The Siren’s Song: A Study of the Economic Relationship between Brazil and China

18 Pages Posted: 29 Apr 2012

See all articles by Jorge Arbache

Jorge Arbache

University of Brasilia - Department of Economics

Date Written: August 1, 2011

Abstract

Economic co-operation between Brazil and China has grown rather fast over recent years, boosted by China’s demand for Brazilian commodities as well as Brazil’s demand for consumer, capital and intermediate goods from China. As a result, the latter has become the most important trade partner and also the most important source of foreign direct investment in Brazil. The development of the partnership between Brazil and China suggests that this is a symbiotic relationship. For China, Brazil may help to ensure the supply of commodities it needs to grow and to maintain its political stability. For Brazil, the partnership with China helps to boost exports, increase investments and provide the country with manufactured and other goods at a low price. This article makes the point that the partnership with China is not unlike the Siren’s Song as in Homer’s Odyssey: it is seductive and irresistible, but offers risks that cannot be ignored. This is the case because the bilateral economic relationship, as it stands at the present time, is increasingly asymmetric and is beneficial to Brazil in the short term, but encourages a growing dependence of the Brazilian economy on the Chinese economy in the long term. This paper argues that, to be beneficial and long-lasting, the economic relationship between Brazil and China requires a less pragmatic view and a more strategic approach on the part of Brazil, as well as the development of an agenda for collaboration with broader aims based on the principle of mutual benefit. The article proposes an economic agenda for collaboration between the two countries.

Keywords: Brazil, China

JEL Classification: O11, O23, F32, F43

Suggested Citation

Arbache, Jorge, The Siren’s Song: A Study of the Economic Relationship between Brazil and China (August 1, 2011). Available at SSRN: https://ssrn.com/abstract=2047126 or http://dx.doi.org/10.2139/ssrn.2047126

Jorge Arbache (Contact Author)

University of Brasilia - Department of Economics ( email )

Campus Universitário Darcy Ribeiro
Asa Norte
Brasília, Distrito Federal 70910-900
Brazil
+ 55 61 8194 4529 (Phone)

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