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Foreign Policy

The Evolution of China’s Relations with Brazil and Venezuela

Feb 28 , 2019
  • Tom Harper

    Doctoral researcher, University of Surrey

One of China’s latest ventures into the developing world has been in Latin America, but the region has also gained notable attention as a result of domestic politics and turmoil. This comes as China has branched away from less geopolitically controversial regions like Africa, and into regions traditionally dominated by the United States and Russia, such as Central Asia and the Middle East through its flagship Belt and Road Initiative. In the case of the latter, Beijing has shown notable flexibility in its dealings with both American allies such as Israel, and more recently Saudi Arabia, as well as hostile states such as Iran.

This flexibility, as well as Beijing’s presentation of its policies as ‘mutually beneficial’, has enabled China to gain a significant foothold in the developing world, and this will likely be the case for South America as well. However, this image of mutual benefit and ‘win-win cooperation’ is also one of the biggest challenges to Chinese policies in Latin America.

The Populist: Sino-Brazilian Relations in the Era of Bolsonaro

As a member of the BRIC nations, Brazil has been one of the entry points for Chinese involvement with Latin America, with Sino-Brazilian relations intensifying over the past decade. Brazil has benefitted from the US-China trade dispute. As China seeks to move its agricultural supply chains to alternative sources in a bid to wean itself off American agricultural produce, Brazil becomes even more strategically important to Beijing.

This carefully cultivated relationship appeared to be threatened by the election of the right-wing president, Jair Bolsonaro. The former army officer appeared to spell trouble for Chinese interests in the country with his rhetoric condemning China for buying up Brazil and promising to shift recognition to Taiwan, Beijing’s diplomatic adversary. However, upon taking power, one of the first foreign dignitaries received by Bolsonaro was Li Jinzhang, the Chinese ambassador to Brazil, and he indicated that Brazil would be open to further Chinese investment. This indicates one of several breaks from his campaign rhetoric, which can be explained by both China’s approach to the region as well as its position as Brazil’s largest trading partner.

One of Bolsonaro’s most powerful supporters in particular, the agricultural lobby, benefits immensely from a trade with China and has little interest in confrontation with Beijing. While his foreign policy has been characterised by its strong, pro-American stance, Brazil’s ties with China have largely been governed by the country’s trade department, and some of Bolsonaro’s ministers, most notably Minister of Agriculture Tereza Cristina, have even advocated a deeper relationship with Beijing. Such a change can be attributed to the importance of China to Brazil’s economy, which Bolsonaro pledged to improve.

In addition, the plans to privatize many of Brazil’s state-owned utilities under the watch of Paulo Guedes can also open more potential avenues for Chinese influence. While American firms are often held up to be the beneficiaries of this policy, it is also possible that their Chinese counterparts will compete for ownership, particularly in the country’s infrastructure, which offers China an opportunity to make further advancements in this field. Should this come to pass, it will mark another break between Bolsonaro’s campaign rhetoric and the policies of his administration.

The case of Brazil tests China’s claims that its policies in Latin America are ‘mutually beneficial’. While much of China’s engagement with Latin America has followed the path of Sino-African relations, most notably in the similar path taken by both Bolsonaro and the late Michael Sata of Zambia, who won the presidency on a wave of anti-Chinese populism before backtracking on it, Brazil has greater leverage in its relationship with China than many of the African states had. With the current trade tensions, Brazil may believe that it is in a position to make greater demands from China, which will likely guide Beijing away from involvement in strategic sectors and push for a more equal partnership.

Who to Deal with? China and the Venezuelan Crisis

A more challenging prospect for China’s involvement is the political instability of Venezuela, which poses a potential threat for Chinese interests in the country. China has been a significant investor in Venezuela and has given Caracas several substantial loans which have indebted the country to Beijing. It is this debt that forms the crux of China’s interests in Venezuela, alongside Beijing’s involvement in the country’s oil sector. Oil sales priced in Renminbi have given rise to discussion regarding the creation of a ‘Petro Yuan’ as a way to challenge the hegemony of the dollar.

While Beijing, alongside Moscow, supports Maduro’s government, its relationship is strictly pragmatic rather than a true alliance. This was reinforced by reports that a Chinese delegation had met with the rival president, Juan Guaido, a claim that Beijing strongly denies. While the veracity of these reports is still uncertain, it is nevertheless indicative of how Beijing’s flexibility in its approach to the developing world has enabled it to adapt to the changing political climates of the region.

The imperative to deal with Beijing has also been voiced by the opposition itself, who claim that they seek to renegotiate Chinese initiatives in the country rather than cancelling them. As with the case of Brazil, this will also require Beijing to establish policies that are truly mutually beneficial for both China and Venezuela. In this sense, whoever prevails in the current crisis will still have to contend with the fact that China has become a central component in the nation’s economic health, and that Beijing is more likely to favor the faction that can most effectively guarantee the security of Chinese economic interests in the country.

Implications

Latin America highlights how China is ultimately a pragmatic actor that seeks to further its economic interests in the developing world, rather than seeking to promote an ideology, as it had done during the Mao era. What has been China’s greatest strength is its flexibility and reluctance to side with a single political faction, which has enabled it to gain a foothold in South America just as in Africa. This has allowed developing states to play the ‘China card’ in their relationship with Washington to reap benefits from balancing between the two powers, which further complicates the current trade tensions. Therefore, to further secure its interests, Beijing has to follow through on its rhetoric to make its relationship one of genuine mutual benefit.

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