The Challenge of Understanding China and Its Future




MORE than four decades have passed since China and Brazil established diplomatic relations in 1974. As the largest developing countries in the northern and southern hemisphere respectively (and as BRICS members), China and Brazil have agreed on many world issues and share similar global responsibilities. Their partnership has deepened significantly in recent years. Brazil was the first developing country to establish a strategic partnership with China. In 2012, a comprehensive strategic partnership was formed between the two nations, and in July 2014, the partnership was further strengthened during Chinese President Xi Jinping’s visit to Brazil. China is now Brazil’s largest trading partner; and economic, cultural and technological exchanges have steadily increased over the last few years.



In July 2016, Marcos Caramuru de Paiva, an experienced Brazilian diplomat and China expert, was appointed ambassador of Brazil to China. Mr. Caramuru started his diplomatic career in 1975, and has worked at the World Bank and has served as Brazilian ambassador to Malaysia and Brazilian consul-general in Shanghai, China. He is optimistic and sees great potential in future Chinese-Brazilian relations. China Today recently interviewed Ambassador Marcos Caramuru de Paiva at the Brazilian Embassy in Beijing to gain his insight into the many issues involved in China-Brazilian relations.


China Today (CT): Throughout your career as a diplomat and consultant with a strong presence in China how have you viewed the evolution of the relationship between Brazilian and Chinese people?


Ambassador Marcos Caramuru (MC): I think that, in a general manner, people are more mature now in relation to their perceptions of China and Brazil. Before, there was only a general idea of China among the Brazilian public: of the country’s importance in the world, of what was going on in commerce and investments, but now it’s possible to notice the development of several points of view, despite there still being some lack of information. In Brazil, the number of think tanks and institutions studying different aspects of China is growing. These include the China-Brazil Business Council (CEBC), the Brazilian Center of International Relations (CEBRI), Getulio Vargas Foundation (FGV) and organizations like the FHC Institute (iFHC) in Sao Paulo, which was founded by the former president Fernando Henrique Cardoso. In China, there are think tanks with a growing interest in Brazil, and in addition, several financial institutions and big companies in Brazil have research institutes with a focus on China.


CT: What is the reason for this growing interest in China?


MC: It is, without a shadow of a doubt, because China’s growth has a great impact on global growth: around 30 to 35 percent. It’s inevitable that the whole world will pay attention to what happens in China. The second thing is that there’s a growing flow of Chinese investments towards Brazil, and many banks have portfolios dedicated to mergers, acquisitions, and financing investments, which necessitates following China closely and monitoring its growth and impact on global growth and on bilateral trade. Still, there are other institutions committed to studying the Chinese and global reality with a long-term perspective.


CT: What is Brazil’s current view on BRICS?


MC: It’s a positive view, of course. BRICS is growing increasingly mature. Member states started with the general idea that emerging countries should have a voice and more meaningful participation in the capital of the main international financial institutions, like the IMF, the World Bank and others. And they got involved in the creation of their own institutions, like the New Development Bank (NDB) based in Shanghai. Now we’re evolving towards making more comprehensive decisions in the field of agriculture and environmental protection; and towards major themes of international life, and the contribution BRICS can make to world peace and security. It’s still in the process of maturing but there have been many meaningful demonstrations of action.


Chinese Ambassador to Brazil Li Jinzhang gives a speech at the inauguration ceremony of two Chinese-funded factories producing solar panels and chassis for electric buses, in Campinas on April 6, 2017.


The NDB is the most important of them at the moment, without a doubt. This year’s BRICS meeting, which is going to take place in China in early September, is greatly anticipated. We’ve held meetings recently with China’s Ministry of Commerce, precisely to discuss how to prepare a more concrete plan of action.


The world is currently paying much more attention to BRICS. This is the result of the maturity of the group, not only in their internal decisions, but also in their positions on global issues.


CT: But the critics of the block usually point out a number of problems. What’s your view on this?


MC: Of course there are problems and issues in the short term. China and India are growing at a much faster rate than the other members, including Brazil. The group was created at a time when all its members were developing quickly. In the case of China, growth rates are lower than they used to be, though they remain very high compared to the average growth rate of other countries. In the case of Brazil, the economy is adjusting itself little by little, and we hope to see some growth in 2017, however small – around 0.5 to 0.7 percent.


