Brazil’s relationship with China and some of the trade agreements recently signed for Chinese companies to invest in the South American nation have set off alarm bells in industrial sectors, warning of unfair competition that harms the local market.
In mid-April, Brazilian President Luiz Inácio Lula da Silva traveled to Beijing in an effort to help revitalize Brazil’s ailing industrial sector, signing several agreements worth some $10 billion, the Associated Press reported. Yet months after signing those agreements, which details have not been revealed, Brazilians are beginning to experience the “predatory dynamics of the Chinese economy,” Argentine news site Infobae reported.
“Today, China is Brazil’s first trading partner, so it is looking for a certain degree of greater openness from Brazil’s economy toward China and as such mutual,” Juan Battaleme, professor of International Relations at the University of Buenos Aires, Argentina, told Diálogo on August 7.
According to Infobae, the communist regime’s economic system encourages Chinese companies to invest abroad in order to gain new markets, natural resources, and technological know-how.
Brazil, Infobae reported, is beginning to realize this with the textile sector, where the dynamics that are emerging are those that in other countries, such as in Italy for example, destroyed a large part of the local production 20 years ago.
Days after Lula’s meeting with Chinese President Xi Jinping, Brazilian Minister of Economy Fernando Haddad announced the commitment of Chinese e-commerce giant Shein to “nationalize” 85 percent of its Brazil sales with products manufactured locally, Reuters reported.
The $750 million announced investment, however, does not seem so advantageous for the locals. For example, among the Brazilian companies committed to Shein is the textile company Coteminas, which has a headquarter in Blumenau, Santa Catarina state, and already laid off 700 workers.
For Carlos Alexandre Maske of the Blumenau Textile Workers Union, there are clear inconsistencies. “It’s a contradiction, because Blumenau announced a partnership with Shein while penalizing its workers,” he told Infobae.
U.S. news site Político reported that Shein was recently in the crosshairs of the U.S. House of Representatives Select Committee on China for the alleged use of slave labor in the production of garments in the Xinjiang region, the same region where Chinese authorities carry out their campaign of repression against Uyghur Muslims.
Maske, according to Infobae, expressed concern that the Chinese industry would be favored to the detriment of domestic industry. Fernando Pimentel, president of the Brazilian Textile Industry Association, warned of fiscal stress and profound competitive problems, Infobae reported.
The Brazilian government reported that its objective is to relaunch relations with its main trading partner since 2009. In 2022, China imported more than $89 billion in Brazilian products, especially soybeans and minerals, and exported almost $60 billion in diverse products to the Brazilian market.
“The reason for signing these agreements is because Brazil is the gateway for many Chinese products for the automotive industry, such as software and chips,” Battaleme said.
The agreements signed cover sectors such as space, research and innovation, digital economy, exchange of communication content, and trade facilitation, state news agency Agência Brasil reported.
According to Battaleme, when the market begins to open up to China, producers who compete directly against that country will realize that Chinese industries use very different labor and market access logics to those of Brazilian businessmen. “The biggest tensions will then arise in that same environment.”
For example, Chinese company BYD announced that it will build in Brazil its first electric vehicle center outside Asia. The plant will operate in 2024 in the state of Bahia to expand in Latin America, Bloomberg reported on July 4.
The initiative will include production of hybrid and electric cars, a unit focused on chassis for electric buses and trucks, and another to process lithium and iron phosphate for the international market.
BYD has been in Brazil since 2015, when it opened an electric bus chassis factory in Sao Paulo. Later, it began producing photovoltaic modules in the same region, and lithium iron phosphate batteries in the state of Amazonas.
“The productivity capacity that China has is not the same that Brazil has. China today is a great defender of the free market because it can compete much more efficiently than many Latin American economies,” Battaleme said. “We must consider the danger that this implies in the loss of jobs in our region, in addition to filling us with low quality products.”
Meanwhile, human rights activists and union leaders urged the U.S. government to ban products made by Uighur Muslims with forced labor in China’s Xinjiang region, because slavery and forced labor taint the supply chains of Chinese companies, The New York Times reported on August 8.