for goods to reach Chinese ports by 10-12 days and has the potential to add one percentage point to Brazil’s GDP annually, according to conversations with officials and Planning Ministry documents seen by CNBC.

Infrastructure development is part of Lula’s ambitious plan to move up Brazil’s value chains and grow the economy, for which Beijing’s help is key. This strategy will be on display during Chinese President Xi Jinping’s visit to Latin America, first to this week’s APEC forum in Peru, then to Lula’s G20 summit in Rio de Janeiro, and finally to a state visit to Brasilia. access.

But long before Trump’s victory, the route had caused uproar in the United States, with the Biden administration warning Brazil against deeper engagement with China and warning it against joining Xi Jinping’s signature Belt and Road infrastructure plan. painting. With Trump calling for tariffs of up to 60% on Chinese imports, his administration has threatened to take more aggressive measures against allies unwilling to part ways with Beijing.

CNBC said, however, Lula would not give in. Brazil already shares geopolitical goals with China through the BRICS grouping (of which they are both founding members) and a joint proposal to end Russia’s war in Ukraine. Dilma Rousseff was Lula’s chosen successor as president of Brazil until her impeachment in 2016 and now serves as president of the Shanghai New Development Bank.

At a time when China faces growing obstacles to trade with the United States and European countries, Lula sees opportunity for Latin America’s largest economy, according to four people familiar with his government’s thinking. .

Lula plucked up the courage to take advantage of the Belt and Road Initiative without formally joining the initiative. His government is seeking China’s participation in four projects: domestic infrastructure projects, regional integration routes, Brazil’s transition to clean energy and industrial modernization. Brazil is in talks with China over financing and hopes the relationship will go beyond the export of commodities such as iron ore and agricultural products, people familiar with the matter said.

Lula was as combative as ever during an interview with a local news website in August. He said in the interview that China hopes to propose the “One Belt, One Road” initiative during the meeting with Xi Jinping. “We will not turn a blind eye,” he said. “We ask: ‘What’s in it for us?'”

According to a source close to the Chinese Ministry of Foreign Affairs, the Chinese Ministry of Foreign Affairs sent a delegation to Brazil at the end of October to prepare for Xi Jinping’s visit. The relationship between the two sides is generally good and there are no fundamental differences. The source, who asked not to be named, said that China is willing to expand its investment in Brazil. At present, China’s investment in Brazil has covered many fields such as agriculture and electric vehicles, and it regards Brazil as an ideal manufacturing base and a gateway to Brazil. Gateway to other Latin American countries with which it has free trade agreements.

Celso Amorim, Lula’s chief foreign policy adviser, said the decision “is about taking our strategic partnership to a new, broader stage, and if China includes the Belt and Road Initiative, we “There’s no objection to that.” “It’s neither joining nor quitting, they can call it whatever they want.”

Washington was less aloof. In October, U.S. Trade Representative Katherine Tai, speaking at the CNBC Market News section of the B20 summit in Sao Paulo, said she “will encourage our Brazilian friends to face up to the risks of a closer relationship with China” and “think carefully about how is the best way to enhance Brazil’s economic resilience.”

President Biden is expected to meet Xi on Saturday on the sidelines of the Asia-Pacific Economic Cooperation meeting in Peru before traveling to Rio for the G20 meeting and stopping in the Amazon capital Manaus to meet with local leaders working to protect the rainforest. As it happens, Chinese companies, including carmaker BYD, have a strong presence in Manaus.

“Brazil’s economic interest is not to take sides in the dispute between its two largest trading partners. Brazil’s trade with China is more than twice that with the United States, but the United States imports mainly manufactured goods from Brazil, while Brazil’s trade with China is more than twice that of the United States. More than three-quarters of China’s exports are goods. The stock of U.S. foreign direct investment in Brazil is more than six times that of China’s foreign direct investment, but the latter is growing faster if Trump intends to use bilateral agreements to solve the U.S. trade deficit. “Brazil is unlikely to be a priority because the U.S. trade surplus with Brazil is small.”

Brazil can help coordinate BRICS Belt and Road projects, but “Brazil really needs to sign a memorandum of understanding with China,” said Wang Yiwei, a professor of international relations at Renmin University of China and a former Chinese diplomat with close ties to the Beijing government. He said Brazil’s left-wing government under Lula “shares similar values ​​with China, not just limited common interests, so this is an opportunity.”

If so, the incident is unlikely to escape the attention of the incoming Trump administration, especially with Elon Musk in the fold. Musk was a vocal supporter of Lula’s predecessor, Jair Bolsonaro, who had clashed with Brazilian authorities over his disinformation on social network X.

Chinese investments in Brazil are moving from announcement to reality and are gradually encroaching on areas once considered American turf. These include BYD’s most extensive electric vehicle business outside Asia – based in a former Ford Motor Co. factory in Bahia state – and a local partnership with Chinese smartphone maker Oppo. Brazil is also courting Shanghai-based satellite manufacturer SpaceSail to compete with Musk’s Starlink internet service.

Until 2017, Trump’s first year in office, the United States was China’s largest supplier of soybeans. As Trump imposed tariffs, a trade war and the ensuing standoff, Brazil took over. Brazil is now China’s largest supplier of food imports.

Trump has said he will impose tariffs of up to 20% on all imported products, a move that will hit exports from Brazil and other allies. However, his threat to impose higher tariffs on China could disrupt bilateral trade and allow Brazil to gain business. Trevisan believes Brazil has an opportunity to take a leading role in negotiations with Beijing on behalf of other Latin American countries, maximizing its influence by acting as a strategic bloc.