To those who follow international relations, China’s growing economic influence in the world is no secret, and that includes many types of partnerships, trade agreements, and military agreements between China and various Latin American countries. However, Americas Quarterly recently ran a great article that analyzes in-depth the nature of Chinese-Brazilian relations, including the ways that the two countries’ “new ties are also leading to increased wariness by the Brazilians.” Of particular concern to the Brazilians is the lopsided nature of trade agreements, in which Brazil is exporting primary resources to China but importing more expensive Chinese products and the uneven rate at which Brazilian companies are able to enter Chinese markets compared to their Chinese counterparts in Brazilian markets. The article is very thorough, but I had a few historical observations I wanted to add.
First, in discussing the similarities between the two countries’ macroeconomic policies, authors Lawrence Brainard and John H. Welch point to the state-centered developmental model as evidence that “developmentalist romanticism still holds sway in Brasilia.” I wouldn’t necessarily disagree (though given the successes of the state-centric economy in Brazil in the last 10 years, I wouldn’t really call it “romanticism” either), but instead observe that this type of developmentalist model goes back not just a few years, or even a few decades, but in various guises, back to the 1950s. Upon election in 1955, President Juscelino Kubitschek (1955-1960) launched his “Fifty Years in Five” program that was going to turn Brazil from “the country of tomorrow” into “the country of today.” While the creation of the new capital of Brasília in what had previously been unoccupied land in the interior became the biggest symbol of this type of modernization under the Kubitschek administration, his efforts went far beyond the high modernism of the city and included increases in industrial production, plans to reform the university system to create a new class of white-collar technocrats and scientists to foment development, and other state-centered programs intended to rapidly modernize Brazil. While the costs of these efforts played a part in the growing inflation of the early-1960s that ultimately led to the 1964 military overthrow of president João Goulart and the creation of a 21-year-long military regime, this type of state-controlled developmentalism continued under the right-wing dictatorship, which used to projects like the Rio-Niterói bridge and the Transamazonian highway as physical symbols of the broader economic modernization and developmentalism of the governments. While the privatization efforts during the 1990s marked a slight shift away from this type of statist economic policy, it continues to the present, and so the historical legacy of current state-centered macroeconomic approaches goes back decades in Brazil.
On that last point, I’d also add that, while I appreciate the macroeconomic approach of the article, it smooths over the vast differences between the rightist governments of Fernando Collor (1990-1992) and Fernando Henrique Cardoso (1994-2002) and Luis Inácio “Lula” da Silva (2002-2010) and Dilma Rousseff(2010-present). To lump privatization efforts, partial opening of the economy, into one big-picture analysis makes sense on one hand, but also fails to consider more important macroeconomic shifts between one government and the next. These transformations in administration are important; though presidents since 1990 have emphasized market-friendly policies in general, Collor and Cardoso really focused on privatization and neoliberal policies, while Lula and Rousseff have moved away from privatization and created programs to address issues of social justice, including education, income inequalities, etc., in ways that Collor and Cardoso never did. These shifts, with a greater emphasis on social programs for better distribution of wealth/opportunities under PT, are important, but invisible in this type of macroeconomic approach. That’s not to say the latter should be tossed out, but rather to suggest it is important to keep in mind these very real differences between one president and the next in order to avoid a totalizing, linear understanding of economic change over time.
Understanding these differences between governments is particularly important when considering the disparities in savings in China vs. Brazil. As the authors point out, savings rates in Brazil are relatively low compared to China, something which the authors suggest could have a very real impact on future development in Brazil. However, historical context helps understand the difference between the two countries. In the 1990s, Cardoso created a tax that the government levied on those who had a basic checking/savings account. The tax was significant enough that it made banking not just impractical but extremely burdensome to the majority of Brazilians, in turn limiting such accounts to the minority of the middle class and the elites who could afford it. Only with direct government support during the Lula administration did the Brazilian postal service begin providing inexpensive banking opportunities that most Brazilians could afford. This isn’t the type of savings the article is directly referring to, but it plays into it. In an attempt to create programs like the Correiso Banking, as well as other social programs such as Bolsa Familia and Bolsa Escolar, the federal government had to spend money to address real, present social inequalities in order to create better, more stable, and larger base for economy in future. Thus, the lack of savings in Brazil is not necessarily an indicator of poor strategies, but of different ones; in order to plan for future consumer and market stability, Brazil’s government invested in social programs in the present designed to protect Brazil’s economic future.
Finally, a comment on the trade relationship between Brazil and China. As the authors note, although the two countries are closely tied in a number of trade agreements, they are assymetric, with Brazil exporting primary resources like wood, iron, oil, and food at lower prices, and importing more expensive Chinese manufactured goods. This is intriguing because, in spite of all of its efforts to join the global market as a major power, Brazil still faces very real challenges in the nature of its economy. This trade relationship with China in many ways resembles the “imperialism” of colonial society up through neo-imperialist era of 20th century, in which one country extracts its natural resources and is forced to import manufactured goods. Brazil did try to address this imbalance in the 1930s-1950s, when it employed the model of Import-Substitution Industrialization that tried to spur national manufacturing to replace dependencies on foreign producers, but by the 1960s, the weaknesses of the model as it was implemented led to its abandonment. This isn’t to say ISI is on its way in a new guise, but it will be curious to see just how Brazil tries to address an old problem in a new guise in which it is China, and not the US or Europe, who benefits from this trade imbalance.
All of that said, it is important not to let trade strictly define prognostications for the Brazil-China relationship. Certainly, trade is an important part of the equation, but so too are other agreements, including military agreements; indeed, China recently had to turn to Brazil for training in the use of aircraft carriers, as Brazil was one of only four countries with one (along with Russia, the US, and France), and China’s need for many of the goods it imports from Brazil gives the South American power a not-insignificant amount of leverage. Still, there is certainly room for growing uncertainties, and even tensions, between two of the four members of the BRIC, and it will be worth watching going forward to see how two increasingly important world powers work with one another.