Brazil Fixer-in-Chief Heads to China to Mend Partnership

(Bloomberg) -- Brazil’s vice-president lands in Beijing on Sunday on a mission to patch up wounds caused by President Jair Bolsonaro’s lacerating anti-China rhetoric.

General Hamilton Mourao will spend five days in China rubbing shoulders with some of the most powerful leaders in the country, culminating in an audience with President Xi Jinping, in an effort to shore up the relationship between the two emerging market giants. Bolsonaro himself is due to visit later this year, while Xi is due to visit Brasilia in November for the BRICS summit.

China -- Brazil’s most important trading partner for the past decade -- remains a sensitive subject in the Bolsonaro administration. While Mourao and the other business-orientated members of government favor maximizing engagement with the Asian giant, Bolsonaro and his more radical appointees view China with a high degree of suspicion, as a predatory economy that wishes not merely to invest in Brazil, but to own it.

“The Chinese can buy in Brazil, but they can’t buy Brazil,” the president said at a breakfast with journalists on 5 April.

Still, in comparison with his pre-election criticism of China as “heartless”, Bolsonaro in office has dialed down his anti-Beijing sentiment. Mourao’s visit is part of an effort to reset that relationship.

“The Chinese understand that Mourao plays a central role in toning down Bolsonaro’s rhetoric,” said Oliver Stuenkel, a BRICS specialist at the FGV business school. “They know that the Mourao-China relationship will be fundamental.”

Speaking to reporters earlier this week, Mourao recognized the need to balance the Bolsonaro administration’s desire to pivot towards the U.S with practical considerations of China’s economic significance.

“The U.S. are the champions of democracy and freedom and our government has left it very clear what this represents,” the vice-president said. “But on the other side we have to be sufficiently pragmatic to understand the importance of China for Brazil’s economic development.”

Trade Deals

Trade talks will dominate his agenda. Exports to the Asian giant reached a record $67 billion in 2019, with a $30 billion surplus in Brazil’s favor, according to Brazil’s Economy Ministry. Chinese investment in Brazil reached almost $134 billion between 2003 and 2018, Brazilian government figures showed.

While the current trade war between the U.S and China may offer Brazil some short-term gains, particularly for its agricultural sector, the downsides outweigh the benefits, according to Renata Amaral, a foreign trade analyst at Barral MJorge consultancy. “In truth this war is no good for anyone,” she said.

Mourao said that Brazil is monitoring the situation “critically and cautiously”.

From the Chinese perspective, Beijing is looking for Brazil’s formal support for its “Belt and Road Initiative” -- the signature global infrastructure megaproject of the Xi administration. Asked whether Brazil might sign up to the program, Mourao said that any agreement would have to be approved by Bolsonaro in the second half of the year.

After trips to the Great Wall of China and the Shanghai stock exchange, Mourao will meet President Xi, in a clear sign of Brazil’s importance to China. “The visit of vice-president Mourao will reinforce mutual political confidence, deepen our friendly cooperation and add new dimensions to our strategic partnership,” Geng Shuang, a spokesperson for the Chinese Foreign Ministry, said.

With Beijing both uncertain about the direction of Brazilian foreign policy under Bolsonaro and eager to strike deals on infrastructure and food security, it makes sense for the Chinese to roll out the red-carpet for Mourao, according to Hussein Kalout, a specialist in foreign policy and a researcher at Harvard.

Brazilian States

While the federal government remains ambivalent about its relationship with China, some of Brazil’s powerful state governors are seeking to develop their own relationship with the Asian country. One of them is Carlos Massa Ratinho Junior, the governor of the southern state of Parana, who traveled to China recently to discuss agriculture and railroad projects.

“We’re open to talk with any country that wants to and understands that the state of Parana is the best to place to invest in Brazil,” the governor said in an interview, adding that his actions did not conflict with the federal government’s stance towards Beijing.

But in a sign of the domestic pressure Bolsonaro is under not to abandon entirely his skeptical attitude to China. Luiz Philippe de Orleans e Braganca, the vice-president of the lower house’s foreign affairs committee and a lawmaker from Bolsonaro’s own party, said the government should set limits to the partnership.

“It’s good to talk to China, but it depends what is being discussed,” he said. “For example, the 5G network set up by China is dangerous because it will give the Chinese more information about Brazilian citizens than the Brazilian government.”

(A previous version of this story incorrectly stated that Mourao lands in Shanghai on Sunday. In fact he arrives in Beijing)

--With assistance from Dandan Li, Murilo Fagundes and Mario Sergio Lima.

To contact the reporters on this story: Samy Adghirni in Brasilia Newsroom at sadghirni@bloomberg.net;Simone Iglesias in Brasília at spiglesias@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Bruce Douglas

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