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Brazzil - Foreign Relations - May 2004

Brazil: Lula's Making Eyes at China

Among the agreements Brazil President Lula hopes to sign in
China is one in the area of tourism, which would include Brazil
as an itinerary approved by Beijing. This would create direct
flights between the two countries. By 2010, 100 million Chinese
will be traveling around the world, but only to authorized places.

Gabriela Guerreiro


Picture Thursday, May 20th, on a national radio and television hookup, President Luiz Inácio Lula da Silva presented a balance sheet of his 500 days in office. The first part of the program was devoted to his trip to China, where he departed this Friday. According to Lula, the journey represents a "mission of the utmost importance to the country," since the objective is to expand trade with that nation.

Lula presented data that prove China's current strategic importance for Brazil. "China, with its 1.3 billion inhabitants, is the fastest-growing country in the world at this moment and one of the countries that buys the most. Its volume of imports today reaches the astronomical figure of US$ 412 billion. Since last year our government has made the strategic decision to draw closer and closer to China," the President affirmed.

He informed that, last year alone, Brazil exported US$ 4.5 billion to China. Lula said he intends to increase this volume, since the exports to China are currently concentrated in soybeans, mineral ores, and steel products. "We have the quality and competitive prices to grow substantially in other areas in which China buys a great deal, such as electro-electronic devices, sporting goods, chicken, beef, coffee, cellulose, airplanes, and automobiles. Without mentioning the alcohol extracted from sugar cane, ethanol, which China may need, a lot, since it has 171 cities with over 1 million residents."

For the President, trips like the one to China, in addition to consolidating "the great progress that Brazil is achieving in foreign trade," can also have direct impacts on the country. "Increasing exports to countries that are major buyers, like China, is one of the most reliable and solid ways to accelerate our own domestic sector, mobilizing and strengthening our economy and thus helping to create the jobs we so badly need," he pointed out.

New Investments

Around US$ 3 billion is the total of investments expected to result from Lula's visit to China. The Vale do Rio Doce Company alone will conclude an agreement worth US$ 2 billion with its Chinese counterpart Baosteel to install a steel plant in the state of Maranhão.

China is the Vale's biggest customer. Last year the company exported nearly US$ 1 billion to that country. The same performance should be repeated this year. This amount represents 11 percent of the Vale's iron ore shipments.

"The partnership with China is strategic for a country like Brazil, which wants to grow. China has a high savings rate and aspirations to invest in other countries. This is the case with our association," observes Fábio Barbosa, corporate executive director of finance.

Barbosa, who was secretary of the National Treasury during Fernando Henrique Cardoso's administration, recalls that China's development has made the country a good buyer, "extremely open," and capable of teaching Brazil the paths to growth.

In 2003, China exported US$ 436 billion and imported US$ 413 billion, for a trade surplus close to US$ 20 billion. "The surplus is similar to Brazil's, except that their trade flow was five times greater, almost US$ 850 billion," he pointed out, comparing it with Brazil's trade flow of US$ 150 billion. The Chinese Gross Domestic Product is US$ 1.3 trillion, while Brazil's is US$ 500 billion.

In the agricultural sphere, the two governments will sign an agreement to exchange information about research on animal and plant hygiene and disease prevention.

The goal, according to the commercial attaché of the Brazilian embassy in China, José Mário Ferreira Filho, is to encourage understandings over research procedures and methods concerning food security, laws, and norms.

Such an agreement, he contends, will avert distressing incidents like the one that occurred two weeks ago, when four Brazilian soybean export firms were punished by the Chinese quarantine (inspection agency) for selling soybeans containing high levels of chemical substances.

Ferreira Filho assured that the incident, which happened a few days before the signing of agreements in the agricultural sphere, will not harm the understandings with China.

Another accord that is expected to be concretized during President Lula's stay in China is in the area of tourism, with Brazil's inclusion as an itinerary approved by the Chinese government. This will permit the establishment of direct flights between the two countries.

It is estimated that, in 2010, around 100 million Chinese tourists will travel around the world. But only to authorized destinations. To avail itself of this opportunity, the Brazilian aviation company, Varig, opened an office in Beijing in March.

Gabriela Guerreiro 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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