Paul Liu

Watershed - How can Brazil and China increase bilateral commerce in the next years?

Paul Liu - Brazil has been growing quite significantly in the last years. That is due to some factors. Firstly, because China entered the World Trade Organization, it became more accessible and went on to have access to countries, which before it did not have.  Up to 2001, Brazil and China had bilateral commerce of US$ 2 billion. This number grew in such a way that we reached about US$ 25 billion last year and this year can reach US$ 30 billion. It is a significant growth, but still very small for the size of the economy and foreign trade of China. Of course, as Brazil exports 75% concentrated in five commodities, it is not easy to amplify these numbers from one moment to another. The profile of imports from China and the rest of the world changes rapidly. It ranges from primary products to industrialized and today technology products; equipment machines are taking the lead. Who knows what we will manage to expand in other sectors.
 
WS - What opportunities for business do Brazilians still not take advantage of in the Chinese market?
 
PL - Brazil is not present like Americans, Europeans and Asians. Chinese fairs have an insignificant participation from Brazilians. Recently, APEX (Brazilian Agency for the Promotion of Exports and Investments) adopted another posture, goes to China to take part in some fairs. It is already the sign of an improvement. But Brazil is very immediatist. We know that in the Chinese government all work is founded on medium and long term projects. Take soybeans as an example. In 2001, we did not sell soybeans to China. Last year of the US$ 3.8 billion of agribusiness we exported, US$ 3. 2 billion was soybean and derivates. China became aware that it is more advantageous to continue buying from Brazil than keep producing. Brazil has opportunities to export sugar, cotton, corn, meat and processed fruit. I think that the Brazilian businessman should speak up and look forward. Another area where Brazil does not take advantage is that of granite and stones. Brazilian producers could be present in China, promoting and selling to companies from there. If you analyze various sectors, there is space to enter. The Chinese footwear industry went to Rio Grande do Sul and they complained that China had put an end to the gaucho producers. Today this sector was “invaded” by Brazilians. The largest Chinese footwear exporter is Brazilian, with more than 35 million pairs. When the businessman was “eliminated” by Chinese competition, he went to get to know their market. Today, it has hundreds of factories making models which he created himself. I think that Brazilian companies do not have the expertise to get out and conquer markets.

WS - China is investing heavily in Africa. Is it a short term strategy in the search for resources or a strategy which could eventually generate regional growth? 

PL - It is a medium to long-term strategy of the government to maintain Chinese economic growth. When it started this process in 2005, by chance I was there. China invited 45 African heads of state and in the first meeting, President Hu Jintao gave an amnesty of  US$ 5 billion in debts. On the other hand, he negotiated bilateral agreements to get raw material and develop agricultural projects. Many ask me why this strategy does not take place in Brazil. China wants to do that. The problem is that Brazil does not want it, does not open up. Today, it wants to export, but not to buy, much less bring labor and products from the outside. In Angola and Mozambique, China is practically doing the entire infrastructure, and against it, what each country can offer. Nigeria has no petroleum exploration capacity; China goes there, explores for petroleum and exchanges it for other product, that is intelligent. I am rooting that Brazil may be more flexible. If we are incapable of investing in infrastructure, we are going to negotiate with China. One of the complaints is that the Chinese promised, but did not place their investments. However, it is not their fault. When you put up a project to attract investment, you need a start, middle and end. There are two or three large Chinese projects here. Gasduct, in Rio de Janeiro, Thermoelectric in Rio Grande do Sul and some private sector projects. It is the start of a process, which is breaking the paradigm that you cannot enter Brazil, but there is still much to do.

WS - The relationship between China and India, in political terms, was never so good. India is also standing out as a great power. What is the strategic importance of  India for China?

