Opinion

Relations of global significance

By Sun Hongbo (China Daily)
Updated: 2011-05-27 11:19

China and Brazil should optimize investment structure and promote diversity of bilateral trade and exchanges

Since the establishment of the bilateral strategic partnership in 1993, especially since the start of the new century, ties between China and Brazil have developed rapidly, with frequent exchanges at different levels and various kinds of dialogue mechanisms maturing. Both countries have also continuously made new headway in pushing for bilateral economic and trade cooperation and maintained unblocked communications and coordination on a variety of global issues.

Sino-Brazilian ties have already gone beyond the bilateral scope and evolved into a relationship of global significance. This is partly the result of the multi-polarization of the international political pattern and the growing economic interdependence among world members. The formation of the world's new economic growth centers, led by some emerging economies, has also contributed to a closer bilateral relationship.

Brazil is playing a pioneering role in the development of the South American continent, as are China and India in Asia. According to its own official statistics, Brazil was the world's seventh largest economy in 2010 in terms of its purchasing power. In view of its economic size and its ever-rising international political influence, both traditional powers and emerging nations are vying to be its cooperative partner.

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The international financial crisis has expedited economic and trade cooperation between China and Brazil, and emphasized their common strategic interests in pushing for multilateral cooperation. The two countries have shared stances on a number of international issues, ranging from the Doha Development Round - the current trade-negotiation round of the World Trade Organization - and the reform of the international financial system to climate change and efforts for better global governance.

Meanwhile, China has become the largest trading partner of Brazil since 2009. It is also Brazil's largest export destination and second largest source of imports. Statistics from China's customs indicate that Brazil was China's ninth largest trading partner in 2010 and that bilateral trading volumes amounted to $62.55 billion, an increase of 47.5 percent on the previous year. Trade volumes with Brazil account for 34.18 percent of China's trade value with all South American countries.

China and Brazil have also enjoyed active and smooth communications within some global and regional multilateral frameworks, such as within the United Nations, the World Trade Organization, the G20 and BRICS.

But despite the smooth and rapid development of ties between China and Brazil, there are also some negative factors. In Brazil, there are still some people who worry about "competition from China" and some even adopt the "China threat" tone. They argue that Brazil's primary products-dominant exports to China, lacking high value added commodities, will result in its dependence on China. They also accuse the exchange rate of the yuan for the competition that Brazil's products face from those of China in overseas markets, saying this has caused a de-industrialization tendency in Brazil. At the same time, China's increased investment in Brazil in recent years has raised concern.

These worries deserve China's attention even though they do not constitute mainstream opinion in Brazil and will not hamper the smooth development of the strategic partnership between the two and their economic cooperation.

To ease these misgivings, China should strengthen dialogue with Brazil and discuss ways to optimize their investment structure and promote the diversity of bilateral trade. At the same time, the two countries should strive to make changes to the bilateral economic and trade cooperation model to ensure both sides can benefit from mutual economic exchanges.

China's 12th Five-Year Plan (2011-2015) and Brazil's hosting of the 2014 World Cup and the 2016 Olympic Games offer huge potential for the further development of bilateral ties. The "go-overseas" strategy pursued by enterprises in both countries, their ongoing diligence in promoting industrial structural upgrading and their endeavor to develop some new industries will also provide more economic and commercial opportunities for bilateral cooperation.

In this context, the two countries should strengthen technological cooperation in areas with huge potential, such as in agriculture, new energy, biology, aerospace, equipment manufacturing and other high-tech sectors, in order to raise the quality of bilateral economic cooperation and increase technological contributions to their economic growth.

At the same time, cultural and personnel exchanges should also be strengthened to consolidate the social foundation for a stronger relationship between the two countries.

The author is an associate research fellow with the Institute of Latin American Studies under the Chinese Academy of Social Sciences.