Why Brazil And The United States Should Be Bigger, Better Partners

Analysis: As Brazilian President Dilma Rousseff prepares to arrive in Washington to meet President Obama, a closer look at the bilateral relations between these Western Hemisphere powerhouses shows vast potential, much of it unfulfilled.

The two presidents in Brazil last year (Roberto Stuckert Filho)
The two presidents in Brazil last year (Roberto Stuckert Filho)
Montserrat Nicolás

WASHINGTON – How much respect does Brazil get in Washington?

When U.S. President Barack Obama visited his Brazilian counterpart Dilma Rousseff last year, there were plenty of niceties exchanged, but few results achieved. Brazil still doesn't have a permanent place on the United Nations Security Council, and its candidates for the presidency of international organisations repeatedly find themselves cold-shouldered by Washington.

Rousseff's visit to Washington on April 9 won't change anything either. In fact, the United States wants to downgrade the official nature of her visit: "State visits are not organized during election periods," explained the White House, apparently forgetting about British Prime Minister David Cameron's recent reception.

U.S. Secretary of State Hillary Clinton has emphasized that Brazil and the United States are "natural partners' and that they form part of a "new global architecture."

Dan Restrepo, adviser to Obama, has insisted that the two presidents "will progress from conversations to producing concrete results." The Treasury has also spoken of its optimism regarding the meeting between "two powerful economies with shared interests."

Brazil is playing an increasingly important role as a market for U.S. exports (8th most important market globally). But a number of positive gestures from Washington should also be acknowledged: for example, the U.S. has let subsidies on its domestic ethanol production expire, thus opening doors for Brazilian exporters to enter the market.

But despite this positive action from Washington, generosity when it comes to the high-technology industry appears to be another thing entirely. A juicy contract between Embraer and the US Air Force was dropped following "documentation problems during the tendering process." The deal was for 20 Super Tucano airplanes to be sent to Afghanistan, a sale that could have reached the $1.5 billion mark. And yet even before the deal had fallen through, the U.S. Securities and Exchange Commission initiated an investigation into Embraer, the details of which have not come out, but which appears to be linked to the bribery of civil servants in three countries, including Argentina.

In Brasilia, the cynical link the American reversal with the fact that Brazil prefers to buy French Dassault airplanes instead of U.S. Boeing F-18s, a deal worth close to $4 billion.

"We see Brazil as a global player and an important country in Latin American, but Obama has failed to lay the foundations or to understand the importance of Brazil," said Carl Meacham, an advisor on the region to Republican senators.

For Meacham, there is a palpable lack of vision in the current U.S. administration - and repeated wasted opportunities for the U.S. private sector. "We are not present in the Brazilian market," he said.

Power to the BRICS

Alongside the commercial, there are also financial aspects to be considered. Today Brazil is the fourth largest holder of U.S. Treasury bonds with $229 billion. In other words, the South American giant has contributed to the financing of the Northern powerhouse's economic adjustment. All this against the background of what Guido Mantega, president of the Central Bank of Brazil, refers to as "a war of currencies."

Sebastián Brown, economist and emerging market strategist at Barclays, adds that "the currency war is not only relevant for Brazil but also for the main currencies in the region."

In this context, Brazil would be the only country capable of pushing for a new global financial system, including greater leadership in international organizations such as the International Monetary Fund or the World Bank.

The proposals from President Rousseff to the U.S. are gift-wrapped in an attempt to kick-start, as outlined by the Brazilian ambassador Mauro Vieira, "a new stage of the relationship," based on "innovation, science and technology and the joint search for new ways to create investment with an emphasis on knowledge." For example, Rousseff has established 75,000 grants for Brazilians to study at universities in the United States.

Vieira says both Brazil and the United States want real results: "The protocol level of the meeting is not important."

Read more from AméricaEconomía in Spanish.

Photo – Roberto Stuckert Filho

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How China Flipped From Tech Copycat To Tech Leader

Long perceived as a country chasing Western tech, China's business and technological innovations are now influencing the rest of the world. Still lagging on some fronts, the future is now up for grabs.

