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Premier Li's visit to Brazil will transform bilateral ties

(People's Daily Online)    13:37, May 15, 2015

Chinese Premier Li Keqiang, who has earned the reputation of "super salesman", will pay an official visit to Brazil on May 18, 2015. In a recent interview with Chinese media, the Brazilian President Dilma Rousseff announced her "wish list" for this important visit, covering trade, investment, scientific and financial cooperation, and the Asian Infrastructure Investment Bank.

Undoubtedly, the Chinese Premier's visit comes at the right time for the Brazilian Government, which is suffering from the pressures of economic recession. China places great emphasis on cooperation between international capacity and the equipment manufacturing industry. Brazil urgently needs to increase investment and realize industrial upgrading. Therefore, matching supply and demand between China and Brazil will be the main focus of this important visit.

A new supply and demand relationship needs to be built between China and Brazil in the area of trade. As a result of the moderation of China's economic growth and falling international commodity prices, Sino-Brazilian trade in 2014 decreased by 7 percent. It was only the second fall in bilateral trade since 1999 (the first was 3 percent in 2012).

In the first four months of 2015, bilateral trade decreased by 19 percent, which included a reduction in exports from Brazil to China of 32 percent. Therefore, the Sino-Brazilian trade relationship which has focused on commodities in the last decade faces major challenges.

During the visit of Li Keqiang to Brazil, the two countries are expected to sign agreements to lift the ban on export of Brazilian beef to China. Nevertheless, bilateral trade cannot recover in the short term, and Brazil may continue to experience a deficit in its trade with China. With regard to increasing the types of products exported to China, Brazil presented some proposals such as increasing coffee exports, boosting the processing and exporting of agricultural products, and enhancing commercial services. Even so, Brazil still needs more time to implement these policies and approach the market. In view of the current situation, Brazil is not yet ready to reach free trade agreement with China, as the Brazilian President Dilma Rousseff acknowledged in the interview.

In contrast, a relatively optimistic situation presents itself with regard to Sino-Brazilian cooperation over investment. Firstly, the Brazilian economy has a perennial problem of low investment. The demand for foreign investment continues to grow in Brazil, especially with the shrinking international liquidity in recent years. Secondly, China's strategy of taking its production capacity and equipment abroad provides opportunities for Sino-Brazilian cooperation. Thirdly, the Sino-Latin America cooperation system covers six areas: energy, infrastructure, agriculture, manufacturing, science and technology, and information technology.

President Dilma Rousseff, on behalf of Brazil, welcomes China's participation in the construction of Brazil's High-speed rail. According to predictions in the Brazilian press, during the visit, China and Brazil may sign 60 investment agreements, worth about 53 billion US dollars.

Currently, Sino-Brazilian relations are in a period of transformation and upgrading. Transformation focuses on economy and trade, while upgrading focuses on multilateral cooperation. Premier Li Keqiang's visit will be crucial for the future development of bilateral relations. On one hand, it will establish a "new engine" for Sino-Brazilian trade relations. On the other hand, it will strengthen financial cooperation in multilateral areas and enrich the cooperation of global governance.

The article is edited and translated from《社科院专家:李克强访问巴西将促进两国关系转型与升级》 source: People's Daily Online, author: Zhou Zhiwei

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