Two OpEds on Brazil-China with Australian implications

ANCLAS Senior Associate Dr Sean Burges has had two OpEds published this week dealing with Brazil-China relations and ideas for balancing the relationship through cooperation with Australia and Canada. The English-language version, structured around some of the challenges that could arise from Australia’s focus on Asia was published on December 5th in The Australian. A separate piece addressing how Brazil might get past its current challenges with China was published in the major Brazilian daily O Estado de São Paulothe English language text is appended below.

 

A new approach needed for China
Sean W Burges
Senior Associate, Australian National Centre for Latin American Studies at the Australian National University
Like many other countries, Brazil is struggling with the relentless onslaught of Chinese exports. The Brazil-China Business Council convened its fourth annual conference in São Paulo to try and address this challenge. Some interesting stories were told, but not much new thinking was displayed. More worryingly, there appeared to be little recognition of the subtle warnings that China is maneuvering Brazil into position as a subordinate, vassal state.

China’s ambassador to Brazil, Li Jinzhang, used a mix of oblique messaging and ancient imperial strategies to quietly underline relative power positions and the limits on Brazilian aspirations for the bilateral relationship. Jinzhang deliberately spoke in Mandarin, not the Portuguese that we might expect from an ambassador to an important global player such as Brazil. To be generous, it is possible that his Portuguese, a language reportedly difficult for the Chinese, was not up to a major public address. But if this was so, why not use a common second language such as English, the international language of business and diplomacy? His message was clear: you must come to us and adapt to our ways and priorities.

Quiet reminders that China dominates the bilateral relationship were accompanied by a subtle warning to Brazilian industrialists complaining about Chinese imports and calling on Brasília to engage in further protectionist measures. Jinzhang told the story of a small Chinese village that, like Brazil, was a predominantly agrarian community. Through hard work and innovation this village transformed itself into an industrial powerhouse and now contributes just over two percent of China’s exports from a tiny geographical footprint. While gently delivered, the lesson for the gathered Brazilian business leaders was very simple: we are not going to slow the pace of exports and it is up to you to innovate and compete with us. More chillingly for Brazil’s leading agro-industrial business sector, Jinzhang also noted that a central policy goal of the new administration in Beijing is food security with an ultimate aim of self-sufficiency.

An implicit aspect of CEBC President Ambassador Sergio Amaral’s closing address was a riposte to China’s challenge. Unfortunately, Amaral’s idea of reinvigorating Latin American integration ventures to create a larger internal market and a common set of high tariffs to exclude Chinese products is an old idea that has failed. Moreover, the idea is delusional, completely ignoring that Chile, Peru, Colombia and Mexico have banded together to form the Pacific Alliance precisely with the idea of looking West to China’s Asia and not East to Brazil.

Interestingly, Jinzhang’s story about a Chinese agrarian town transformed by innovation points to a path forward for Brazil, one that would involve a very different direction for Brazilian foreign policy and major, but ultimately productive shifts in thinking by Brazilian business. There are two concrete avenues for action.

First, Brazil must increase its rate of innovation. The Ciência Sem Fronteiras program will help, but it is not enough on its own. Lessons from the Chinese experience should be added to the mix. Industrialization in China was built upon successive waves of FDI, which brought new technology and processes – Chinese firms engaged in an extensive process of international collaboration to drive innovation. Thanks to Ciência Sem Fronteiras Brazilian universities are already beginning to experience this through active engagement by universities in the US, UK, Canada, Europe and even my own home institution, the Australian National University. Business should follow and actively seek dynamic partners with whom new markets, products and processes can be explored and developed. The Brazilian Government could actively assist with creative programming at institutions such as the BNDES or new financing lines through the Banco do Brasil or Caixa Economica.

Second, Brazil needs a new approach to managing China. One option that will not work is the middle power route Australia and Canada have long-used to manage bilateral relations with the US. The commonality of interests is simply not in place to make this viable with BRIC-member China. Instead, attention should be given to a sophisticated ‘balancing’ strategy involving a partnership with Australia and Canada. Why these two countries? Both are relatively small and actively courting Brazil, which makes them manageable. More importantly for the impact on Chinese perceptions, they are the two other major mineral and food exporters to China.

With Australia, Brazil and Canada – a new ABC group of countries – engaging China independently Beijing is able to engage in a divide and conquer strategy. The end result is that Chinese tariffs let in raw materials cheaply, but price value-added products out of the market. This leaves the ABC countries as breadbaskets for Chinese consumers. Collective action might be an avenue for reversing this process and forcing concessions from Beijing.
China is undoubtedly going to one of Brazil’s main economic partners for the rest of this century. The danger is that relying on tired integration models and an excessively autonomist approach to engaging Beijing will quickly shunt Brazil back into a peripheral position as little more than China’s pantry.

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Filed under Brazil, Foreign investment, Foreign Policy / Diplomacy, Trade

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