“Brazil needs China’s experience to re-industrialize”: an interview on how the Lula administration will approach China and the BRI

On the first day of 2023, the 77-year old Luiz Inacio Lula da Silva was sworn in for the third time as Brazil’s president at an emotional and a bit unconventional inauguration ceremony, as former President Jair Bolsonaro intentionally skipped the sash-passing handover event.

To a deeply divided country, Lula conveyed a message of “unity and reconstruction.” But the polarization that has torn Brazil apart over the years will likely still shape and constrain Lula’s domestic and foreign policy choices despite his victory. As Brazil’s top trade partner and a major source of foreign investment, China is set to become a key component of the new administration’s foreign policy, even though Lula’s immediate focus will likely be domestic economic and environmental issues. In his previous terms as president (2003-2010), Lula has transformed Brazil-China relationship and harnessed the commodity “super cycle” to finance his social programs. Now, regaining power after over a decade, the world is watching how he will reconnect with China.

Will Brazil finally sign on to the Belt and Road Initiative (BRI) that it has resisted so far, an absence that is becoming increasingly eye-catching as 21 other regional countries have done so? Some argue that Brazil is already reaping the benefit of close economic ties with China without needing to sign on to the highly politicized initiative. Will Lula’s calculations be any different? And how will his left-leaning world view affect his approach to China-related multilateral fora such as BRICS? We brought these questions to Dr. Feliciano de Sá Guimarães, Associate Professor at the Institute of International Relations at the University of São Paulo (USP), who also helped with the transition government’s preparation work.

Lula with then Russian President Dmitri Medvedev, Chinese president Hu Jintao, Indian prime minister Manmohan Singh at the 2010 BRIC summit. Image by José Cruz/ABr

Panda Paw Dragon Claw (PPDC): Consecutive Brazilian presidents, left and right, have kept a distance with the BRI by not signing an MOU with China. What’s the main rationale behind this position? Would the Lula presidency change this situation?

Feliciano de Sá Guimarães: I think the Chinese leadership in Brazil (i.e. the Chinese embassy) has not convinced Brazilian authorities of the gains for Brazil participating in the BRI. This is more on the side of China than on the side of Brazil in showing interest. For example, the issue has not come up in the transition government.

The Lula administration does want to have a closer relationship with China, that might include participating in the BRI, but I’m not sure because this is never clearly stated. So it’s really a matter of how the Chines embassy in Brazil convinces both Brazilian public authorities and entrepreneurs of the gains in participating in the BRI. I don’t think it’s very clear for Lula on why Brazil should be part of it.

PPDC: China policy was a major component of Lula’s time in office 2003-2010. President Hu and Lula met 8 times during that period. What has or has not changed between now and then?

Feliciano de Sá Guimarães: I think it’s very clear for the Lula administration that Brazil needs to have a closer relationship with China in general. The Lula administration wants to re-industrialize Brazil and has declared a couple of times that he wants to visit China and learn from China how to invest and how to improve industrialization. They might use the Chinese experience on that regard.

There is a general sense in Brazil that under the Bolsonaro administration the relation with China was terrible. And Lula needs to re-ignite the bilateral relationship. So China would definitely be one of his first visits. (Note: Brazil’s Foreign Relations Minister Mauro Vieira has already announced that Lula will visit China within the first three months in office.)

Brazil has a very close relationship with BRICS as well. There is currently a Brazilian (Marcos Troyjo) in charge of the New Development Bank headquartered in Shanghai. So there is a sense that we need to increase the relationship in all areas, from trade to politics to reforms of the international order. There is a lot to be gained from this closer relationship and Lula will certainly try to have a good relationship with Xi.

A Jaguar Land Rover manufacturing facility and Education Business Partnership Center in the state of Rio de Janeiro, Brazil. Image by: Land Rover MENA

PPDC: How will Lula’s leftist politics and world view (e.g. emphasis on Global South solidarity and changing an unjust world order) shape his approach to China today?

Feliciano de Sá Guimarães: Brazil and China have similar views of how the global order should work, and what reforms to the global order should happen. Brazil will be very happy to have a clear support from China in the reform of the UN Security Council, giving Brazil and other countries a permanent seat. I don’t think China will ever allow that to actually happen but a public statement (of support) is very important for Brazil. I think Lula will try to have a closer relationship with African countries as well. China has become a key partner for many African countries. We will not compete for influence with China (Brazil’s is a very different type of influence), but it’s part of the broader Global South solidarity that both China and Lula perceive in the same way.

I think the fact that Lula comes from a leftist party also improves his credentials in the eyes of the Communist Party in China. They tend to see him as a more welcoming politician towards China and that’s definitely the case. But you have to realize that Brazil is on this side of the world that its China relationship cannot go that far because it always has to deal with the US and how the US perceives Chinese influence in Latin America. So something that the Lula administration always has to be careful is how can we have a closer relationship with China without destroying the bridge with the US, which is also a key partner of Brazil.

PPDC: In what way will the divisive election and the post-Bolsonaro political tensions within Brazil constrain Lula’s policies on BRI and BRICS?

Feliciano de Sá Guimarães: That’s something to be seen: how powerful the Bolsonaro opposition will be in the next couple of years especially in the area of foreign policy. I think a lot of the Bolsonaro people that have been elected in the last election are going to be part of the international relations committees in both the Senate and the House. So foreign policy in Brazil again will be a divisive issue, especially if we have a closer relationship with China. The Bolsonaro side will use this closer relationship to attack the Lula Administration. They will say that Brazil has become a Communist country. This is something that we always have to take into consideration: How to design this closer relationship with China while keeping in mind this negative side effects in Brazil’s domestic political arena.

PPDC: In terms of sectors or geographies, which areas will be Lula’s priority when it comes to Chinese investments into Brazil?

Feliciano de Sá Guimarães: Any Chinese investment that increases industrialization in Brazil and creates high-skill jobs in areas such as solar panels, the ship industry or the computer industry, will be very important for us: all the areas that Brazil tries to industrialize. We should try to use Brazil’s capacity in some specific industrial areas to attract Chinese investment. So far Chinese investments in Brazil have been concentrated in buying Brazilian public companies in areas of transportation or energy and I think that’s not enough, although Brazil is by far the No.1 recipient of Chinese investments in Latin America. The Chinese can do much more in terms of investments.

We should look into how to re-industrialize Brazil. Industry is only 15 % of national GDP. It used to be around 25%. So Brazil has to change that. It will never be a developed country if it is lagging behind in terms of industrial capacity. China has proved that industrialization is key for development, so any Chinese help in that regard will be welcome by the Lula administration. That’s very different from the approach taken by Bolsonaro’s administration.

PPDC: For Chinese stakeholders with an eye on increasing their economic presence in Brazil, what are some of the pitfalls/challenges to look out for given the country’s changing political landscape? 

Feliciano de Sá Guimarães: I don’t think there is going to be many pitfalls or challenges. The Lula Administration will never have a negative overarching narrative against Chinese investment in Brazil. That will be unthinkable. To the contrary, the Lula administration will be more welcoming for Chinese investment and the growing Chinese influence in Brazil’s society. You have to remember that there are several factions within the Workers’ Party that see Chinese investment and political influence very positively and I think that will help China in the long term in Brazil.

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