China-Brazil relations, the win-win strategy, and third-parties’ bad faith

Commentary: The proactive use of third parties to promote the development of relations, as well as the creation of new cooperation models, will help reduce China's risks and create a win-win situation from a multilateral perspective

A container with China's Sinovac vaccine against COVID-19 arrives at Brazil's Sao Paulo airport in November. Photo: REUTERS/Amanda Perobelli

In a previous article we focused on Argentina, but it is worth continuing to analyze the situation in Latin America.

Another case is Brazil, a key country in the BRICS cooperation mechanism. It has been China's main trading partner in Latin America since 2009. After the son of Brazilian President Bolsonaro, Eduardo Nantes Bolsonaro (whom his father pathetically appointed Ambassador to the United States in July 2019, despite not having any specific qualifications: he resigned without even taking office after being offered the leadership of the Partido Social Liberal instead) visited the United States in March 2020, and tweeted condemning China for hiding the new coronavirus epidemic, by saying that China had a "dictatorial government", etc., a diplomatic crisis was triggered.

At the same time, Brazil asked China for assistance, hoping it would provide five million Covid-19 test kits, and a total of 14,000 air conditioning and ventilation systems. Later, thanks to the efforts of Brazil's then Minister of Health, Nelson Lutz Sperle Teich (April 17 - May 15, 2020), China eventually gave Brazil 228 million dollars in medical supplies, which helped the country alleviate the extreme shortage of hospital equipment, as well as treatment and prevention supplies. Additional two tons of hospital supplies arrived in Brazil.

There were some minor twists and turns. Although the relations between China and Brazil were not affected by the personal views of President Bolsonaro's son, it can be seen that the development of Sino-Brazilian relations was not so smooth under the influence of the epidemic. 

The newspaper Folha de S. Paitio claimed that the Brazilian government deliberately minimized the impact of Chinese diplomacy by hiding it and maximizing U.S. aid to 'avoid becoming a victim of Chinese foreign propaganda'.

The aid received from China is substantial, while the aid received from the United States (the country with the highest Covid-19 death toll) is far less. Nevertheless, the U.S. aid is vigorously publicized by the White House, which avoids mentioning aid from China. This reflects the tendency of changing sides.

This is the aspect on which we have been dwelling for some time: the United States is more important in the positioning of Latin America’s foreign relations. The development of China-Latin America relations is largely limited and constrained by the development of relations between the United States and its 'own' South. 

Secondly, China needs to attach importance to third-party forces to develop relations with that region. Within the rise of trade protectionism and anti-globalization, the proactive use of third parties to promote the development of relations, as well as the creation of new cooperation models, will contribute to reduce China's risks and create a win-win situation from a multilateral perspective.

China has always proposed win-win cooperation in its foreign policy and has different interpretations from the U.S. win-win cooperation. First and foremost, the United States distorts the meaning of the expression. Attorney General William Barr said that win-win meant that China won twice. There are also those who believe that win-win means that China wins first, and in their opinion China always puts its interests first. 

In the context of the demonization strategy by Latin American media, there are obviously those having negative opinions. For example, during the election campaign, Brazilian President Bolsonaro pointed out that China was buying Brazil. His remarks raised concerns in all walks of society.

Due to the investment of Chinese companies in Brazil in 2016, 2017 and 2018, they have shown a trend of fast development, particularly through mergers and acquisitions. Latin American countries have more mineral resources and China has more energy and infrastructure projects. Therefore, the bulk of Chinese investment in Latin America is made by mining energy companies, which is an important sector of Chinese investment. 

Indeed, the Chinese companies’ merger and acquisition targets are mostly assets driven by European and U.S. companies. Just consider, for example, the State Grid Corporation of China (SGCC) (the largest utility company in the world, established in 2002), which acquired a number of electricity companies in Brazil, many of which were Portuguese, Spanish and U.S. companies or subsidiaries of these countries or major shareholders, and were merged by SGCC.

Strictly speaking, China did not buy those assets from Brazil, but from Europe and the United States. However, when European and American countries controlled those assets with purely colonialist attitudes, Brazil had not such strong public concerns. Instead, when the Chinese purchase took place, public concern was stirred up by the paid media. 

For example, in Brazil, the Chinese companies Longping Hi-Tech Park (established in 1997) and CITIC Group Agriculture Fund (established in 1979) have acquired the trade in certain products of the U.S. company Dow Chemical (one of the world's most important chemical companies), and the Chinese company Wanhua Chemical will take over from Dow Chemical. The acquired companies are actually U.S. companies and such large-scale operations have raised fears among the local public.

Many Latin American countries are now facing economic and even debt crises triggered by the public health crisis. Therefore, they may not be able to keep on operating some assets and will return them at a relatively low price. 

The U.S. and European companies have been hardest hit by the pandemic, but they are recovering. When Chinese companies acquire shareholdings in these energy or resource companies, they can cooperate with companies in Europe, the United States, Japan, South Korea and other Asian countries, so as to raise less concern among the public in Brazil, Chile and Peru.

China's actions record shared interests and provide an image of inclusive and open cooperation. The State Grid Corporation of China says it is keen to work with European and U.S. companies to acquire some assets in Latin America 

In terms of financing methods, Chinese companies should also strengthen cooperation with the World Bank (established in 1945), the Inter-American Development Bank (Banco Interamericano de Desarrollo, established in 1959), the Asian Infrastructure Investment Bank and the New BRICS Development Bank.

They are multilateral financial institutions with a very broad investment experience. For example, the Inter-American Development Bank has been operating for over sixty years and it is the world's leading regional lender, which has funded over 20,000 infrastructure projects in Latin America. Its experience and expertise are therefore unrivalled. 

Obviously China also established multilateral investment bodies such as the aforementioned Asian Infrastructure Investment Bank (established in 2014) and the New BRICS Development Bank (established in 2014). Nevertheless, compared to the Inter-American Development Bank and the World Bank, the experience of Chinese financial institutions in transnational investment and financing is relatively less. Many infrastructure projects have a very long construction period and require a relatively large scale of investment. They entail high risks, which can be reduced through cooperation with these multilateral institutions.

In short, all this is necessary to strengthen cooperation with third parties without spreading fears and terror artfully created by malicious disinformation. 

 

Professor Valori is President of the International World Group