Brazil’s left-wing President Luiz Inácio Lula da Silva, known popularly as Lula, took a historic trip to China this April.
There, the two countries deepened their comprehensive strategic partnership, signing 15 agreements involving trade, scientific research, technology, renewable energy, agriculture, meat production, finance, the digital economy, communications, the media, the fight against poverty and hunger, and even the joint development of satellites and space cooperation.
China pledged investments estimated at around $50 billion Brazilian reais. Symbolically, under one of the deals, a Brazilian factory previously run by US automaker Ford will instead by operated by the Chinese electric car manufacturer BYD.
Lula’s meeting with President Xi Jinping in Beijing came just weeks after China and Brazil reached a deal to use their local currencies in bilateral trade, excluding the US dollar.
While visiting China, Lula made it clear that de-dollarization is a top priority for his country.
“Every night I ask myself why all countries have to base their trade on the dollar”, Lula said, according to a report in the Financial Times.
“Why can’t we do trade based on our own currencies?” the Brazilian leader asked. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Many US politicians were outraged by the historic de-dollarization agreement between China and Brazil.
Neoconservative Republican Senator Marco Rubio fumed on Fox News:
Today, Brazil – in our hemisphere, the largest country in the western hemisphere south of us – cut a trade deal with China. They’re going to, from now on, do trade in their own currencies, and get right around the dollar.
They’re creating a secondary economy in the world, totally independent of the United States.
We won’t have to talk sanctions in five years, because there will be so many countries transacting in currencies other than the dollar, that we won’t have the ability to sanction them.
Lula, now in his third term as president, was unfazed by the criticism in Washington.
The Brazilian leftist leader has already publicly pledged to create a new currency for trade in Latin America. He stated clearly that the goal is to weaken the region’s “dependence on the US dollar”.
“Who decided that our currencies were weak, that they didn’t have value in other countries?” Lula asked while in China.
“Why can’t a bank like that of the BRICS have a currency to finance trade relations between Brazil and China, between Brazil and other countries?” he continued. “It’s difficult because we are unaccustomed [to the idea]. Everyone depends on just one currency”.
Lula made these remarks criticizing US dollar hegemony in a speech for the New Development Bank (NDB), the financial institution birthed by the BRICS bloc of Brazil, Russia, India, China, and South Africa.
Lula was one of the creators of the BRICS, back when it was previously just the BRIC. He co-founded the group during his first two terms in office, which ran from the beginning of 2003 to the end of 2010.
The leftist Brazilian president has been an outspoken advocate for a multipolar world.
The NDB was meant as an alternative to the US-dominated World Bank, which is notorious for imposing devastating austerity measures and neoliberal economic reforms on countries in the Global South.
On April 12, Lula flew into Shanghai, where the NDB is located. He was the first foreign head of state to visit the BRICS bank’s headquarters.
There, Lula was greeted by his successor, Brazil’s former President Dilma Rousseff, a fellow member of the left-wing Workers’ Party.
Dilma is now president of the New Development Bank. There, she has pledged to use the institution to fund high-quality “sustainable development” to fight climate change and “promote social inclusion”.
Dilma said the NDB plans to finance “critical and strategic infrastructure projects” like ports, airports, and highways, as well as “more modern models of transportation”, such as high-speed trains, in underdeveloped countries in the Global South.
Lula’s trip to China was his first state visit outside of the Americas in his third term.
The Brazilian president traveled to the United States in February, but only for one day. In contrast, Lula spent four days in China – a symbol of how important their alliance is.
“No one will prohibit Brazil from improving its relationship with China”, Lula said during his trip, in a clear message to the United States.
Lula also visited the research center of China’s tech giant Huawei, which has been unilaterally sanctioned by the US – another message to Washington.
Brazilian’s Minister of Finance Fernando Haddad, who joined Lula in China, explained that their goal is “reindustrializing Brazil in partnership with Chinese capital”.
Reporting on the historic trip, S&P Global Market Intelligence noted (emphasis added):
The 20 new agreements have a broad scope, indicating that the Lula administration is looking to prioritize deepening economic ties with China. Lula’s visit to mainland China, which was postponed due to illness, had been planned to last five days and would have included a delegation of around 200 business representatives, compared with the one day that Lula spent in the United States in February, with no clear agreements reached.
China is Brazil’s largest trading partner
When Lula ended his second term at the end of 2010, he was one of the most popular leaders in world history, with a staggering 87% approval rating.
Lula and his successor Dilma transformed the country. In a speech in China, Lula boasted that their Workers’ Party-led governments helped lift 36 million Brazilians out of extreme poverty, taking Brazil off of the UN Hunger Map for the first time in history.