CT: The New Development Bank, as you mentioned, is a concrete initiative from BRICS. In addition to this bank, Brazil is also a founding member of the Asian Infrastructure Investment Bank (AIIB). What are the advantages for Brazil in taking part in these initiatives? Are they part of some kind of Brazilian foreign policy strategy for Asia?


MC: In the New Development Bank, Brazil’s interests are more direct because we want not only to take part in the development of the bank, but also to obtain resources from it. The NDB, as it’s known, raises resources from the market in order to relocate them to the partner countries, and we have a direct interest in obtaining funds for infrastructure projects in Brazil.


China’s largest ride-on-demand platform Didi Chuxing partnered with Brazilian company 99 in January, 2017.

In AIIB’s case, our participation has to do with a vision of the future. We see AIIB as the seed of something which will grow and become an institution of global impact, which will be much bigger than it is today. And we see the perspective of a new order emerging. We understand that the AIIB is going to have a much more encompassing future and impact which will be seen in Asia. And that’s why we’re participating in this initiative now.


CT: Towards the end of last year, there was a controversy over the acknowledgement of China as a market economy within the WTO. Some developed countries refused to grant China this status. Does Brazil see any competitive threat in granting China this status?


MC: Brazil doesn’t see it as a threat. This is a very complex discussion because it demands a legal interpretation of the WTO accords. Brazil has been using protectionist measures very responsibly, and we will implement anti-dumping measures when necessary, but always with a sense of responsibility, logic and non-discrimination. We’re in an open discussion with the authorities and organizations in charge of the subject in China. What we’ve seen is that, from December 11, 2016 onwards, there has been a new reality in place, clearly different from the previous one. There’s a discussion of this issue within the WTO, which we’re following closely and awaiting the outcome.


CT: Is this discussion taking place exclusively inside the WTO?


MC: There’s also a very positive discussion within the G20 and in other forums, about the oversupply of several items. I’ve been paying particular attention to the question of steel, which is a good example, but the debate over oversupply goes beyond this. When the international economy and China were growing at very fast rates, enormous investments were made in a numbers of areas. With the downturn of the international economy after the 2008 crisis, the world realized there was an excess of supply in several areas. This is a discussion which has already started within the G20, but it must be explored further, either in G20, or in another forum.


CT: In 2016 Brazil was the third country to receive majority Chinese investments, second only to the U.S. and Switzerland. What new areas can potentially receive Chinese investments in the near future?


MC: First, infrastructure – an area where we have great needs and historically low investment volume. The second area would be agriculture and there are other areas with potential, but I believe that we’re going to see something truly new from the joint ventures which are forming in the financial sector.


One of the meaningful developments which I’ve been following in economic investments between Brazil and China is the number of new joint ventures between Chinese and Brazilian financial institutions. Previously, several Chinese banks established branches in Brazil, such as the Industrial and Commercial Bank of China, the Bank of China, and the China Development Bank. After that, some Chinese banks began acquiring Brazilians ones. For example, China Construction Bank has acquired a big Brazilian bank. Now there’s a new flow of Chinese banks going to Brazil to acquire capital from Brazilian banks and financial institutions, but they’re operating together with Brazilian managers. This is the case, for example, with the Bank of Communications, which purchased Banco da Bahia; FOSUN, a financial institution which has bought Rio Bravo; and Haitong Bank in Shanghai has bought Banco Espírito Santo (a Portuguese bank which is very active in Brazil) and with this, it has indirectly acquired a Brazilian institution.


These joint ventures have been producing something entirely new because they’re financial institutions with Brazilian and Chinese capital, mostly Chinese capital, but Brazilian managers, who know the Brazilian reality very well. The action of these new financial institutions with a Brazilian and a Chinese side will produce a greater integration between Brazil and China.


CT: What kind of support do the Brazilian Embassy and the Ministry of Foreign Affairs offer Brazilians who want to import, export or invest, or who are working in China?


