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Story Publication logo February 26, 2020

How Bolsonaro’s Risky Bet on China in the Amazon Could Backfire

Image by Heriberto Araújo. Brazil, 2019.

As the world's largest consumer of soy, China's hunger drives Brazil's sales. How the Amazon fits...

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China is Brazil's largest trade partner, buying much of its beef and soy. Bolsonaro has leaned into this partnership — but with potentially risky downsides. Image by Heriberto Araújo. Brazil, 2019.
China is Brazil's largest trade partner, buying much of its beef and soy. Bolsonaro has leaned into this partnership — but with potentially risky downsides. Image by Heriberto Araújo. Brazil, 2019.

The cowboys and prospectors of the Amazon couldn't be any happier. One year into his tenure, Brazilian President Jair Bolsonaro is delivering on his campaign promise to reinforce, at whatever the cost, Brazil's status as an agricultural colossus. In 2019, Brazil recorded its second highest ever soy production numbers and exported more than 50 percent more soybeans than the United States. Beef sales jumped 15 percent to reach an all-time high, including over $7 billion sold overseas.

China, the country's largest trade partner, has driven this meat and grain boom, buying $31 billion worth of its food commodities last year. The partnership seems to work well: Brazil has the land, and China the demand. But Bolsonaro might want to think twice about this relationship.

Before his election, Bolsonaro had run on an anti-China platform. "The Chinese are not buying in Brazil," he warned during the campaign. "They are buying [up] Brazil."

Since then, his posture has radically changed. Last October, he visited Beijing and declared that Brazil and China "were born to walk together." His powerful minister of agriculture, Tereza Cristina, has even established a special China department to cater to Brazil's largest customer.

This hasn't turned off his supporters — for now. On China, "when he is wrong, he recognizes it and changes course. He isn't ashamed of this," Agamenon da Silva Menezes told us when we stopped by his office. The cattleman and representative of one of the most vocal ranching associations in the Amazon had supported Bolsonaro in the election.

For Bolsonaro, economic prosperity trumps environmental preservation. Agriculture and deforestation are the main drivers of emissions in the country, and logging the Amazon's trees for timber, then converting that cleared land to expand the boundaries of soy fields and cattle pastures in order to sell more to China has become, in Bolsonaro's mind, part of the country's manifest destiny.

He has mostly ignored the global outcry to save the Amazon, which is critical to fighting climate change due to its ability to store massive amounts of carbon emissions. He has also cut the budget of the government's environmental protection agency, hamstringing its ability to police the jungle, and sent the army in to finish paving the more than 800 miles of a highway bisecting the region, meant to facilitate the transport of grain to China through the Amazon basin. Deforestation rates in the Amazon reached a 10-year high in 2019 and jumped a staggering 183 percent between December 2018 and December 2019.

Meanwhile, China — a signatory to the Paris agreement on climate change — has kept quiet over its contribution to the crisis. When it comes to Brazil, Beijing has put its food security priorities ahead of its environmental commitments and chosen to do business with no questions asked.

Yet Bolsonaro's bet on China may backfire. Meat prices in Brazil have skyrocketed domestically, fueling inflation. That's a worrisome trend in a country where churrasco (barbecue) is almost a religion and where inflation sparked massive demonstrations in 2013 that threatened to derail then-President Dilma Rousseff's bid for a second term. Experts and officials agree that the rising cost of beef at home is a direct consequence of record beef sales to China, where a devastating swine flu that has halved its pig population has led many Chinese to buy more beef as a replacement protein.

This hasn't just come at the expense of Brazilian consumers. In some cases, it has even come at the cost of Brazilian sellers. Powerful Chinese state-owned enterprises recently bullied Brazilian exporters, renegotiating contracts at the last minute and pushing them to sell meat at a loss.

Now, Bolsonaro's ambitious trade plans with China might face further jeopardy. Brazil had benefited from the trade war between the United States and China, stepping in to sell more soy and beef to the Asian superpower as U.S. farmers got cut out. But the boom times may be over, with the new trade deal essentially a purchase agreement with a pledge from Beijing to buy $36 billion worth of agricultural products from the United States this year, much of it soy, and $43 billion the next.

In order to honor its commitment, China has no choice but to pivot back to the United States. As a result, Bolsonaro's staunchest supporters — farmers — may face a soy surplus this season, just when the harvest is forecast to reach an all-time high. In January, Brazil's soy exports dropped more than 26 percent from the same period last year.

The coronavirus also looks set to severely hit China's domestic growth and, in turn, demand for Brazilian food commodities. With many workers still under quarantine and on unpaid leave across the country, appetite for expensive, imported beef will — and already has — start to wane.

Bolsonaro now faces a dilemma. He can take a step back from the vagaries of Chinese demand and do what his admirers claim he's good at: learning from his mistakes and changing course. He can work on preserving the Amazon; environmentalists say it is possible to develop the region sustainably. Or, he can double down on his partnership with China — and put Brazil's, and the world's, future prosperity at risk.



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Environment and Climate Change

Environment and Climate Change
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Food Security

Food Security

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