In 2002, the year before Lula entered office, Brazil’s GDP PPP was $1.72 trillion; when he left, it was $2.8 trillion.
Today, Brazil has the eighth-biggest economy on Earth, when measured with purchasing power parity (PPP). It is even bigger than the economies of France and Britain.
When Lula was previously president, Brazil had become the sixth largest, but following a US-backed political coup, Brazil’s economy suffered from years of right-wing rule and aggressive neoliberal policies that devastated the country and fueled deindustrialization.
China has the world’s largest economy, when measured with purchasing power parity. It is also among the top two most populous countries (India’s population is expected to overtake China’s in 2023).
For its part, Brazil is the most populous country in Latin America, and the seventh-most populous on Earth.
China has been Brazil’s top trading partner since 2009. Commercial exchange between the two giants has skyrocketed in the past two decades.
The Brazilian government boasted that their bilateral trade increased by a staggering 21 times since Lula’s first visit to China in 2004.
In 2022, China and Brazil did US$150.4 billion in trade. From 2021 to 2022 alone, their bilateral trade grew by 10.1%.
What is unique about this relationship is that Brazil has a significant trade surplus with China, exporting roughly $90 billion in 2022 while importing approximately $60 billion.
In fact, Brazil exports three times more to China what it sells to the United States. (Brazil has a trade deficit with the US.)
Brazil is a commodities powerhouse.
The South American nation is the world’s second-biggest exporter of iron ore.
Brazil is also among the top 10 biggest oil producers. As of 2021, it produced more oil even than Iran, representing roughly 4% of global output.
US-backed political coups in 2016 and 2018 damaged Brazil’s economy
Under the rule of the Workers’ Party, Brazil had established itself as the sixth-largest economy on Earth.
But years of US meddling pushed the South American giant into recession and stagnation.
A huge drop in commodities prices in 2014 caused significant economic problems. This crash was intentionally pushed by the United States, which massively expanded its own shale production while pressuring Saudi Arabia to overproduce oil to collapse crude prices on the global market, in an effort to hurt the economies of major oil producers Russia, Iran, and Venezuela.
Dilma governed from 2011 until 2016, when she was overthrown in a political coup backed by the United States, impeached on an absurd budgetary technicality that far-right leader Jair Bolsonaro regularly engaged in.
Lula was subsequently imprisoned in 2018, on fraudulent charges overseen by the corrupt judge Sergio Moro, as part of the lawfare (judicial warfare) campaign known as Lava Jato (Operation Car Wash), which was closely supported by the US Justice Department and State Department.
Brazil’s top court later dropped all charges against Lula. Even the United Nations Human Rights Committee determined that Lula’s civil rights and due process guarantees had been violated.
But the imprisonment of Lula on false pretenses, under Washington’s watch, essentially handed the 2018 election to the fascistic Bolsonaro, who openly praised Brazil’s previous extreme-right, US-backed dictatorship, as well as the fascist junta of Augusto Pinochet in Chile.
Bolsonaro rewarded Moro, the judge who jailed Lula, by appointing him as his “super justice minister”. Bolsonaro and Moro then promptly visited CIA headquarters in Langley, Virginia, to thank the notorious US spy agency.
Under Bolsonaro, Brazil’s foreign policy was totally subordinated to Washington. He eagerly recognized US-appointed coup leader Juan Guaidó as the so-called “interim president” of Venezuela, and even supported cross-border terror attacks on the country’s leftist Chavista government.
Donald Trump’s former CIA director turned secretary of state, Mike Pompeo, admitted that Washington tried to use Bolsonaro and his far-right counterpart in India, Narendra Modi, to divide and destabilize the BRICS system.
The geopolitically motivated 2014 commodities crash, US-backed political coups in 2016 and 2018, and six subsequent years of right-wing rule devastated Brazil’s economy.
Brazil-based journalist Brian Mier also explained to Geopolitical Economy Report that “Lava Jato sabotaged the economy, causing a 2.5% drop in GDP by paralyzing and bankrupting Brazil’s five largest construction and engineering companies”.
He pointed to studies that found that the US-backed Lava Jato lawfare led to the loss of 4.4 million jobs.
“Lula and Dilma had quintupled the foreign reserves, and Brazil was prepared for a commodities bust cycle, so Lava Jato had a bigger effect on the recession than the commodities bust”, Mier said.
All of this led to what was essentially a lost decade. The country is only recovering today.
Lula says the NDB offers “extraordinary hope” to “become the great bank of the Global South”
On April 13, Lula met with New Development Bank officials in Shanghai. The Brazilian government published an official transcript of his remarks.
