BEIJING (AP) – Brazilian President Luiz Inácio Lula da Silva’s trip to Beijing has made clear that he is counting on China to revitalize the South American nation’s struggling industrial sector – particularly by bolstering the doldrums of exiting US companies.
After Lula met with China’s President Xi Jinping on Friday, Brazil’s Finance Minister Fernando Haddad told reporters that the nations are planning a “leap forward” in their relationship.
“President Lula wants a policy of reindustrialization. This visit begins with a new challenge for Brazil: attracting direct investment from China,” Haddad said. He added that Brazil also wants strong ties with the US, but noted with regret that recently “some American companies have made the decision to leave Brazil”.
Industrial policy is dear to Lula, a former steelworker-turned-union leader. Decades later, he launched his bid for a third presidential term in front of a car factory on the bleak outskirts of Sao Paulo. This area – and the country – is producing fewer and fewer manufactured goods.
Brazil’s National Statistics Institute announced in July 2022 that Brazil lost 1 million industrial jobs over the past decade, a decrease of 11.6%. The institute said in 2021 that the country’s industrial sector accounted for 18.9% of Brazil’s GDP, up from 38% three decades earlier.
Speaking to journalists ahead of his departure from China on Saturday morning, Lula said Brazil’s relationship with the Asian giant “goes beyond this phase of commodity exports”. He added he visited the headquarters of Chinese telecom company Huawei because he needs to drive “a digital revolution” in his South American nation.
Over the years, Brazil has become a major exporter of commodities, and China has consumed them voraciously. China overtook the US as Brazil’s largest export market in 2009, buying tens of billions of dollars worth of soybeans, beef, iron ore, poultry, pulp, sugarcane, cotton and crude oil every year.
The Asian giant and the Latin American powerhouse have had a somewhat frosty relationship over the past four years, when far-right leader Jair Bolsonaro held the Brasilia presidency. Even some of Bolsonaro’s supporters in the agribusiness sector have been critical of the outbursts that have antagonized China.
On Thursday, Lula met with the CEO of Chinese manufacturer BYD, which makes electric buses and is in talks to start up a factory in the Brazilian state of Bahia, Lula’s office said. The previous owner, Ford Motor Co., announced in 2021 that it would close the plant along with two others in Brazil.
According to Chinese state media, Brazil is already the largest recipient of Chinese investment in Latin America. And Lula doesn’t just want more investment; He also seeks partnerships that challenge the hegemony of Western-dominated economic institutions and geopolitics, including diplomacy over the war in Ukraine.
Lula’s visit on Thursday included swearing in former Brazilian President Dilma Rousseff as head of the China-backed New Development Bank, which finances infrastructure projects in Brazil and elsewhere in the developing world.
The bank presents itself as an alternative to the International Monetary Fund and World Bank, which often impose credit terms that developing countries criticize as punitive.
At the inauguration ceremony, Lula criticized both the IMF and the US dollar’s dominance in international trade, and welcomed an agreement between Brazil and China to use the Chinese yuan in their bilateral trade
Lula and Xi oversaw the signing of agreements in 15 areas, from agriculture to aviation, underscoring the improvement in ties since Lula took over in January.
“As comprehensive strategic partners, China and Brazil share extensive common interests,” Xi said, according to the Chinese Foreign Ministry.
“China … regards the relationship as a high priority on its diplomatic agenda,” he said.
Charles Tang, chairman of the Brazil-China Chamber of Commerce, told The Associated Press that he expects several new deals for Chinese infrastructure investments after the trip.
“China tends to invest money in it, as was the case in Africa. China is full of reserves for investment and can bear the current risks in Brazil,” Tang said over the phone.
The trip was Lula’s third visit to China but the first with Xi as president. On Friday, the two leaders met for three hours – far longer than planned.
“The duration of the meeting speaks for itself,” said Brazil’s Ambassador Marcos Galvão at a late-night press conference.
Xi had greeted Lula with full military honors, including a 21-gun salute, at the Great Hall of the People next to Tiananmen Square in the heart of the Chinese capital. The two leaders walked to the tune of the Brazilian song “Novo Tempo” – or “New Time” in English.
The Brazilian leader is trying to rebuild ties with China after a tumultuous relationship under Bolsonaro, who showed little interest in foreign travel.
On Friday, a son of the former president, Senator Flávio Bolsonaro, criticized Lula for flirting with China.
“The only thing missing is waging a direct war against the United States… Lula is walking a dangerous path alongside dictatorships and enemies of democracy like Venezuela, Cuba and Nicaragua,” the younger Bolsonaro said on social media.
In February, Lula traveled to Washington, where he and US President Joe Biden stressed the importance of defending democracy and preserving the Amazon rainforest. However, the trip did not bring the hoped-for financial commitment for the Brazilian Amazon fund.
The talks between Lula and Xi touched on the conflict in Ukraine, with leaders unanimous on the need for a negotiated settlement, according to Chinese state broadcaster CCTV.
A key element of Lula’s involvement abroad is his suggestion that Brazil and other developing countries, including China, mediate peace. However, his proposal that Ukraine should cede Crimea has angered Kyiv and its closest supporters, the US and Europe.
Lula said Saturday morning that China and the US play an important role in the discussion about Ukraine, but added: “It is necessary that the US stop stimulating war and stop talking about peace.”
One of about 50 leaked secret documents on the Discord platform seen by the AP said that in late February the Russian Foreign Ministry backed Lula’s plan to set up a club of supposedly impartial mediators because it “would oppose Western action. Aggressor-victim paradigm.” The article cited electronic surveillance as a source.
China has also tried to play a role in ending the conflict, albeit in a way that Moscow strongly supports. She refused to condemn the invasion, criticized economic sanctions against Russia and accused the US and NATO of provoking the conflict.
Lula’s trip to China represents a clear contrast to the “low-key visit to Washington” and offers leverage against Europe, said Oliver Stünkel, a political scientist at the Getulio Vargas Foundation university and think tank.
“This approach to China could actually encourage Europeans to strike a deal with Brazil so they don’t lose even more market share to China in South America,” Stuenkel said.
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Savarese reported from Sao Paulo. AP reporter Frank Bajak contributed from Boston, and senior producer Wayne Zhang contributed from Beijing.