MC: That is part of our daily work. People get in touch with the embassy to find out about suppliers, buyers, taxes and rules. We have a section here which receives questions like this daily.


The second thing is that we’ve been helping many companies participate in fairs and exhibitions in China. There are at least two important fairs in the area of food, agriculture and processed food, which we participate in every year. We’ve also been helping Brazilian companies participate in many other fairs here.


The third point is that we organize visits, in general, led by ministers. The most recent one was at the end of last year, when the Brazilian Minister of Agriculture came to China with an important delegation in the area of food, processed food and commodities. We visited Shenzhen, Guangzhou, Chongqing, Beijing and Shanghai, accompanied by a group of entrepreneurs.


CT: In the area of tourism, is the flow of travelers between Brazil and China increasing?


MC: Tourism is a bit more complicated because the geography doesn’t help. We’re too far from China, which hinders us from attracting a greater flow of Chinese tourists to Brazil. It’s two days to go and two days to come back, and the Chinese don’t have very long vacations. A second point is that, to a great extent, we are best known for tourism on the coast, on the beaches. We’re now becoming aware, little by little, that the Chinese have a particular fondness for forests, for more rural regions. We need to do better.


I believe that, as the average income rises in China, people will have more time to visit different places and will be able to discover Brazil. But it has come to our notice that more and more Chinese tourists are going to Brazil and Argentina or other places in Latin America. Such a long trip only pays off by visiting several countries at once. I don’t believe that we should have short-term expectations. The general idea of Chinese tourists is first visiting Asia, Southeast Asia, than going to Europe and the United States, then finally exploring other places, like South America. We’ll get there.


CT: Throughout the long time you’ve lived in Asia, in China in particular, what have you learned from Chinese culture?


MC: I’ve definitely learned a lot, but not enough. China is a very complex country, and one needs time to get to know the Chinese. Firstly, the business culture in China is different from that of other places, regarding its rapid changes. The Chinese are getting better prepared to understand the external reality.


Another thing I’ve learned is that when Brazilians and Chinese meet in business negotiations, they always end up having a very positive surprise. I frequently hear people say, “I crossed the world with the expectation of seeing something entirely different from my reality here, but I see they are similar to us.” We have more similarities than differences. And people’s spirits are quite alike. Recently, there was a dinner with a Chinese company which had acquired majority stocks in a Brazilian company. Brazilians and Chinese celebrated together like old friends.


There is another point: When we analyze China, we must be able to focus on the future. Almost always, in order to analyze a reality, one looks into the past. In China, you have to try to understand what will come, which is always more complicated than simply understanding the past. The greatest challenge when dealing with China is to understand the future. If you don’t make an effort in this sense, it’s impossible to get good results.


CT: What kind of cultural exchanges do you expect between China and Brazil? Are cultural activities being planned?


MC: We’re preparing plans for this year. Basically, we’re focusing on soccer, which is something which brings us increasingly closer. There’s a growing interest in soccer in China, and this is going to be an important point.


Our second focus is music. Most Chinese listen to our music without knowing that it’s Brazilian; they think they’re listening to jazz or something similar. Promoting Brazilian music is going to be the easiest thing to do because all it takes is to associate what people already know and like about Brazil.


We’re also trying to do something in the area of the arts in general; painting, specifically. Last year, three or four Chinese curators went to Brazil with the goal of discovering the foremost names in contemporary Brazilian art. We’re still working on this project in order to make something meaningful.


Many times, a cultural exchange requires long-term preparation. When there’s money, it’s easy. But Brazil is going through a period of budgetary constraint, which forces us to do things slowly. And we have to improve on what we did in the past.


CT: How many Brazilian students are there in China now?


MC: I believe it is somewhere around 60. This number used to be higher, but due to the budgetary constraints, the student exchange program has been considerably reduced. It’s amazing to see how many young Brazilians are learning Chinese and spending time in China. And I am also amazed at the increase of Portuguese courses in China.


I believe that young people who are learning our languages are convinced that the two countries’ economic interconnection is a long-term proposal, something that will grow. Knowing the other language is going to be a good tool to find jobs in the future. The opportunities will be there for those who master both languages, and this is great.