Brazil’s Mourao seeks to repair ties with China

Brazil’s Mourao seeks to repair ties with China

Vice-president met with Xi Jinping in Beijing to defuse Jair Bolsonaro’s rhetoric

Brazil’s vice-president went to Beijing on a delicate and sensitive mission: to rescue the relationship with his country’s biggest trading partner, strained by repeated anti-China comments from his rightwing nationalist boss, President Jair Bolsonaro.

By the time Hamilton Mourão returned home from last week’s state visit, which included a meeting with Xi Jinping, his trip was already being hailed as a diplomatic success.

From the globally sensitive subject of Huawei’s market access to reinvigorating Chinese investment in Brazil’s stuttering economy, Mr Mourão’s diplomatic offensive set the scene for a deeper partnership between the eastern and western hemisphere’s largest developing nations, say analysts, officials and members of his delegation.

“The visit symbolises the end of a period of unprecedented uncertainty in the bilateral relationship,” said Oliver Stuenkel, an expert on the Bric nations at the Fundação Getúlio Vargas in São Paulo. “It is quite remarkable how Mourão has convinced his Chinese interlocutors that he can control Bolsonaro when it comes to China.”

With a combined population of more than 1.6bn people, the trade relationship between Brazil and China is among the world’s most important, particularly at a time of rising US-China tension.

China needs Brazil’s soyabeans, iron ore and crude oil to fuel its economy, the world’s second largest. As Beijing cut back purchases of US soyabeans last year, Brazil’s exports surged 30 per cent. The Latin American giant is keen to remain attractive for Chinese investment, with deals involving Chinese companies exceeding $10bn in both 2016 and 2017.

“The Brazil-China relationship has been evolving from pure trade to a more complex and sophisticated investment/partnership relationship,” said Su Jung Ko, founder of Golden Hawk Consulting, which advises Asian buyers on mergers and acquisitions in Brazil. “Brazil [is] an attractive market for Chinese investors due to its size, domestic market and huge natural resources.”

This relationship, however, turned decidedly frosty last year upon the election of Mr Bolsonaro, who is frequently critical of China and what he sees as Beijing’s debt-trap diplomacy.

Ahead of the vote in October, he said: “What we need is to become aware that China is buying Brazil, not buying in Brazil, it is buying Brazil.”

The then-candidate also took a trip to Taiwan, raising fears in China that he might, upon election, consider formally recognising what Beijing regards as a renegade province.

Amid the furore, Chinese mergers and acquisitions in Brazil dropped sharply to about $2bn last year, down from $11bn the year before, according to data from Dealogic.

Many of Mr Bolsonaro’s closest advisers, including his sons, favour a tough stance on China and have been pushing the Brazilian leader to focus on developing relations with Donald Trump instead.

Since his inauguration in January, Mr Mourão, a 65-year-old retired general, has resisted these forces, preferring quiet diplomacy to regain the support of Beijing and show he can temper Mr Bolsonaro’s anti-China impulses.

“He is pro-China and very clear in his thinking,” said a member of Mr Mourão’s delegation to Beijing. “Nobody [in Brazil] wants to fight China, especially the agribusiness sector. There will be pragmatism.”

In Beijing, the vice-president managed to strike the appropriate notes to satisfy his local audience as well as the Brazilian businessmen in his delegation.

While restarting a suspended vice presidential-level “co-ordination commission”, Mr Mourão lobbied for China to open its markets to “value-added” Brazilian imports, including jets from Embraer.

“Brazil cannot be just a store that China goes and buys items. It has to be more than that. Things that come from Brazil have to have the same value as those coming from China,” he said.

However, on sensitive issues, such as Huawei’s market access, Mr Mourão played to his audience: “We see Huawei with good eyes . . . Huawei is established in Brazil and will make more investments.”

The US is currently pressing Brazil to join it in banning Huawei from participating in the rollout of 5G mobile network infrastructure. Brasília is expected to make a decision later this year or early next year after Mr Bolsonaro meets Mr Xi in August. Few, however, anticipate an outright ban.

In a sign of China’s interest in nurturing relations with Brazil, Mr Mourão was given an audience with Mr Xi, an unusual shift of diplomatic protocol.

While avoiding a concrete commitment, Mr Mourão also voiced support for China’s trademark One Belt One Road development strategy, which has seen Beijing already pump billions of dollars into infrastructure projects around the world.

“We are following this with high expectations and we are open to proposals for investments in infrastructure, which is what interests us,” the Brazilian vice-president said.

But on his return home Mr Mourão still has to contend with domestic politics. Many in Brasília, including Mr Bolsonaro, believe the nation should throw its ideological support behind the US, particularly given its ongoing trade tensions with China.

“We want to sell [China] soyabeans and iron ore, but we will not sell our soul. That is a very clear principle,” said Ernesto Araújo, Brazil’s foreign minister, earlier this year.

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