During this year’s hectic Brazilian presidential campaign, international markets’ ears pricked up at privatisations promised by far-right candidate Jair Bolsonaro, who swept to a comfortable second round victory over leftist rival Fernando Haddad on Sunday. In September, he boasted of plans to sell 100 state-owned companies.
But just three days after October’s first round vote, plans screeched to a halt. In an interview with news network Estadão, Bolsonaro backtracked on a pledge to privatise Eletrobras, a state-owned energy company, which markets had been watching closely. Energy generation is strategic for Brazil, he said, adding that he didn’t want national assets in the wrong hands.
“When you privatise, will you privatise to any capital in the world?” Bolsonaro asked during the interview. “China isn’t buying in Brazil, it’s buying Brazil. Are you going to put Brazil in Chinese hands?”
The contradiction between the liberal economic policy promised by Bolsonaro and his nationalist stance has caused concern, especially among the Chinese, Brazil’s largest trading partners.
Bolsonaro proclaimed himself anti-communist, suggested that Chinese investments threatened Brazil’s sovereignty, and even visited Taiwan, with whom China is locked in an ongoing diplomatic dispute about its independence. He has expressed a strong desire to draw closer to the US, which launched a trade war against China earlier this year.
Retired army captain Bolsonaro won the run-off with 55% of the total vote share.
Fierce criticism of China has not been uncommon in recent elections in the region. In the 2015campaign, current president of Argentina Mauricio Macri wrote a letter to Chinese authorities saying that agreements between Argentina and China might be unconstitutional and would be reviewed. In Chile in 2017, Sebastián Piñera followed suit, saying that “China’s strong political presence in Latin America [was] not good.”
Both backpedalled. The avalanche of Chinese investments in South America and a growing dependence on trade seemingly took precedence.
“I believe that once he is in office, Bolsonaro’s focus will be more pragmatic,” said Maurício Santoro, professor of international relations at the State University of Rio de Janeiro. “But this scenario is greatly concerning for the Chinese. Bolsonaro is an unknown.”
No matter what Jair Bolsonaro said during his campaign, I think he will adopt China-friendly policy.
Hu Xijin, editor-in-chief of Chinese tabloid Global Times, which focuses on international affairs, expressed scepticism that anti-China sentiment would infuse Brazil’s foreign policy.
“No matter what Jair Bolsonaro said during his campaign, I think he will adopt China-friendly policy. China is top buyer of Brazilian soybean and ore. Trump-style capricious China policy will not be in line with the interests of his administration,” Hu tweeted.
Chinese investments in Brazil
Bolsonaro and his allies tend to repeat that China is trying to buy Brazil. Since 2009, China has been the number one destination for Brazilian exports, replacing the US. It is also Brazil’s largest investor.
US$20.9
Last year, China invested US$20.9 billion in Brazil
Last year, China invested US$20.9 billion in Brazil, the highest annual figure in the past seven years. A large part of these investments included assets in the energy sector, such as power distribution company CPFL Energia. This investment made the buyer, Chinese state-owned State Grid, the largest distributor of electricity in Brazil.
China also invests in other areas of strategic importance to the Brazilian economy. These include agribusiness and infrastructure that expedites the export of agricultural products.
It makes sense to question whether Chinese investment is the best way to serve Brazil’s geopolitical interests, says Alexandre Uehara, professor at the Asian Business Studies Centre at the country’s Advanced School of Marketing and Advertising (ESPM). But these criticisms have not been constructive for formulating Brazilian economic policy.
“It is silly to say ‘I don’t like China,’ as in the case of electricity. It’s not like that,” says Uehara. “China is presented as the villain behind Brazil’s problems.”
Brazil-China relations date back decades. President Ernesto Geisel established China ties during the military dictatorship in 1970, and the relationship has strengthened in recent years. They peaked under successive Workers Party (PT) administrations, when Brazil and China joined India, Russia, and South Africa in creating the BRICS group of emerging economies.
Closer relations coincided with the strengthening of Brazilian agribusiness, which now sells to the world’s largest consumer of soybeans, but its weakening industry has been damaged by Chinese competition, among other factors.
The election was characterised by strong voter rejection of past PT governments.
Provocations
China’s importance to Brazil grew rapidly in the 2000s and caused concern among nationalists, especially the military, a group close to Bolsonaro.
“The idea that you have strategic sectors of the Brazilian economy controlled by foreigners, and especially a regime like China, which by nominally being a communist party is a communist government, always causes some kind of reaction in the Armed Forces,” explains Santoro. “We still have a bit of this Cold War view.”
This may be why Bolsonaro didn’t shy away from provocations during his campaign. In addition to Taiwan, in February he travelled in South Korea and Japan, two countries that also have complex relations with China.
The trip was planned by federal deputy Onyx Lorenzoni, who is likely to be appointed Bolsonaro’s chief of staff. According to Lorenzoni, the trip aimed to explore Taiwan’s education sytem. This was not how China saw the visit.
The Chinese embassy in Brazil sent an outraged letter to Lorenzoni’s party, describing the visit as a “breach of the one-China policy, a broad consensus in the international community and a policy explicitly advocated by the government and the Brazilian Congress.”
Concerning US closeness
In October 2017, Bolsonaro drew the attention of Brazilian nationalists for another reason: saluting the US flag on a visit to Miami.
“Trump is an example for me,” Bolsonaro told an audience in another city on the same trip. “I know how far I am from Trump, but I plan to approach him for the good of Brazil and the United States.”
Analysts suggest the two could create a right-wing alliance in the region. Rapprochement with the US could benefit Trump, who has been isolated from the international community during his presidency.
“The G7 summits [of the seven largest economies in the world] have produced all kinds of embarrassing photos,” says Santoro. “You can clearly see that the people there are embarrassed to have to be with Trump.”
Brazil has already begun to profit from Trump’s trade hostilities with China, with exports of soybeans up 15% from January to September this year based on the same period last year. But aligning with the US in this context may mean an escalation in relations between the US and China, and not only on trade.
Brazil and China have also been allies in international diplomacy. For example, the two countries are part of the BASIC group, with South Africa and India. Last year, the group began spearheading developing country resistance against the damage caused by a US withdrawal the Paris Agreement.
But Bolsonaro has sent mixed signals about the Agreement. He said that he would not withdraw, but disagreed on Brazil’s commitments, such as the preservation of the Amazon.
Pragmatism expected to prevail
Despite the hostilities, analysts predict the new government will continue good relations with China. Bolsonaro counted on support from more than two hundred members of the ruralist front, Brazil’s powerful agribusiness lobby, which is heavily dependent on exports to China. Any quarrel with China would directly affect Bolsonaro’s support base.
“The United States has the status to pick a fight. It’s the world’s largest economy,” explains Uehara of ESPM. “This is not the case in Brazil.”
Diálogo Chino spoke with members of Bolsonaro’s campaign who are already making overtures to China and discussing meetings with Chinese representatives.
In an editorial published yesterday, the state-run China Daily highlighted the country’s willingness to establish good relations with the new government.
“We cherish the sincere hope that when he assumes leadership of the world’s eighth-largest economy, Bolsonaro will take an objective and rational look at the state of China-Brazil relations,” it wrote.
It took Piñera just one day to make peace with China after getting elected. “We all know that China is Chile’s main trading partner, and that we will strengthen this relationship,” he said at the time.
It remains to be seen if and when Bolsonaro will follow suit.