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China, Brazil explore new economic ties

Xia Xiaoling
Updated: May 22,2015 7:48 AM     China Daily

The future of economic cooperation between China and Brazil looks bright and ties will be further strengthened based on the two countries’ complementary economic structures and long-term friendship.

The two countries established formal diplomatic relations in 1974 and a strategic partnership in 1993. In 2013, the partnership was upgraded to a more comprehensive one.

China has been Brazil’s top trading partner for the past six years. It is also Brazil’s largest export market and import source. Brazil is China’s 10th largest trade partner and the largest in Latin America.

There has been steady development in investment cooperation between the two countries. The volume of direct investment and number of financial cooperation projects have continued to grow.

Brazil has abundant natural resources and is China’s most important source in Latin America for iron ore, sugar cane, soybeans and cotton. It is also an emerging source for oil.

Brazil has a relatively weak manufacturing sector. It has an increasing demand for electronic appliances, mobile devices, mechanical equipment and computers. In 2003, the import value of these products from China accounted for only 4.4 percent of its total imports. By 2014 it had reached 16.3 percent.

The trade volume between the two countries also keeps growing. In 1974, the trade volume was $17.42 million and last year it reached $86.58 billion.

The economic structures of the two countries can supplement each other and they both have large domestic consumption. In the future, these two factors will keep contributing to the growth of bilateral trade volume.

Investment cooperation

By the end of 2014, investment from Chinese companies in sectors including energy, infrastructure, manufacturing, agriculture and service through merging, purchasing and joint ventures totaled $18.9 billion. There are more than 100 Chinese enterprises in Brazil.

Investment from Brazil to China is also soaring. Last year, the actual investment volume reached nearly $600 million and covered sectors including auto parts manufacturing, regional aircraft manufacturing, real estate and hydroelectric power generation. The two countries are both undergoing industrial restructuring, which will render more investment opportunities.

Like most Latin American countries, Brazil has very weak infrastructure, which is a large obstacle for its economic development. The Brazilian government has put a range of infrastructure projects in the railway, port, road and airport sectors on its agenda. The government welcomes Chinese enterprises to join the bids for these projects. The cooperation in infrastructure, with China’s rich experience, advanced technologies and financial advantages, will bring new development to the bilateral trade between the two countries.

In the agriculture sector, the Brazilian government is looking for investments from Chinese companies for any part of the agricultural production chain. The two parties have released plans for the investment cooperation in agriculture, which will act as the guide for Chinese enterprises tapping into this sector.

Brazil’s manufacturing industry went through some low points during the 1980s and 1990s. Brazil’s government launched a range of new projects to fuel its economy, which call for more cooperation with China in the manufacturing sector. The Chinese government is also encouraging enterprises to open up to more new opportunities, especially for enterprises with abundant capabilities.

The two initiatives match and lead to a range of cooperation opportunities, mainly in clean energy, industrial park development and agricultural chain development.

Financing cooperation

Financing plays a crucial role in cooperation projects between the two countries.

The Bank of China, the Industrial and Commercial Bank of China, China Development Bank and China Construction Bank have set up branches or offices in Brazil. Two major banks from Brazil have established representative offices in Shanghai. The Brazilian Mercantile & Futures Exchange also opened a representative office in Shanghai.

China and Brazil, both major influential developing countries, share some development strategies and are very willing to explore new cooperation opportunities.

On May 18, Premier Li Keqiang visited Brasilia, the capital of Brazil, and started his official visit to Latin America. The visit is another milestone in the development of the bilateral relationship between the two nations and is expected to bring new energy and a great many deals.

The author is the Economic and Commercial Ministerial Counselor for the Chinese Embassy in Brazil.

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