PL - India has been growing in the last few years. Its economy also has a strong growth potential. However it has some overall difficulties. For example, the people are attached to a very strong religion, and that inhibits growth in some areas. There are very differentiated castes in the population. China has that too, but due to regime implanted 30 years ago, not for a millenary history, which is easier to resolve. There was never a more interesting moment for India and China. I believed that the young would choose to study in the USA or Europe, like in the 60`s and 70`s. What surprised me is that the second countries chosen by the Chinese is India, due to its strong education in the areas of technology and medicine. I think that the two countries will maintain this cooperation for a long time. Just like India, China is doing an interesting thing, which is partnership with countries that were enemies during the Cold War. Korea and Japan never had a better relationship with China than now. The most classical example is the relationship between China and Taiwan. Almost a million businessmen set up in China and now, with easing of their tension, this more intensive relationship is going to generate highly positive results for Taiwan.

WS - Environmental questions in China are the reason for great world preoccupation. Is the country really decided to resolve them?

PL - The Chinese government is quite cautious in relation to this matter, given its importance. It is clear that when you have a great concentration in a small area, there is no way of resolving the problem of environmental pollution from one hour to the other. But I ask, if Brazil with 180 million people still has 50, 60% of its sewerage to be taken care of, imagine a country with 7,8 times more population. It is complicated to manage that. The present government is the third post economic reform. The first government was concerned with creating the structure, the second in maintaining development. But with this hunger, its wants to fill stomachs first and after that see what it will do ahead. The country could not survive in the 60`s and 70`s and clearly is paying a high price because of the depredation of forests, the destruction of the environment. Today the Chinese government is quite aware of it, you cannot approve polluting projects. China has a serious problem which is it energy matrix. It is not hydroelectric, it is coal thermoelectric, and it is not possible to substitute this matrix overnight. 

WS - The opening Olympic ceremony enchanted the world. Can this moment of admiration for the Chinese be reverted for the benefit of the country’s business abroad?

PL - We need to be aware that China is not a democratic country, it is a strong government. The present opening is politico-economic opening, but not foreseen in the full political form. And it could not even be so, if one day that is done quickly, China will stop growing. China is going towards a market economy, but with a socialist government. Rather, one of the big differences I see with the 50`s when communism was implanted, the bourgeois was enemy number one of communism. Today, there is a very strong bourgeois in the Party to keep the business wing and continue growing.  What China showed in the Olympic opening ceremony is that it is capable of being a new country and relate to the whole world in a harmonious form. The Chinese have a very strong sense of shame, because they spent almost 50 years in wars, invasions, occupations, hunger and social struggles. No one wants to look at this sad past; everyone wants to look forward, since this is a moment China never had: 30 years of prosperity. In the next 20 years, it will not stop growing, and this reflects a lot in the people. There are seeking economic partnerships to continue growing. For this there is a stron sentiment of pride stamped on the face of the Chinese. There is a continuity, a long term programming: 30 years ago, no matter who was in charge, China did not change course, it made adjustments. 

WS - One of the most fascinating aspects of the Chinese culture is its language. Mandarin courses are in great demand in Brazil. Is that a passing wave caused by the Olympics or has this come to stay?

PL - We have followed this work in some institutions, which started to give Mandarin lessons here in Brazil. We take part in the preparation of training projects and the increase in the number of schools. It is not just fascinating, it is necessary. You will not manage to increase the volume of business with another country if you do not speak its language. English is universal, but it is not yet everything. In the Olympics, everyone has to speak English, but does not. In Beijing, if you do not know how to speak English, you will have a problem every day. Maybe one place where you will not have too many problems is Shenzhen, which is international, everyone studies English. Before the reform, China had more than 100 dialects, communication between one region and another was impossible. After 30 years of implantation of Mandarin as the official language, that got a lot better. But there is still a very strong regionalism. It has a good side which is to keep local customs. Can a foreigner manage to learn Mandarin? I would say yes, it is not so impossible. Of course, it is not as easy to learn as English, French Portuguese which are very similar. The secret to learning Mandarin is first to be in the surroundings. Only practicing a language when you are in the country, otherwise it is very difficult. I had this experience. When I returned to China, after many years, my Chinese was not that spoken there - it had become a regional dialect, which only the old from that generation spoke. I had to relearn how to speak Mandarin and the first thing I did was to train the ear. Then I began to speak with a certain facility. What bothers is not understanding the audition. On the day you begin to get used to the sound, you start to like it. The second step is to learn to speak Mandarin more intensively. 


Interiew by Marcos Guedes Pereira