China Perspective

China to remain significant growth engine for Brazil

By Chen Weihua (China Daily)
Updated: 2011-04-13 07:45

NEW YORK - China will continue to be a growth engine for Brazil, although it is increasingly viewed as a competitor in the largest South American economy.

An Obvio 828 (right), manufactured by Brazilian car company Obvio.

Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson Center in Washington DC, told China Daily that Brazilians view China mostly as an economic power and their nation's largest trading partner.

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"Brazil probably would not be an emerging market and emerging country today without its trade relationship with China. You cannot understand Brazil's economic growth without trade with China. That is very well understood in Brazil," said Sotero.

Julia Sweig, Nelson and David Rockefeller senior fellow for Latin America Studies and director for Latin America studies at the Council on Foreign Relations, echoed Sotero's view by saying that China is an engine of Brazilian and Latin American growth.

"(The fact) that Latin America coped quite well during the financial crisis has to do with China's growth and purchasing power," she said.

Trade between China and Brazil increased from $9 billion in 2004 to $56 billion last year, with a surplus of $5 billion for Brazil. China overtook the United States last year as Brazil's largest trade partner.

"If China's economic growth slows down, the whole world will feel it, Latin America will feel it and Brazil will strongly feel that," she said.

Both Sweig and Sotero pointed out that the major issue for Latin America and Brazil is to grow in a very competitive international environment.

They touched upon the concern felt by some in the Brazilian business community about the "deindustrialization" of the country as it mostly exports minerals and raw materials while importing finished manufactured goods.

Brazilian products are facing tough competition from China in Brazil, its neighbors and in the US.

"It has to do with Brazil's lower international competitiveness, which is very well recognized in Brazil as a Brazilian problem," said Sotero, a Brazilian who has lived in the US for many years.

"This is not China's fault. The problem would exist even if China did not exist," he said.

"Brazil obviously does not have the international economic competitiveness that China has. Its relationship with China is both a very positive and challenging one," said Sotero, who has lectured widely on Brazilian affairs in US universities, especially on foreign and trade policies.

Sotero cited Brazil's poor performance in education as the main reason for the problem, especially in comparison with China, whose high school students scored first in a test conducted in OECD countries. "Brazil is way down," he said.

Besides education, Brazil faces a host of problems in making value-added products, innovation, and overcoming the obstacles to development, pointing out that bad roads and transportation are preventing Brazil's agricultural sector from realizing its great potential, according to Sotero.

"The procedures are excessive. The ports are a nightmare and not efficient. You go to Sao Paolo, its airport is not efficient for a city of 20 million people," he said, adding how he was impressed with Chinese airports in cities such as Beijing and Xi'an.

He describes Brazilian President Dilma Rousseff, who will pay a state visit to China this week and attend the BRICS summit, as "very pragmatic and focused on the economy".

BRICS "is viewed in Brazil as a useful platform for consultation" with the four other major emerging economies, he said.

It is for consultation, for comparing positions and for joint action in the context of IMF reform, according to Sotero.

"It is also a useful and important mechanism to remain engaged with China, the emerging country that will influence international affairs in the foreseeable future," he said.

However, he pointed out that Brazil is the only large emerging country in the space where the US has long been the dominant force.

Sweig of the Council on Foreign Relations dismissed those portraying China's involvement in Latin America as a threat to the US as "old-fashioned and jingoistic".

"There might be some loud voices, but it is not the dominant view in the US," she said, adding that Americans who see this as an ideological problem are wrong.

"China and the US should be able to peacefully coexist," she said.