The Northern region of Brazil holds the greatest potential for growth in exports to China: 125.8%. This potential could lead to revenues of more than R$58 billion for seven of the states in the Amazon region, according to a study by the Brazil-China Business Council published in 2023. Between 2012 and 2021, the increase in exports reached 14.6%. These data unveil the importance China has gained for the Amazonian region economy in recent years, but it also points to challenges on the horizon.
"The relationship is characterized by a diverse economic performance, it covers investment in commodities, trade or agribusiness, and in infrastructure, often linked to the needs of the production chain of these agricultural commodities, such as ports and railways. The increase in Brazilian exports of primary products to China brings consequences for the Amazon deforestation process that are complex to quantify and must be interpreted with caution", explains Dr. Flávia Vieira, senior researcher at the Cipó platform.
Despite the limitations of data in the public domain to effectively assess the relationship between deforestation and logistics, infrastructure and possible inspection failures involving the trade of commodities in the Amazon, it is undeniable that such a massive contribution to investment in infrastructure and commodities results in serious social and environmental impacts, emphasizes Vieira. Especially given the historical conflicts in the region. The Amazon region is marked by environmental conflicts that range from the implementation of public policies to promote citizenship and environmental management, to land tenure regularization and territorial ordering.
The researcher believes the environmental agenda and the sustainable development should serve an increasingly relevant alignment between the two countries. According to Vieira, the Brazilian government has been flagging interest in a movement to restructure public policies related to the environment and reinforce the inspection capacity of environmental agencies. In addition, both countries have also been under international pressure and from third sector entities for greater monitoring of the commodity chain in the Amazon.
"One difficulty is the tracking systems of Brazilian supply chains, which present gaps and flaws, and need improvements. Chinese foreign policy has changed significantly in the last decade, when it started to take over commitments to decarbonize its economy. In this sense, The Amazon has become relevant to China not only for its resources, but also for its role in storing carbon and controlling global warming. The environmental and climate issue should be part of the debate on the expansion of Chinese investments in the Amazon. Another point that deserves attention is the evidence of wild animals trafficking increase to China, with the purpose of supplying traditional Chinese medicine with ingredients and, possibly, also the fashion industry and even the domestic animal industry. We still lack sufficient information on this issue, which demands further study and analysis", she evaluates.
Country needs to go beyond soy, meat and ore
Master in political science at the Federal University of Pernambuco – researcher João Cumaru – points out the relationship between the Amazon region and China has gone through different moments over the decades. The focus on commodity trade, with 70% of Brazilian exports absorbed by the Asian country, and the export of iron ore, made the North of Brazil crucial to the bilateral relationship between the two countries.
"Another very emphatic performance in the region is the investment in infrastructure, with most of it concentrated in the last two decades and directed to the energy sector. When we look back at history, China's investments in this sector in the Northern region began with hydroelectric plants, such as Belo Monte. Noteworthy are, also, the lines that carry energy from the North region to the large consumer center, the Brazilian southeast, by State Grid, which bought the (energy company) CPFL. They are highly sophisticated and technologically perfected lines, with few equals in the world", he says.
However, there is a point of concern. While China was becoming increasingly industrialized, Brazil was becoming more and more an exporter of primary products, a characteristic of poorer and developing countries, which are unable to add value to what they produce from the verticalization of the production chain. In the midst of the covid-19 pandemic, with commodities on the rise, the sum of agriculture and mining together surpassed manufacturing in the Brazilian Gross Domestic Product (GDP) for the first time in decades. Besides going against the worldwide trend, the Brazilian deindustrialization is translated in fewer jobs and an increase in the population's cost of living. And China ends up being a fomenter agent in this scenario, due to its high demand for primary products.
Cumaru states that Brazil should ponder on its actual expectation from this relationship, setting up goals and observing other experiences of international cooperation.
