Brazil registers high exports to China amid covid-19 crisis
While the entire world suffers from a sharp decline in international trade levels as a result of the covid-19 epidemic, the total Brazilian trade current remains virtually unchanged. This is what the data released by the Foreign Trade Secretariat for the first four months of the year show. Exports to Asia, especially to China, are the flagship of this result and, according to analysts heard by the RFI, recent friction between the two countries should not be reflected in long-term obstacles.
From January to April, the Brazilian trade flow totaled US $ 123.4 billion, just 2% less than that registered in the same period of 2019, which was US $ 126.2 billion. The variation is considered one of the smallest among the twenty largest economies in the world, the so-called “G20”.
At a time when the World Trade Organization (WTO) projects a worldwide drop in the volume of trade between -13% and -32% in the year, the results obtained by Brazil, so far, are positive. If the volume exported is considered, free from the effect of falling international prices, the country increased its exports in April and in the four-month period by 2.9% and 1.1%, respectively.
Balance released by the Ministry of Economy points, however, to a sharp drop in the sale of Brazilian products and raw materials to various regions of the planet in the first four months: exports to North America fell 18.5%, to South America they fell 21.2%, for Central America and the Caribbean it fell 57.1%, for the Middle East it fell 29.9%, for Africa it fell 1.5% and for Europe, it fell 3.5%.
In contrast, Brazilian exports to Asia rose 15.5% in the same period compared to the first four months of 2019. That is, despite the projected coronavirus effect on world demand, Brazilian exports to China grew 11.3% .
“This does not surprise me, because the United States is in great difficulty because of the covid-19”, analyzes Thiago Aragão, partner at Arko Advice, a political risk analysis company, in an interview with RFI. “If the situation were different, China would buy more soy from them, as the trade agreement between China and the USA would be in full operation,” adds the senior researcher at CSIS – Center for Strategic and International Studies in Washington DC. “In addition, the clash between the Americans and China has increased substantially, at a time when the Chinese are in full recovery after a critical moment in the pandemic and are buying a lot,” he says. The Asian market now represents 47.2% of total Brazilian exports. Disregarding the region’s two largest economies (China and Japan), sales to Asia in the first quarter were higher than Brazilian exports to the USA and Mexico combined.
According to the Special Secretary for Foreign Trade and International Affairs of the Ministry of Economy, Marcos Toyjo, President Jair Bolsonaro’s guidelines “to maintain strong and diversified trade relations” are among the explanations for the good performance of Brazilian exports. “The profile of Brazilian agribusiness” also contributed to the results, explained Troyjo to the Brazilian press, on the date of the release of the trade balance data, at the end of April.
Brazil and China: two trade giants
Relations between Brazil and China during the covid-19 pandemic were the subject of a meeting on Tuesday (12) promoted by The Atlantic Council’s Adrienne Arsht Latin America Center, which brings together experts from around the world to debate current issues and the business world. With a combined market of 1.6 billion people, the two giants have a long commercial history and a promising future.
“The numbers of trade with China are not a surprise. China has been, for more than 10 years, Brazil’s largest trading partner, which, on its side, represents no more than 3% of all Chinese purchases around of the world “contextualizes Roberto Martins, Brazilian lawyer at Trench Rossi Watanabe.
“There is a business community used to working together, the Chinese are learning Portuguese and the Brazilian Mandarin, there is mutual admiration”, he describes. “In addition, Brazil responds quickly when China needs food and commodities. And, despite the covid-19, people need to eat. This explains record exports,” says Martins.
In April 2020, Brazil broke monthly historical records of exports in volume and values in the following products: aluminum oxide / alumina (770 thousand tons for a total of US $ 228 million), copper ore (121 thousand tons for US $ 231 million), gold (US $ 278 million), raw cotton (91 thousand tons for US $ 141 million), soy (16.3 million tons for US $ 5.5 billion), soybean meal (1.7 million tons), fuel oils (1.3 million tons), fresh, chilled or frozen beef (116 thousand tons for a total negotiated total of US $ 509 million) and pork (63 thousand tons for US $ 154 million).
“Brazil and China are supplementary customers. The Chinese need raw materials and food and we need manufactured products and investments in infrastructure”, explains Roberto Martins. “So, despite political tensions, things are going well. In the long run, what will make the difference in terms of investments is trust,” says the lawyer.
