Brazil-China: What’s Next After Rousseff’s Visit? - Matías Spektor (Americas Quarterly, web)

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Brazil-China: What’s Next After Rousseff’s Visit?
April 25, 2011
by Matías Spektor

The author of a forthcoming AQ article on Brazilian foreign policy assesses President Rousseff’s mid-April trip to China and what needs to happen to increase mutually beneficial bilateral cooperation.

Matías Spektor will have a feature article in the Spring 2011 issue of Americas Quarterly, to be released May 2, titled "One Foot in the Region; Eyes on the Global Prize."

President Dilma Rousseff’s five-day trip to China in mid-April yielded modest but palpable progress in a trade relationship that is now Brazil’s most important and quickly expanding. But challenges lurk in the short to medium term.

During the visit China agreed to let Brazil’s Embraer sell up to $1.4 billion worth of regional jets and assemble a luxury aircraft line (but there was no progress on the divisive issues of procurement and intellectual property). China also granted licenses to three Brazilian suppliers to sell pork; this while turning down 10 other Brazilian applicants.

The Chinese government also announced that China-based Foxconn has plans to invest some $12 billion in Brazil for a new iPad assembly plant in São Paulo that might eventually develop components as well. If this materializes, then thousands of Brazilian engineers and about 100,000 workers would benefit. Yet the initial excitement quickly wore off once commentators recalled similar Chinese announcements in the past that never materialized. Others pointed out Brazil lacks the human resources to make the plan happen even if the monies are forthcoming.

Politically, the two sides agreed to disagree. The Chinese did not endorse Brazil’s bid for a permanent seat in a reformed UN Security Council, while the Brazilians did not recognize China as a market economy. Hot issues like currency warfare, the future of Doha and Copenhagen, and human rights were kept firmly on the side.

Despite some of the successes, the President’s trip reinforced the challenges of Brazil lacking a China policy. In the past, it could afford to live without one. But with increasing ties, a real need has emerged to develop an operational framework to make sense of China and to build the tools to implement it. A rising China has pulled Brazil into its orbit in powerful ways that are hard to resist or reverse.

The predicament that results is clear: either Brazil develops the skills to influence the overall direction of China’s pull—securing some degree of choice—or it is overcome by the sweeping force of structural change. Here is an opportunity for Brazil to learn to take advantage of the global power transition currently benefiting China; if not, its leaders will become hostage to the growing influence of vocal domestic fearmongers.

A Policy Wanted
From a Brazilian perspective China matters for two major reasons. First, trade is bringing the two together fast, but it is equally resulting in a widening gap and a vastly unequal economic interdependence. So far, with a strong Chinese economy, the trend has paid off for Brazil. But many fear ever deeper dependence on China (and its whims) and warn of disaster should Chinese economic growth stall.

Second, many in Brazil believe a rising China is paving the way for a better, fairer, more multipolar world where China will help to mitigate U.S. arrogance. China’s success might equally help reopen the debate about state-society relations that the Washington Consensus and the “end of history” thesis had hoped to shut down.

At the same time, China on the rise will force the issue of global institutional reform onto the agendas of the powerful states of the industrialized North that cling to the structures developed post-World War II. Without China ascending, Brazil would not be a member of clubs like the BRICS (Brazil, Russia, India, China) or the G20 in which to enjoy its newfound status.

The challenge now is to develop policy tools so that Brasilia can navigate and manipulate Beijing to its own advantage. The onus here is on Brazil. If unsuccessful, Brazil may find itself in the awkward position of pining for the global configurations of the past.

Four Hurdles
Brazil’s China policy faces four major hurdles: unequal power, clashing interests, diverging visions of global order, and the voice of fearmongers at home.

Power relations between China and Brazil are a tale of inequality. Both are rising, but China is going much faster. China can do things to Brazil that Brazil cannot do to China. Yes, interdependence means the two become more dependent on one another. But the trend here is uneven. Bilateral negotiations highlight how Brazil is putting forward demands that China can afford to ignore or only partially accept while doing so at a pace of its own choosing. This is compounded by an asymmetry of attention: Brazilians worry about China with reason while China can afford by and large to simply ignore Brazil.

National interests have taken their own separate directions. Consider international trade, finance, nuclear nonproliferation, human rights, institutional reform or climate change: China and Brazil simply find it hard to agree. They even have had trouble reaching common language to frame the issues. For all their instrumental use of notions of multipolarity, soft balancing against U.S. hegemony, South-South solidarity, and their tacit alliance on some multilateral negotiations, there is little common ground.

Neither do the two countries share a common vision. Rhetoric apart, Chinese leaders have a greater stake in existing patterns of global governance. They surely have many qualms about the current state of the world. But since Chinese leaders are happier about their share of power and voice than their Brazilian colleagues, they are likely to turn deaf ears on Brazilian demands for a common reformist front. Here’s where the hopes for South-South communion turn sour. The issue of UN Security Council reform illustrates the point: on Brazil’s single largest proposal for adapting global governance architecture, China is not willing to move. And it is not pressed to worry either.

The China-Brazil disconnect is on full display in two regions where Brazil is now seeking to demonstrate global reach: South America and Portuguese-speaking Africa. In one, Brazil is seeking to show the powers of its own indigenous capitalism, and in the other, its growing diplomatic responsibilities. Both regions have witnessed the phenomenal, fast-pace expansion of Chinese commerce and influence. But the Chinese push in directions that Brazilians often find counterproductive or outright challenging.

Brazilian frustration with the goods China has to offer also coexists with suspicion about its intentions—a spark for anti-China voices at home. They are not a lobby (yet), but have helped shape public attitudes and expectations.

A recurring argument here is that Chinese demand for Brazilian commodities (instead of higher value products) will hurt the indigenous industrial complex that has modernized Brazil. Another is that Chinese land purchases in Brazil are threats to sovereignty over national natural resources. And yet another warns against Chinese direct investment. The argument here is that such investment—politically driven and controlled by an autocratic state—may well conceal spurious geopolitical objectives that will be detrimental to Brazil.

Under normal circumstances, officials in Brasilia could ignore those voices. But due to the lack of institutions to frame Brazil-China relations, they should worry. After all, they lack the tools to control damage or build an agenda that is positive and mutually beneficial.

A continuing challenge is that Brazil’s leaders generally have a hard time making sense of the Chinese political system and have little access to China’s circles of power and influence. The embassy in Beijing remains understaffed and only a handful of officials have the language skills and knowledge to effectively negotiate in a Chinese setting. Academic engagement is practically non-existent and there are no centers of Chinese studies in Brazil to train new generations on the history, politics and culture of that country. Social connections do not help either: existing levels of people expanding ties between the two countries are tiny.

While the obstacles are plenty, none of these trends is irreversible. If she were to act now, President Rousseff could begin to transform the relationship in her first term.

President Rousseff and the large contingent of businesspeople and officials that accompanied her to China should take a moment to pause and take stock of how much Brazil stands to benefits from its China relationship if this growing bilateral inequality persists. There is opportunity for both countries to benefit from their partnership, but the task at hand is figuring out how to do so before it becomes too late.

But even with the signing of 22 cooperation agreements earlier this month in China, Brazil still is at a disadvantage. Without effective channels and tools to make itself heard in Beijing, Brazil will find it extremely hard to reap the potential benefits of jumping on the Chinese bandwagon. Perhaps more important, without a clear China policy, Brazil will increasingly find itself crippled and unequipped to resist mounting Chinese pressure in whatever form it may take.