"China is highly pragmatic and has a clear understanding of its objectives in relation to Brazil. Therefore, it is crucial for Brazil to “do its homework” and formulate a development strategy. It is important that we define our desired outcomes from this relationship, while recognizing the abundance of valuable assets we possess that can be negotiated with China. Our commodities, like it or not, are valuable assets for Brazil. However, we must add value to our trade. Currently, we have not yet fully embraced Chinese technology, and we need to incorporate it into our strategy, as Argentina is already doing. Bolivia has also made significant progress in technology sharing, particularly in what concerns the exploitation of lithium. Thailand has successfully concluded a technological cooperation agreement for bullet train lines. There are companies, such as BYD, already beginning to incorporate technology in Brazil, producing a wide range of items from solar panels to electric vehicles. Since 2020, they have been manufacturing bus batteries in Manaus, a significant contribution to energy storage and the transition to clean energy. It may be worthwhile to examine the experiences and agreements reached by these countries, moving beyond the traditional commodities of soy, meat, and ore," he argues.
Climate governance agreements should be prioritized
João Cumaru believes that the main challenge is to translate the commitments made in multilateral climate governance agreements into effective actions, considering how China can contribute to sustainable forest management.
According to Cumaru, the recent declaration on climate change signed by Presidents Luiz Inácio Lula da Silva and Xi Jinping indicates the aspirations of both countries for a stronger commitment to sustainability, with the main mechanism being the Sino-Brazilian High-Level Commission for Concertation and Cooperation (Cosban), which now includes a subcommittee focused on the environment. In the researcher's opinion, this is an irreversible movement, as the context of climate emergencies has placed China in a new phase of development.
“In the 1980s, 1990s, and 2000s, China's main concern was lifting its population out of poverty. From the 2000s onwards, the focus shifted to industrial development. Now, they are in a third phase, aiming for socially fair and inclusive development, as well as environmentally sustainable, striving to build an ecological and eco-socialist civilization to achieve sustainable welfare. China carries the label of being the largest polluter, but Shanghai already has nearly 90% of its public bus fleet running on electricity. The dependence on coal is substantial, but it has already declined. The pollution figures are superlatives, but the effort to reduce them is equally immense," he says.
Pará aims to establish an export zone
The dialogue between China and Pará is growing due to the state's export agenda. Practically speaking, 60% of everything produced in the second-largest state in the Amazon region goes to the Asian country, including iron, bauxite, meat, and soybeans. For instance, iron alone accounts for 80% of these exports, making Pará essential for China's construction market, which has been faltering in the past two years but is now showing renewed strength. Meanwhile, soybean production in the Paragominas municipality region continues to expand, contributing to export diversification.
Vitor Hugo Gomes, strategic advisor at Pará Economic Development Company, emphasizes that the bilateral cooperation has been highly fruitful, with cooperative projects for the use of organic fertilizers and the intention to establish a Special Export Processing Zone (ZPE) in the municipality of Barcarena, in northeastern Pará. This area is home to multinational mining companies and industries.
"These are zones that China has been using for decades as development drivers through fiscal incentives and facilitation of import and export processes. In Brazil, we had the regulatory framework for ZPEs under Law 14.184, which changed the scope of their operation that was previously considered rigid by the market. With the establishment of the zone, we can have a direct connection with our main importer. This would greatly strengthen the Port of Vila do Conde, which connects Pará with the world. It is a strategic location. I understand that there is a desire and a pursuit to always add value to our production. Pará is very rich, but heavily relies on primary exports. A more advantageous future scenario would be the verticalization of products here, selling with added value. However, in the meantime, we have active sectors with commercial agreements. Therefore, we are trying to identify opportunities and attract investments to the state," he says.
De-dollarization of the economy strengthens China in the international scenario
According to professor Mário Tito, a Ph.D. in international relations, Brazil is embarking on a path in international diplomacy that points to a more powerful and influential Asia, a scenario that has already occurred in antiquity. And there is a reason for it: 60% of the world's population is in Asia, with an increasingly large-scale production industry to cater to a massive and diverse consumer market.
"The rise of China in the international scenario is part of the new global dynamics today, and Brazil positions itself as a commercial and public policy partner. At the same time, there is a decline in the importance of the United States, which is deeply indebted. The US is losing significance in the world and investing less in other countries. As a result, we are witnessing a process of de-dollarization of the economy. In this context, there are dual expectations regarding the Amazon: the first is the appreciation for forest preservation and conservation. Besides, there is pressure for Brazil not to cease providing products such as soy and meat, as well as producing energy and minerals. These are two conflicting sides. However, if we are not careful, we will perpetuate the vocation of being an exporter of primary products without generating real benefits for the population, having to import high-value products that we do not produce. It is necessary to regain prominence," he argues.
