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Brazil: Lula’s Great China Trip

 Brazil: 
 Lula's Great China Trip

Chinese Ambassador
to Brazil Jiang Yuande believes business
transactions between China and Brazil are still modest in
comparison with both countries’ potential. According to him,
Brazilians are not aggressive enough. Brazilian beef and
coffee, for example, have yet to become popular in China.
by: Edla
Lula

Brazzil
Picture

On Saturday (22), the President of Brazil, Luiz Inácio Lula da Silva,
departs for the Peoples’ Republic of China, where he will visit Beijing and
Shanghai. His return is scheduled for May 27.

According to the Chinese
Consul-General in Brazil, Li Baojun, 509 Brazilian entrepreneurs have already
formally requested visas to accompany the presidential entourage to China,
whose annual growth rate of around 8.5 percent makes it one of the world’s
most promising economies.

The business elite thus
demonstrates the visit’s highly commercial purpose, which is also encouraged
by the hosts. "China intends to increase its cooperation with Brazil
and the Mercosur in various areas, including the trade sphere," Chinese
Ambassador Jiang Yuande guaranteed, on Monday, at a breakfast offered to the
press (Brazilian and Chinese) in Brasília. He admits that his country
is already evaluating the hypothesis of establishing a free trade agreement
with Brazil.

For Yuande, business transactions
between the two countries are still modest in comparison with both countries’
potential. "Brazilian entrepreneurs could be more aggressive," the
diplomat remarked, citing sales of beef and coffee as examples of Brazilian
products that have yet to become popular in China.

The Ambassador affirmed
that, in his country, Brazilian beef is not nearly as well-known as Australian
beef. Brazilian coffee was also mentioned by the diplomat as "timid"
in the Chinese market.

Yuande believes that Colombian
coffee gets more propaganda and consequently is more successful especially
in winning the following of youth, who are more accustomed to drinking this
beverage. "In restaurants, one pays US$ 10 for a cup of coffee,"
the Ambassador informed.

Even without taking full
advantage of the potential of the Chinese market—the largest in terms
of the quantity of consumers, since the population approaches 1.3 billion—Brazil
enjoys a surplus in the bilateral trade balance.

Last year’s surplus was
approximately US$ 3.7 billion, mostly from sales of soybeans, vegetable oil,
leather, and iron ore. Brazilian transgenic soybeans are another product that
recently began to enter Chinese ports.

Yuande foresees a growth
in Chinese exports to Brazil in the coming years. "We are going to invest
in the São Luís Steel Plant, in the Brazilian Northeast, and
we encourage private investors to buy land in the country to plant soybeans,"
he commented.

UN Permanent Seat

With Lula’s trip to the
Peoples’ Republic of China, Brazil may be closer to obtaining that country’s
support in its attempt to become a permanent member of the UN Security Council.
This support is important, because China is one of the five countries that
have permanent seats on the Council.

Brazil currently occupies
a temporary seat on the Council, which is the most important source of decisions
on issues of world peace. "China views the question with sympathy, supports
Brazil’s desire to play a bigger role in the United Nations, and we can discuss
this matter further," said the Chinese Ambassador to Brazil.

The Security Council includes
as permanent members the United States, China, Russia, France, and Great Britain,
nations which have voting rights and veto powers in international decisions
of great significance for world peace.

Brazil-China Trade

Trade between Brazil and
China may surpass US$ 8 billion this year. The source of this information
is Ambassador Luiz Augusto de Castro Neves, who should take over as Brazil’s
representative in Beijing in the coming months. According to him, there is
a "great potential" for investments on both sides.

"To the extent that
emerging markets begin to do business with one another, they become less dependent
upon variations in US interest rates. More precisely, the expansion of bilateral
transactions will make both less vulnerable," Neves contends.

According to him, China
is building the biggest hydroelectric plant in the world measured in terms
of installed capacity. The Three Gorges Dam will produce around 18 thousand
megawatts. Brazil’s Itaipu Power Plant, for example, currently produces 12.6
thousand megawatts.

Nevertheless, Itaipu will
continue to be the world’s largest hydroelectric plant in terms of energy
production, since the Paraná River allows the use of 90 percent of
installed capacity, whereas the Three Gorges project will only be able to
harness 50 percent of the hydrographic potential.

Brazil’s future ambassador
to China believes that trade between the two countries can improve even more
with the construction of the power plant. "Much of the equipment for
the Three Gorges is being manufactured in Brazil, because Itaipu, due to its
size and the characteristics of its turbines and generators, is the only model
that can serve for the Three Gorges," explained the Ambassador, who is
currently in charge of the embassy in Paraguay, Brazil’s partner in the Itaipu
project.

In the diplomat’s opinion,
the growth in energy demand will certainly add to the demand for exports of
heavy equipment for hydroelectric plants.

The Most Important

President Luiz Inácio
Lula da Silva described his next international trip as the most important
one this year. When he lands in China on May 21, Lula will be looking at the
world’s largest consumer market, with 1.3 billion people. The country has
been growing at an annual rate of around 9 percent, at the same time as it
is in need of investments in areas critical to development, such as housing,
food, transportation, and electricity.

Brazil is a big exporter
of commodities such as soybeans, mineral ores, steel, and all the products
linked to agribusiness. High-technology Brazilian companies—Embraco,
Gradiente, Embraer—are active in China, producing for the Chinese and
foreign markets. The Chinese, for their part, invest abroad, and Brazil can
attract US$ 5-10 billion of these investments, in the view of the future Brazilian
ambassador to Beijing. "We are an important market, because we have 180
million inhabitants, and there is still much to be done. Brazil possesses
an important growth potential in capital goods and macroeconomics," Neves
insists.


Edla Lula works for Agência Brasil (AB), the official press agency
of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.

Translated
from the Portuguese by David Silberstein.

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