Xi Jinping’s participation in the G20, in Rio, and reception in Brasília reinforce Lula’s relationship with the Asian country; Chinese opened the largest deep-water port in Peru to intensify trade with Latin America
The visit of the President of China, Xi Jinping, to Brazil starting this Sunday (Nov 17, 2024) will highlight the relevance that the Asian country has achieved in Latin America in the last two decades. The presence of the Chinese leader in the region at this time contrasts with the weakening of the influence of the United States, which will be represented by Joe Biden (Democratic Party), a president at the end of his term.
Both are coming to Brazil for the G20 Leaders Summit, which will be held in Rio on November 18th and 19th. Previously, Xi and Biden met in Peru, where they participated in Apec (annual meeting of the Asia-Pacific Economic Cooperation Forum).
In the neighboring country, the Chinese opened the Port of Chancay, the largest built by China in the region. The objective is to expand trade between continents via the Pacific. The Asian nation is currently the largest extra-regional trading partner of almost all South American countries. It has surpassed the position held by the North Americans until the end of the 20th century.
Biden, in turn, is participating in the last major global event of his political career. He will leave the presidency of the United States on January 20, 2025, at the age of 81. Donald Trump (Republican) will take command of the largest economy in the world when he returns for a second term at the head of the White House.
During the election campaign, the Republican indicated that he will adopt a protectionist policy in favor of the North American market, especially against the entry of Chinese products. The strategy could lead Brazil to look even more towards China.
The defense of bilateral relations to the detriment of negotiations conducted by multilateral institutions, such as the UN and the G20 itself, also opposes Trump and Xi. In Peru, the Chinese leader cited the construction of the Port of Chancay as an example of his commitment to multilateralism and free trade between countries. Its Commerce Minister, Wang Wentao, classified the rise in protectionism in the world as a “setback”.
Biden and Xi Jinping will be received by President Luiz Inácio Lula da Silva (PT) in different situations. The North American will meet the Brazilian in a meeting in Rio on Tuesday (19.Nov.2024). It should start with lunch and continue with a conversation. At the end of his term and without having chosen his successor – Vice President Kamala Harris (Democrat) lost to Trump – Biden has little to offer.
Topics on which he converges with the PT government, such as environmental protection and labor issues, tend to be treated differently by Trump – although the Democratic administration has not made much progress on the environmental issue. Lula should take the moment to thank the Democrat for supporting him in 2022.
Xi Jinping, on the other hand, will be received with honors as head of state in Brasília on Wednesday (20.Nov.2024). On that occasion, the 2 countries will announce a series of commercial and diplomatic agreements and commitments. The Chinese, however, hoped to be able to announce Brazil’s adherence to the Asian country’s largest infrastructure program, the Belt and Road Initiative.
The Lula government, however, preferred not to sign the agreement. He considers that there are already initiatives underway and that he can continue seeking Chinese investments without directly aligning himself with Xi Jinping’s geopolitical strategy. The Brazilian Executive focuses on Chinese participation in 4 major axes: investments in works under the New PAC (Growth Acceleration Program), construction and reform of regional integration routes in South America, contributions to energy transition projects and modernization of the industrial park .
China and Brazil are already joint members of Brics (a bloc originally composed of the 2 countries with India, Russia and South Africa) and have become even closer recently by jointly presenting a proposal for a political resolution to the war between Russia and Ukraine.
The idea was announced at the UN headquarters (United Nations), in New York, in September. Although the initiative was rejected by Ukrainian President Volodymyr Zelensky, it was seen as an important step in the Sino-Brazilian relationship.
Currently, Brazil’s trade with China is more than double that with the United States, but it is still very focused on the export of Brazilian commodities. Chinese investments have advanced throughout Latin America in areas of mobility, renewable energy and infrastructure.
XI JINPING INAUGURATES PORTO NO PERU
Before arriving in Brazil, the Chinese leader participated on Thursday (Nov 14) in the inauguration ceremony of the Port of Chancay, in Peru, the largest in the Asian country in Latin America.
At 18 meters deep, the port infrastructure has already consumed US$ 1.3 billion in investments. It will be managed by Chinese state-owned company Cosco, one of the largest maritime transport operators in the world.
In operation, Chancay will be able to receive cargo ships of up to 24,000 containers. The expectation is that the project will become a logistics hub in the South Pacific and relieve the port of Callao, the busiest in Peru
The Chinese deep-water port is expected to boost trade relations between China and Latin America. There are US$286 billion of Chinese investments in the region.
China is the largest trading partner of 6 countries – Brazil, Argentina, Chile, Venezuela, Ecuador and Bolivia. The country sells more and more production goods, including machines used by industries. It occupies space that once belonged to European and North American suppliers.
EXPECTATIONS WITH TRUMP
US analysts estimate that the country’s government and companies’ lack of interest in Latin America has favored the increased presence of the Chinese. There are doubts about what Donald Trump will do on the issue when he returns to the White House in January 2025.
The expectation is that the Trump administration will raise tariffs on Chinese products in the United States. The Asian country may seek to compensate for losses in other markets.
Economist Renato Baumann, researcher at Ipea (Institute for Applied Economic Research), cites the case of Chinese electric cars. With the increase in the USA and Europe, they began to be sold intensively in Brazil and other countries. Chinese electric cars sold in Brazil in the segment in the 1st half of 2024.
Chinese companies have the flexibility to set prices and presence in many markets. Baumann said that there are currently more countries that have China as their largest trading partner than the countries in which trade with the US is in first place in the ranking.
But the Trump administration could go beyond imposing barriers on Chinese people in the United States. It is possible that part of the barriers will affect industries in Brazil and other countries that have replaced US-produced goods with Chinese ones. It would be a way of trying to influence other companies that are considering going in the same direction to change their plans.
There are US$286 billion of Chinese investments in Latin America, the equivalent of what the country has in Africa, where support for infrastructure works began earlier. The model was improved in Latin America, with the selection of projects with greater viability. There was also greater concern about the financing model. The excessive debt that Chinese works caused in some African governments was avoided.
China’s participation in the trade flow of Latin American countries is not new. It began to grow more intensely two decades ago. But there are recent changes. The Asian country sells more and more production goods, including machines used by industries. It occupies space that once belonged to European and North American suppliers. The change came silently, especially during the Covid-19 pandemic.
Baumann is finalizing a study on the participation of Chinese produced goods in industries in Brazil. It compared the stock that existed in the period from 2018 to 2019 with that from 2021 to 2023. The numbers are under analysis. They cannot be disclosed yet. Baumann said the increase was very significant. “It’s a structural change”, he stated.
