The Chinese government was trying to make peace with the frontrunner in yesterday’s Brazilian presidential election, Social Liberal Party candidate Jair Bolsonaro, whose China-bashing threatened to chill a profitable trading relationship that has benefited both countries.
An ardent nationalist, Bolsonaro was expected to win a landslide victory.
Chinese diplomats based in Brasilia have over the past two weeks met twice with top Bolsonaro advisors, participants in the meetings said.
Their aim is to highlight cooperation with Latin America’s largest country, whose grain and minerals have fueled China’s rise, while lifting millions of Brazilians from poverty in the resulting commodities boom.
Bolsonaro has portrayed China, his nation’s largest trading partner, as a predator looking to dominate key sectors of its economy.
With its own economy slowing, China cannot afford to become embroiled in another costly trade war like that which has erupted between Beijing and Washington.
Two-way trade between China and Brazil stood at US$75 billion last year, according to Brazilian official statistics.
China has invested US$124 billion in Brazil since 2003, mostly in the oil, mining and energy sectors, and it is eager to bankroll railway, port and other infrastructure projects there to speed the movement of its Brazilian grain.
However, the far-right Bolsonaro, much like US President Donald Trump, has criticized China repeatedly on the campaign trail, saying the Chinese should not be allowed to own Brazilian land or control key industries.
“The Chinese are not buying in Brazil. They are buying Brazil,” Bolsonaro has said repeatedly.
Companies in the crosshairs include China Molybdenum Co, which bought a US$1.7 billion niobium mine in 2016 that Bolsonaro said Brazil should develop itself.
Niobium is used as an additive to steel to make it stronger and lighter. It is used in cars, buildings, jet engines and a host of other applications.
Brazil controls about 85 percent of the world’s supply and Bolsonaro said he wants his nation to reap the benefits.
Bolsonaro is also on record opposing a planned privatization of some assets of state-owned utility Centrais Eletricas Brasileiras SA (Eletrobras) on concerns that Chinese buyers would win the bid.
Officials at China Molybdenum declined requests for comment, but six senior executives at Chinese companies operating in Brazil said they were watching Bolsonaro’s remarks with varying degrees of concern.
“We are worrying a bit about some of his extreme views,” one Chinese infrastructure executive said. “He is on guard against China.”
Bolsonaro’s friendly leanings toward Taiwan are likewise vexing to Beijing.
Bolsonaro in February became the first Brazilian presidential candidate to visit Taiwan since Brasilia recognized Beijing as the sole Chinese government under the “one China” policy in the 1970s.
The Chinese embassy in Brazil issued a letter condemning Bolsonaro’s trip as an “affront to the sovereignty and territorial integrity of China.”
Bolsonaro’s combative stance is in stark contrast to the rest of Latin America, whose leaders have welcomed Chinese investment, loans and commodities purchases.
It could eventually put him at odds with Brazil’s powerful farm and mining industries, for which China is an indispensable customer.
Shares of Brazilian miner Vale SA, the world’s largest iron ore producer, hit an all-time high last month on strong Chinese demand for its high-quality ore.
Brazil’s farm sector, meanwhile, has reaped the benefit of China’s feud with Trump.
Beijing has sharply reduced purchases of US soybeans, filling the gap with Brazilian grain. Brazilian exports of soy to China are up 22 percent by value this year, with about 80 percent of its soy shipments now destined there.
The US-China trade war has given Brazil leverage for now, but Jorge Arbache, former secretary for international affairs at the Brazilian Ministry of Planning, Development and Management, said Brazil would do well not to overplay its hand.
Brazil “does not have the luxury of giving up its biggest trade and investment partner,” Arbache said. “There’s not one economy in the world that can occupy the space China occupies.”
Chinese diplomats met with Bolsonaro’s top economic advisor, Paulo Guedes, early last month to discuss the importance of the bilateral relationship, Chinese Minister-Counselor Qu Yuhui (瞿玉輝) at the embassy in Brasilia said on Monday last week.
The Chinese team portrayed its nation as a partner that does not compete with Brazil economically, said Qu, who attended the meeting, and one other person familiar with the matter.
Guedes was offered a trip to China to strengthen his knowledge of the world’s second-largest economy, Qu said.
He said Chinese diplomats made it clear they would like to meet Bolsonaro in person, although no meeting has been set.
“Regardless of right or left-wing, we want to talk and advance the smooth development of China-Brazil relations, which we believe benefits both countries,” Qu said. “We have confidence that whoever is Brazil’s president will improve China-Brazil relations.”
Guedes did not respond to requests for comment.
Qu and another Chinese diplomat were spotted earlier this month entering the offices of Brazilian Federal Deputy Onyx Lorenzoni, Bolsonaro’s campaign manager, proposed chief of staff and the organizer of the candidate’s Taiwan trip.
Qu declined to comment on the matter.
Lorenzoni said that he met with two Chinese diplomats and there would be further talks after the election.
He said China is a vital partner and the two countries would maintain good relations.
If elected, Bolsonaro’s first major meeting with the Chinese would come early in his presidency.
Brazil is to host the BRICS (Brazil, Russia, India, China and South Africa) summit next year, an event that Chinese President Xi Jinping (習近平) is likely to attend.
Bolsonaro is content with China purchasing commodities, but the former Brazilian Army captain is wary of the Asian nation’s recent shopping spree in Brazil’s energy and infrastructure sectors.
China Three Gorges Corp paid 13.8 billion reais (US$3.66 billion) in 2016 to operate two of Brazil’s largest dams. Last year, State Grid Corp of China bought a controlling stake in Sao Paulo’s CPFL Energia SA and a subsidiary for 17.36 billion reais, while China’s HNA Airport Holding Group Co Ltd bought a controlling stake in Brazil’s second-busiest airport.
Brazil is now expected to put a number of government concessions and assets up for bid next year, including railways and state-held energy assets.
The outgoing administration of Brazilian President Michel Temer has attempted to privatize Eletrobras, a move that requires congressional approval.
Bolsonaro has said he is against selling Eletrobras generation assets, because it would “leave Brazil in Chinese hands.”
The Chinese infrastructure executive said his company was worried that Bolsonaro might change the government auction rules to disadvantage Chinese bidders.
He and other Chinese executives who spoke to reporters declined to be identified.
To date, Bolsonaro has been vague about how he would carry out actions to stop Chinese investment he sees as undesirable. Brazil has no equivalent of the US Committee on Foreign Investment, which reviews the national security implications of foreign investment in US companies.
Bolsonaro also needs to tread carefully with the huge agribusiness caucus, which controls more than 40 percent of seats in the Brazilian Congress.
The nation’s farmers are overwhelmingly supportive of Bolsonaro, but have made clear that maintaining good relations with China, their largest export customer, is paramount.
“The economy is much more important than propaganda to get votes,” said an executive at an agricultural company, who declined to be identified. “You can’t change it that easily without severe repercussions.”
Additional reporting by Marcela Ayers, Anthony Boadle, Maria Carolina Marcello, Rodrigo Viga Gaier and Marta Nogueira.
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