Criticism of Chinese during pandemic
When it comes to trust in business, many people wonder whether repeated criticism by Brazilian authorities of China over the pandemic of the new coronavirus could cause the Asian country to change its plans regarding trade with Brazil.
One of the most recent incidents between Brasilia and Beijing came after Education Minister Abraham Weintraub linked the covid-19 pandemic to a plan by China to “take over the world”, as he wrote in a tweet.
“Bilateral relations are not linear and within a logical sequence in a continuous way. They are full of curves and returns”, observes Thiago Aragão. “For a narrative to become a problem, the two countries must consider it this way, that is, China must accept these criticisms as a political problem. However, even though Beijing has shown its dissatisfaction, Beijing has not turned this into concrete acts and maintains its will. to sustain the relationship with Brazil “, he completes.
Subsequently, the Chinese Embassy in Brazil published a series of messages on social networks in repudiation of comments made by deputy Eduardo Bolsonaro (PSL-SP), who blamed the Asian country for the pandemic.
“Even though there have been aggressive and confrontational demonstrations from individuals close to the Brazilian government, on the other side there is a commercial relationship that is doing very well,” notes Aragão. According to the analyst, however, the feeling that “narratives of criticism, even coming from a few people, may turn into concrete actions capable of damaging trade relations are among the concerns of the Chinese in relation to Brazil”.
However, according to Thiago Aragão, China feels it is “protected” in relation to Brazil’s aggressive commercial narratives. “After all, Brazil depends as much or more on this bilateral relationship than China. But the fear that these narratives will become concrete acts exists for areas not related to trade, such as Chinese investments in Brazil, potential purchases by Brazilian companies, a sign green to participate in bids, etc. “.
Another point worth mentioning is “the influence of the United States in Brazil, as for example in the debate or suspicion about the activities of the communications giant Huawei”, adds Aragão.
USA vs. China: a choice for Brazil?
As a market economy, Brazil maintains trade relations with several countries, including China and the United States, two powers that are waging a thorny trade war.
“The United States has a mature relationship with Brazil, a solid connection with national banks, which understand the country very well and will always be on the lookout for numbers and opportunities. With China, it is an active commercial relationship capable of attract investments, especially in infrastructure “, contextualizes Marcos Caramuru de Paiva, former Brazilian ambassador in Beijing (2016-2018).
“With China, we do not have a long and mature relationship, but a recent cooperation that is strong and that has room to grow. We will see in the long term, when Brazil falls into the post-coronavirus reality and needs to attract investments and savings, and direct foreign money to areas where the country is unable to develop alone “, he explains.
The need or not for Brazil to make a choice between the commercial partnership with China or the United States was discussed at the meeting promoted by the Atlantic Council. For Julie J. Chung, from the US State Department, the current moment when both countries face economic and health difficulties “is propitious for the flourishing of new strategies and opportunities”.
However, as the head of the Western Hemisphere Affairs Department explained, “the concerns of the American government regarding China, before and after the pandemic, are the same: lack of transparency, accountability, compliance with global rules and censorship.”.
In Chung’s opinion, Brazil should make “a choice between the values that Brazilian society wants to integrate into its future”. According to her, while the United States “promotes an agenda of transparency and fight against corruption, with respect to international standards”, China insists on a “model that allows to spy on civil society and prevents, among other things, the freedom of religion”.
The former Brazilian ambassador in Beijing, on the other hand, does not see “Brazil in a dilemma between the USA and China”. Marcos Caramuru de Paiva explains that, while the United States is an important partner, especially in terms of the quality of its products and because it is a free market economy, China presents a different type of model. “What we can do is establish relations in a way that is convenient for both sides, knowing that Chinese state companies are very important,” he says.
According to Paiva, Brazil needs to understand the Chinese reality, but it does not need to refrain from taking advantage of such opportunities. “There are few voices in Brazil who want to challenge China because the country follows a different model from the Western one. Most want to deal with China the way China is,” he explains. “It doesn’t have to be a competition between the US and China, but a decent dialogue with both,” concludes Caramuru.
Source: economia.uol.com.br