Tatiana Bokova, Intern of the Russian National Committee on BRICS Research – special for InfoBRICS
China is currently playing a leading role in tackling international challenges and advancing global governance as the world experiences a post-pandemic economic recovery, a widening development gap in economies, and serious challenges such as climate change. The Belt and Road initiative introduced by Chinese President Xi Jinping in 2013 serves as a boost to global development. The project was initially focused on connectivity and land integration of the western part of China with Central Asia and Europe; then it has added maritime routes that include Southeast Asia and the Indian Ocean, Africa, and as of 2018, they already included it in Latin America with its projection towards the Arctic Ocean. Nowadays, over 20 nations have already signed a Memorandum of Understanding to take part in this initiative and foreign direct investment from China in several regions has already surpassed $90 billion.
The Belt and Road Initiative launched by China aims to join efforts with other economies of the world to realize the "five links" (political communication, site linkage, seamless trade, financial integration and person-to-person connections) and create a community with a common future for humanity through extensive consultation, co-building and exchange. During the project, China has helped many developing countries build infrastructure such as communication networks, ports, airports, highways, hospitals and schools, adopt experiences in fighting poverty, and give concrete plans to implement many ideas. Undoubtedly, as a member country of the BRICS, China is building relations with the members and cooperating with them within the Belt and Road Initiative.
In recent years, Sino-Latin American relations have achieved a breakthrough in the initiative. Since the recognition of the Belt and Road, many Latin American countries have signed memorandums of understanding or cooperation documents with China. In addition, the Community of Latin American and Caribbean States (CELAC) and China have signed the One Belt, One Road cooperation document. As of 2021, for example, China had implemented 192 infrastructure projects in the Latin America and Caribbean region with a total investment of $98.4 billion, creating over 673,000 local jobs.
Brazil is a major Latin American country and an important strategic partner of China. Bilateral economic relations are developing rapidly and the states have agreed on two documents of intergovernmental cooperation, namely the Sino-Brazilian Strategic Plan 2022-2031 and the Sino-Brazilian Implementation Plan 2022-2026. Furthermore, investment cooperation has intensified. According to statistics, total Chinese investment in the South American country exceeded $66 billion in 2020. Although Brazil has not yet signed the Belt and Road cooperation agreement with China, the scope and content of bilateral relations are highly consistent with the initiative, which has great significance for the Brazilian economy. This article will discuss the prospects for Brazil's entry into the Belt and Road Initiative and bilateral infrastructure cooperation.
Infrastructure is undoubtedly an important area of cooperation. Both BRICS and the Belt and Road can jointly focus on building infrastructure in underdeveloped regions in order to facilitate convenient and smooth economic and trade cooperation. With the active support and efforts of Chinese and Brazilian governments and enterprises, the two sides have often cooperated in road construction, port maintenance, energy infrastructure and network construction. Generally, infrastructure has become another major area for Chinese investment in Brazil after mining and agriculture. The PRC has been involved in the construction of several infrastructure projects, such as hydroelectric power plants, airports, and power transmission lines.
Moreover, the construction of railways and roads is an important area of infrastructural cooperation. In 2015, the two states issued a joint statement stressing that cooperation on railways is "vital" for the creation of an integrated and sustainable infrastructure network in South America, as well as necessary for more efficient bilateral trade. Later, China and Brazil agreed on a $20 billion infrastructure fund, mainly for building railways, which in turn would help boost trade and the economy. The launch of the Belt and Road Initiative also contributed to the smooth progress of landmark projects, giving new impetus to cooperation. Consequently, the Brazilian government is aware that joining the initiative will open up great opportunities for road construction in Brazil, so it has strengthened its cooperation with China in road infrastructure.
The implementation of the Belt and Road in Latin America has also given new impetus to cooperation in port construction. In 2018, for example, China Merchants Port completed the acquisition of Paranagua, Brazil's second-largest port, and created the largest port acquisition and merger project in Brazil and Latin America. The countries later held a ground-breaking ceremony for the Port of St. Louis project, and the total investment in the port project was more than $700 million. The project was a demonstration program and an important hub for the "Belt and Road" that would connect Brazil and Latin America and facilitate seamless trade and financial integration to achieve joint development.
However, the Brazilian government has made it quite obvious in its official statements that the country is more interested in expanding bilateral investments with China than in joining the Chinese Belt and Road Initiative. Brazilian politicians claim there is already a significant amount of Chinese investment flowing into Brazil, around $70 billion, while infrastructure accounts for only 4%. "Formally joining the initiative is not in Brazil's interest at the moment," noted Brazil's vice president.
Although Brazil has not signed the memorandum, this does not mean that the state does not aspire to join the Belt and Road at all. The Brazilian position regarding participation is positive. Many experts point out that the initiative has opened up new space for global economic growth in Latin America, expanded new practices to improve global economic governance, and provided new opportunities for Sino-Brazilian infrastructure cooperation. In addition, the two sides can strengthen linkages between other development strategies and plans, as well as adhere to the principle of joint contribution and promote Sino-Brazilian relations in the field of infrastructure cooperation.
"China's proposed reconstruction of the Silk Road is a fortunate development for Brazil, but also a benchmark. In the future, China has more influence in Brazil and in the world," explained the director of the University of Brazil.
The signing of the Belt and Road Memorandum could create the conditions for further trade expansion between China and Brazil. However, for the bilateral partnership to benefit more from the Belt and Road initiative, then Brazil and China need to focus on analysing how the two sides can strengthen cooperation within the "five links", looking for the best cooperation model based on the characteristics of capital demand, construction time, technical complexities and return period. In addition, the Latin American state has to improve its investment climate as much as possible, while Chinese companies have to work hard to adapt to the Brazilian legal system and corporate culture. In order to promote financial integration between China and Brazil under the Belt and Road Initiative, both sides should look at the following, namely increasing the intensity of currency swaps, developing inclusive finance, which allows benefiting from financial integration between the two countries.
Consequently, as for Brazil, the joint promotion of Sino-Brazilian cooperation since the establishment of diplomatic relations between China and Brazil has always maintained a good dynamic, including economic and infrastructure relations. However, although Brazil has not signed the Memorandum of Understanding on the Belt and Road initiative or related documents, its position regarding participation in it is positive and opportunities for Sino-Brazilian infrastructure and economic cooperation are only expanding.
