Lula visits China to boost Sino-Brazilian relations

First modification: 04/11/2023 – 13:48

By Justine Fontaine

The far-right former Brazilian president Jair Bolsonaro repeated that China was “buying Brazil” and multiplied anti-China statements, especially during his electoral campaign. Lula, back in power since January 1, thus seeks to distance himself from these hostile discourses and break the diplomatic isolation of his country, in order to position Brazil as a leading global player.

“Brazil continues to insist on having a seat on the UN Security Council, despite the fact that it has almost no chance of getting it,” says geographer Hervé Théry, a professor at the University of Sao Paulo. “This is part of an attempt at intermediate affirmation: Brazil tries to join the club of the greats, for example by applying to join the OECD, and become the leader of what was previously called the Third World,” he continues. In this way, Brazil is also trying to revive the BRICS, the heterogeneous club of large developing countries, which includes Brazil, Russia, India, China and South Africa.

Mediation in Ukraine

In this diplomatic strategy, Lula is also trying to position himself as a mediator in the war in Ukraine. During his first two terms, between 2003 and 2010, Brasilia already tried to act as a go-between on the Iranian nuclear issue. Today, the country has an ambiguous position on the war in Ukraine. On the one hand, Lula says that Russia cannot seize Ukrainian territory, but on the other, he suggested last week that Ukraine could cede Crimea to Russia. In addition, Brazil does not participate in the sanctions against Moscow.

During his visit to China, Lula intends to present his mediation plan for peace in Ukraine to his counterpart Xi Jinping. For Frédéric Louault (author of the book Le Brésil in 100 questions – L’interminable émergence), Professor of Political Science at the Free University of Brussels (ULB), this is part of a long diplomatic tradition in Brazil. “Lula, during his first terms, had established good relations with Russia, without completely turning his back on the United States, the European Union and the Western bloc,” he explains.

“Brazil has an intermediary position that can bring together different players firmly opposed to each other around the same table,” continues the researcher, who acknowledges that the country “cannot assume such an ambition on its own.” Hence also the need for Brazil to propose an articulated solution with other powers, particularly China. If this works, and if a “common Sino-Brazilian position could bring the different actors in the conflict back to the same table”, Brasilia could emerge stronger on the international scene, says Frédéric Louault.

break free of the dollar

China is Brazil’s largest trading partner, so the economy is an important part of Lula’s visit to China. The Chinese market represents more than a third of Brazilian exports, three times more than the United States. Brazil is one of the few countries that sells more to China than it buys from it, thanks mainly to soybeans and beef.

According to the economist Mylène Gaulard, a professor at the University of Grenoble, Brazil could join the “New Silk Roads”, a gigantic Chinese investment project in transport infrastructure. The two countries could also reach an agreement on semiconductors, essential for the manufacture of electronic chips, but whose exports to China have been severely restricted by the United States since October 2022.

“China’s goal is to break away from US semiconductors and produce them both at home and abroad,” Gaulard says. “China is negotiating to be able to install Chinese semiconductor factories on Brazilian soil,” he adds.

Finally, China and Brazil announced at the end of March that they had signed an important agreement to trade with each other in reais and yuan, that is, to do without the dollar. A mockery of the United States, but also a way to counteract the volatility of the dollar since the beginning of the Covid-19 pandemic, explains the economist, and to avoid currency transaction costs in bilateral trade between China and Brazil.