Brazilian President Jair Bolsonaro's trip to China this week offers an opportunity to consolidate the two nations' strong economic ties.

China has been the main export market of Brazil for a decade and is its largest source of foreign investment. 

But the South American country has historically had to balance that relationship with the geopolitical concerns of its powerful hemispheric neighbor, the United States.

Nevertheless, in 1993, Brazil was the first nation to establish a strategic partnership with China under Beijing's multidimensional diplomatic structure. That was upgraded to a comprehensive strategic partnership seven years ago, suggesting an even closer relationship.

More recently, Brazil has been a beneficiary of the tariff war between China and the U.S., stepping in to fill gaps in Chinese soybean imports, in particular, caused by a fall in U.S. sales.

In the short term, it would be interested in shoring up this business growth, even if the world's two largest economies should reach an agreement to end their protracted trade dispute, according to Brazilian political risk specialist Thiago de Aragao.

He was among panelists discussing Brazil-China relations on the CGTN current affairs discussion program, The Heat.

Unfavorable global climate

Sourabh Gupta, a senior international relations policy specialist at the Institute for China American studies, told the program that Brazil's benefits from the trade war are sustainable, whatever the outcome of the tariff conflict. 

"It is such a big exporter," he said. "It can have a foothold in the market which it can dominate for a long period of time."

Gilson Schwartz, an economics professor, cautioned, however, that despite the soybean and pork export spurt, the trade volume between Brazil and China has actually been declining in the past year as a result of the unfavorable global economic climate, which is itself partly the result of the conflict.

Brazil enjoys a trade surplus with China, exporting more than 60 billion U.S. dollars worth of goods in 2018 and importing about 35 billion dollars, according to Chinese government figures.

Schwartz, who teaches at the University of Sao Paulo, said Bolsonaro is keen to attract more foreign direct investment from countries like China to drive economic growth, given domestic limits on state spending.

The Brazilian economy has been performing sluggishly with multiple agencies forecasting that any expansion this year will be less than one percent. Schwartz said the country was afflicted with the so-called Dutch disease caused by excessive dependence on the export of commodities.

Economists argue that this phenomenon can lead to an appreciation of the "real" exchange rate: A unit of foreign currency that buys fewer services in the domestic economy than it did previously. 

"This brings the exchange rate to a non-competitive level and Brazil as a big exporter of commodities to China has to face the challenge," Schwartz explained. "Either we change the composition of our trade or we are going to be really prey to the Dutch disease."

Beijing-based current affairs commentator Einar Tangen disagreed with that analysis, suggesting that structural internal problems were the Achilles heel for Brazil.

He said that despite tremendous riches as seen in its export of 50 percent of the world's coffee, Brazil does not add local value to its products and is therefore stuck with trading in commodities.

"Now that's not something that China can change," he argued. "They can provide investment for those people who want to do it but there will be a natural reaction if Chinese companies were earning a lot of money by providing this added value. Brazil has to take on itself this responsibility of developing its resources and adding value to them."

Huawei connection

One possible flashpoint in the future relations between Brazil and China is the role of Huawei, the Chinese telecommunications giant.

Huawei has done business in Brazil for two decades, but it remains to be seen whether the company will be given a prominent role in building the South American nation's 5G network in the face of American objections. Tangen suggested the country is caught in the middle of the two major powers and any decision it makes will cause unhappiness one way or the other.

Apart from trade and business, the two nations have extensive cultural and people-to-people exchanges in areas such as the arts, sports and medicine. Ten Confucius Institutes have been established in Brazil, which has set up a national festival to celebrate every August the arrival of Chinese immigrants to Brazil.

More than 200 years ago, the first tea growers from China traveled to Brazil to plant tea and teach their skills.

Bolsonaro's visit does not end the high-level diplomacy between China and Brazil. A summit of BRICS (Brazil, Russia, China, South Africa) nations is due to be held next month in the Brazilian capital at which leaders of the two nations will have another chance to meet.

The Heat is a daily discussion program on CGTN hosted by Anand Naidoo. It is aired Monday to Saturday at 2300 and 0630 GMT.