Lula in China: What Brazil Gain or Lose if It Joins the Chinese Trillionaire Scheme

However, Brazil has not yet decided whether to include any mention of the project in the joint statement that should be issued at the end of the visit, on Friday (4/14).

A meeting is scheduled for Friday between Lula and Chinese President Xi Jinping.

The new ten-year Silk Road will be completed in 2023, and Brazil’s commitment to the tool would be a huge political win for Beijing.

According to these sources, the decision is still awaiting the arrival of the Brazilian delegation to Shanghai. However, formal commitment to the project will be ruled out at this point.

However, discussions about the Chinese initiative show a general split between a faction led by diplomats from the Ministry of Foreign Affairs (MRE), including its chief, Ambassador Mauro Vieira, and a group closer to President Lula, which includes his special adviser on international affairs, former chancellor Celso Amorim.

Itamaraty stated that Brazil would not need to join the project because Brazil is already a target for a large portion of Chinese international investment.

In contrast, Celso Amorim and ministers such as Agriculture, Carlos Favaro, argue that Brazil could join the Chinese project as a way to benefit from infrastructure projects in the country.

a One Belt, One Road It is a trillion-dollar project launched by the Chinese government in 2013 that initially envisioned a series of infrastructure projects such as highways, railways, and ports, as well as works in the energy sector, such as oil and gas pipelines linking Asia with Europe.

There are different estimates of how much money has been invested since its launch. Values ​​range from US$890 billion (R$4.46 billion) to US$1 trillion (R$5 trillion).

The project became known as the New Silk Road in reference to the ancient Silk Road, the name given to the trade flow that operated in the first millennium and linked Asia with Central Europe.

Since its launch, the Chinese project has been expanded to other regions of the world, such as Africa, Oceania, and Latin America.

According to the Center for American Studies Council on Foreign Relations (CFR), which specializes in international relations, has already joined 147 countries or expressed interest in joining the plan since its launch. They account for two-thirds of the world’s population and 40% of the world’s GDP.

In Latin America, there are at least 20 countries already participating in the initiative, including Argentina, which, in April 2022, signed a memorandum of understanding with the Chinese government providing for membership.

International analysts believe that the project is one of the arms of the project to expand China’s economic and political power.

China is currently the second largest economy in the world, and until the outbreak of the COVID-19 pandemic, there were estimates that it could overtake the United States by 2028.

In an apparent reaction to the Chinese project, the leaders of the Group of Seven (a group formed by the United States, Canada, France, the United Kingdom, Japan, Italy and Germany) issued, in 2022, a financing plan for infrastructure projects worth US dollars. 600 billion Brazilian reals (3 trillion Brazilian reals).

The project, however, is the subject of other controversies. Experts warn, for example, of the dangers of excessive indebtedness for countries that contract such financing.

In 2018, the Sri Lankan government transferred control of a port to China after failing to pay its debt to the country.

On the other hand, China rejects the criticism, saying it would be an attempt to tarnish its image in the international arena.

Another frequent criticism is that the loans made available by the program depend on the intermediation of Chinese companies to be released, and more often than not, China sends qualified labor to countries for infrastructure work and only employs low-wage employees locally.

Specialists in Sino-Brazilian relations claim that adhering to the program will have little practical effect and will not lead to a “flood” of direct investment in Brazil in the short term.

They say Brazil’s approval of the initiative will have more political than economic consequences.

Karen Vazquez, an international cooperation specialist and professor at Fudan University in China, estimates that Brazil’s formal accession could provide access to a US$40 billion (R$200 billion) fund of Chinese investment.

However, according to Vazquez, the slowdown in the Chinese economy has made the terms of these loans less attractive than in the past.

“I also do not see how accession would benefit Brazil’s participation in regional integration projects funded by China. Some of these initiatives have already been considered, such as the bioceânica railway, whose implementation obstacles tend to be more related to the countries’ internal issues and less to finance these projects,” the professor tells BBC News Brasil.

