With a sharply slowing economic growth, and a one-fifth of its population living under poverty line, Brazil is looking up to China as an export market and a source of investments to expand and modernize its resource rich economy.

That was the key mission of Brazil’s President Luiz Inacio Lula da Silva during his state visit to China last week. To underscore the importance of China relations, Lula told his hosts that Brazil’s exports to China were larger than the sum of the country’s sales to the United States and the European Union.

China has been Brazil’s largest export market for 14 consecutive years. The bilateral trade last year reached $171.4 billion. The trade business in the first quarter of this year was growing at an annual rate of 5.5%, with exports to China climbing at a rate of 8.5%.

To speed up trade flows and facilitate transactions, the two countries have agreed on digital product certifications and trade settlements in national currencies.

During Lula’s last week visit, bilateral agreements were signed in 15 different areas, covering trade and investments in agriculture, digital economy, aeronautics, science and technology.

Let the Chinese samba

Of particular interest was Lula’s visit to the telecommunications giant Huawei to encourage Chinese investments in Brazil's digital transformation and low-carbon industries. That means that China is not only Brazil’s largest export market, but it is also a key source of Brazil’s equipment and services in mining, infrastructure and logistics.

Lula also met with the management of the Chinese electric vehicle manufacturer BYD (Build Your Dreams), which is getting ready to start operations in Brazil’s state of Bahia.

China and Brazil are showing an example of a remarkable trade relationship at a time when international flows of commerce and finance are disrupted by global and regional impediments to trade and economic development.

Lula and his Chinese host President Xi Jinping showed last week that their comprehensive strategic partnership is underpinned by common interests shared by the two largest developing countries in Eastern and Western Hemispheres.

The mutual trust and understanding underlying this close trade relationship survived “the four frosty years” of Lula’s predecessor and are now leading to projects transcending the bilateral framework.

The two countries apparently wish to merge the operation of China’s Belt and Road Initiative with Brazil’s “reindustrialization strategy.” Brazil lost 1 million industrial jobs during the past decade, and the country’s industrial sector shrank to 18.9% of GDP from 38% during the 1990s. Brazil apparently believes that trade and investments with China can accelerate the much-needed modernization of the country’s sluggish and structurally unbalanced economy.

Brazil needs help

In addition to coordinating their actions within BRICS (an organization of leading developing economies of Brazil, Russia, India, China and South Africa), the U.N. and the G20, Brazil and China have also agreed to work closely with Latin America’s Southern Common Market (MERCOSUR), the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC).

Those common initiatives will promote the regional trade and finance and will also have a political component more in tune with developing countries’ objectives.

Interestingly, from all that transpired during Lula’s last week visit to China, it seems that a push for coordinated actions on a regional and global level was fully supported by Brazil. Indeed, Lula assured his Chinese hosts that Brazil’s “legislature and society” shared a desire for “strong and multifaceted” relations with China.

Lula did not make anything up. Cultural and people-to-people contacts in sports, medicine and arts have been flourishing for years. Brazil has 14 Confucius Institutes, and there is a national festival in August to celebrate the arrival of Chinese immigrants to Brazil. Two cities in Brazil (Recife and Foz do Iguacu) have also proclaimed the Chinese New Year an official holiday.

Now, in these troubled times, there are people who will look for, and probably find, a political subtext in that friendly Sino-Brazilian summit, although the Chinese and the Brazilians are tough traders and the BYD factory in Bahia is one of the plants shuttered by Ford Motor Company in 2021.

Brazil is desperate for exports and foreign direct investments. This year and next, the economy is expected to stagnate, eking out estimated growth rates of about 1%. Inflation is slowing, but the policy interest rate is still 13.75%, and a budget deficit of 6% of GDP will not allow much room for social welfare programs.

It’s fortunate that China remains the largest buyer of Brazilian soybeans, beef, poultry, sugar cane, iron ore and crude oil.