Lula recalled that the 2008 financial crash was caused by “greed” and risky financial speculation. Today the crises continue, Lula noted, with large banks like Credit Suisse collapsing.
“I think the world has never needed an instrument to help in the world’s development as much as it needs it now”, he said of the NDB.
In light of this instability, the NDB offers “extraordinary hope”, Lula argued.
“We have to be more concerned with serving the countries that are most in need of money”, the Brazilian president said. He argued that their goal should be to “help the neediest and poorest countries”.
“I hope that this bank is able to lend money for the development of the African continent. I hope that this bank is able to have money to lend to the poorest countries in Latin America”, he urged.
While in China, Lula tweeted:
It is a dream of developing countries to have an instrument that invests in their development.
During the 8 years I was in the presidency, I tried to create a Bank in the South, which would allow investment in the necessary things in our region, without submitting to the rules of the IMF.
The BRICS Bank represents a lot for those who dream of a new world.
The dream of creating the BRICS was for an instrument of development, which will certainly be strong, with the goal of benefiting countries. If not, we will never have the poorest countries be able to develop themselves.
It would not be fair if we ended the 21st century as we started the 20th century, with those who were rich getting richer and those who were poor getting poorer.
As Dilma Rousseff was officially sworn in as director of the New Development Bank, Lula delivered another speech.
He said the NDB has potential to “become the great bank of the Global South”, praising it as a “tool for reducing inequalities between rich countries and emerging countries”, which could help prevent “social exclusion, hunger, extreme poverty, and forced migration”.
“Many developing countries are accumulating unpayable debts”, Lula warned
“The unmet financing needs of developing countries were and remain enormous”, he added.
Lula called the NDB a “milestone” in South-South cooperation.
“For the first time, a development bank with global reach was established without the participation of developed countries in its initial phase”, the Brazilian leader said.
The NDB is “free, therefore, from the shackles of conditionalities imposed by traditional institutions on emerging economies. And more: with the possibility of financing projects in local currency”, he continued.
Lula explained, “The creation of this Bank shows that the union of emerging countries is capable of generating relevant social and economic changes for the world. We don’t want to be better than anyone else. We want opportunities to expand our potential and guarantee dignity, citizenship and quality of life to our peoples”.
“The New Development Bank has great transformative potential, as it frees emerging countries from submission to traditional financial institutions, which try to govern us, without having a mandate to do so”, he added.
Lula noted that, in Brazil, the NDB has helped finance infrastructure projects, income support programs, sustainable transportation, climate change adaptation, sanitation services, and renewable energies.
Referring to the former Brazilian president affectionately as “comrade Dilma”, Lula emphasized that her new global leadership role is an important accomplishment for women’s representation.
He also noted Dilma’s revolutionary struggles in the 1970s “to put into practice the dream of a better world”. Dilma had been part of the leftist resistance against Brazil’s US-backed fascist dictatorship, and she was imprisoned and tortured.
Lula explained:
“The time when Brazil was absent from major world decisions is in the past. We are back on the international stage, after an inexplicable absence. We have a lot to contribute to key issues of our time, such as mitigating the climate crisis and fighting hunger and inequality.”
“It is intolerable that, on a planet that produces enough food to meet the needs of all humanity, hundreds of millions of men, women and children have nothing to eat.
It is inadmissible that the irresponsibility and greed of a small minority put the survival of the planet and of all humanity at risk.
Brazil is back. With the willingness to contribute again to the construction of a more developed, fairer and environmentally sustainable world.
In another Brazilian government statement, Lula stated:
We want the Brazil-China relationship to transcend the trade issue; we want to have a deep relationship in science and technology; partnerships between universities to have more Brazilian students in China, and more Chinese students in Brazil.
We count on China in our fight for the preservation of planet earth, defending a healthier climate policy. That is why an energy transition is extremely important, so that we can produce cleaner energy, especially wind, solar, and biomass energy.
Brazil is committed to achieving, by 2030, zero deforestation in the Amazon, and to making our contribution to preserving the planet.
We are convinced that the development of Brazilian agriculture does not need irresponsible deforestation, let alone fires. Brazil can practically double its agricultural production by recovering degraded land, without having to cut down a single tree.
For his part, Chinese President Xi said:
China has a strategic and far-reaching relationship with Brazil, which has a place of priority in our foreign relations. You are our longtime friend.
The Brazil-China relationship, in healthy and stable development, will play an important role for peace, stability, and mutual development, for both countries and the world.
ZNetwork is funded solely through the generosity of its readers.
Donate