Pablo Ibáñez, professor of political geography at the Federal Rural University of Rio de Janeiro and visiting researcher at Fudan University, notes that Brazil’s entry into the project will have a more symbolic nature. However, he advocates membership.

“I don’t see major flaws,” says Ibanez. “China doesn’t ask for big counterparts when it’s financing projects. I think Brazil should get in, because it’s a big partner for China.”

Marcos Caramoro, former Brazilian ambassador to China, considers that although symbolic, membership can benefit investments claimed by Brazilian states.

“The commitment does not make much difference in practice, but it does send a message to Chinese economic agents that can help them when evaluating investments in subnational entities such as state governments,” he explained.

Analysts interviewed by BBC News Brasil also believe that the disadvantages of Brazil’s potential accession will be small and not necessarily related to the partnership itself.

“The problems I see are related to the difficulties of implementing infrastructure projects, such as the environmental impact and how that affects indigenous people or traditional people,” says Ibanez.

Experts also heard downplaying the risks of possible US retaliation against Brazil if the country somehow linked itself to the Chinese project.

Vazquez points out, however, that Brazil’s signals on the subject need to be well calibrated.

“Some representatives believe that joining the project will give Brazil more room to bargain with the United States and China and will not be encapsulated as a member of any ‘band’,” says the professor.

But she says that the argument is questionable insofar as it gives a “signal” that Brazil is allied with China without pointing in the same direction and intensity to the Coalition for Economic Prosperity in the Americas, a project launched by the government of Joe Biden in 2022, that can be understood as favoring one side.

“At the very least, it should be clear what Brazil wants and what it can gain from each of these initiatives, which, in my opinion, are lacking,” says the professor.

The United States is going through one of the most tense periods in its relations with China, and has expressed concern about deepening relations between China and Brazil.

Washington sees the fact that Brasilia has not yet committed itself to being part of One Belt, One Road.

“For the United States, it is worrisome to see Brazil increasingly beholden to China, as it is involved in an increasing number of companies, particularly in sensitive areas, such as technologies, public services, energy, and mineral zones, which bring risks for USA-Brazil cooperation,” he added. says Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies in Washington.

“If, as the rumor has it, Lula surrenders to the project on his trip to China, it would also be a big deal for the United States and viewed with reservations, because it would provide a new avenue for China’s influence and loans in the country.”

In the midst of this scenario, the two wings of Lula’s government have been publicly diverging on whether or not Brazil should join the Chinese initiative.

In an interview with reporters from international agencies in Brazil last week, Mauro Vieira indicated that Brazil would not need to adhere to the Chinese plan at this time.

“Our strategic partnership goes far beyond One Belt, One Road. It’s not something we rush in one way or the other. It is something that is part of the communications and the conversations, but it is not an urgent decision, Vieira said when asked about the topic by BBC News Brasil.

On the other hand, Celso Amorim said in an interview with Valor Econômico that Brazil would have no reason to stay out of the initiative.

“There is no reason why Brazil should not enter. I have no prejudice and see no political harm,” said Special Adviser Lula.

Another advocate for Brazil’s entry into the mechanism was the Minister of Agriculture, Carlos Favaro.

In response to a question by BBC News Brasil, he said the country’s commitment to the Chinese project could bring investments considered important for the logistics of Brazilian agribusiness and for national integration.

“I advocate (Brazil’s entry) because one of the main obstacles to the competitiveness of Brazilian agriculture is the logistical infrastructure. Exorbitant freight is synonymous with the loss of competitiveness of export products,” the minister said.

For Pablo Ibáñez, the difference in views between the leadership of Itamaraty and the members about the president is the result of the viewpoint of PT members such as Lula and the wing led by Celso Amorim to favor strengthening relations with countries outside the United States – the United States. Axis of states.. Europe.

On the one hand, you have PT and Lula and Celso Amorim who are known to value the growth of relationships in the so-called Global South. On the other hand, Itamaraty has a more pragmatic wing that believes that this (accession) could bring retaliation from the United States.