At the World Semiconductor Conference in Nanjing, China, on June 9

Emmanuel Grasland

BEIJING — China's tech tycoons have fallen out of favor: Jack Ma (Alibaba), Colin Huang (Pinduoduo), Richard Liu (Tencent) and Zhang Yiming (ByteDance) have all been pressured by Beijing to leave their jobs or step back from a public role. Their time may be coming to an end, but the legacy remains exceptional. Under their reign, China has become a veritable window to the global future of technology.

TikTok is the perfect example. Launched in 2016, the video messaging app has been downloaded over two billion times worldwide. It has passed the 100-million active user mark in the United States. Thanks to TikTok's success, ByteDance, its parent company, has reached an exceptional level of influence on the internet.

For a long time, the West viewed China's digital ecosystem as a cheap imitation of Silicon Valley. The European and American media described the giants of the Asian superpower as the "Chinese Google" or "Chinese Amazon." But the tables have turned.

No Western equivalent to WeChat

The Asian superpower has forged cutting-edge business models that do not exist elsewhere. It is impossible to find a Western equivalent to the WeChat super-app (1.2 billion users), which is used for shopping as much as for making a medical appointment or obtaining credit.

The flow of innovation is now changing direction.

The roles have actually reversed: In a recent article, Les Echos describes the California-based social network IRL, as a "WeChat of the Western world."

Grégory Boutté, digital and customer relations director at the multinational luxury group Kering, explains, "The Chinese digital ecosystem is incredibly different, and its speed of evolution is impressive. Above all, the flow of innovation is now changing direction."

This is illustrated by the recent creation of "live shopping" events in France, which are hosted by celebrities and taken from a concept already popular in China.

10,000 new startups per day

There is an explosion of this phenomenon in the digital sphere. Rachel Daydou, Partner & China General Manager of the consulting firm Fabernovel in Shanghai, says, "With Libra, Facebook is trying to create a financial entity based on social media, just as WeChat did with WeChat Pay. Facebook Shop looks suspiciously like WeChat's mini-programs. Amazon Live is inspired by Taobao Live and YouTube Shopping by Douyin, the Chinese equivalent of TikTok."

In China, it is possible to go to fully robotized restaurants or to give a panhandler some change via mobile payment. Your wallet is destined to be obsolete because your phone can read restaurant menus and pay for your meal via a QR Code.

The country uses shared mobile chargers the way Europeans use bicycles, and is already testing electric car battery swap stations to avoid 30 minutes of recharging time.

Michael David, chief omnichannel director at LVMH, says, "The Chinese ecosystem is permanently bubbling with innovation. About 10,000 start-ups are created every day in the country."

China is also the most advanced country in the electric car market. With 370 models at the end of 2020, it had an offering that was almost twice as large as Europe's, according to the International Energy Agency.

Photo of a phone's screen displaying the logo of \u200bChina's super-app WeChat

China's super-app WeChat

Omar Marques/SOPA Images/ZUMA

The whole market runs on tech

Luca de Meo, CEO of French automaker Renault, said in June that China is "ahead of Europe in many areas, whether it's electric cars, connectivity or autonomous driving. You have to be there to know what's going on."

As a market, China is also a source of technological inspiration for Western companies, a world leader in e-commerce, solar, mobile payments, digital currency and facial recognition. It has the largest 5G network, with more than one million antennas up and running, compared to 400,000 in Europe.

Self-driving cars offer an interesting point of divergence between China and the West.

Just take the number of connected devices (1.1 billion), the time spent on mobile (six hours per day) and, above all, the magnitude of data collected to deploy and improve artificial intelligence algorithms faster than in Europe or the United States.

The groundbreaking field of self-driving cars offers an interesting point of divergence between China and the West. Artificial intelligence guru Kai-Fu Lee explains that China believes that we should teach the highway to speak to the car, imagining new services and rethinking cities to avoid cars crossing pedestrians, while the West does not intend to go that far.

Still lagging in some key sectors

There are areas where China is still struggling, such as semiconductors. Despite a production increase of nearly 50% per year, the country produces less than 40% of the chips it consumes, according to official data. This dependence threatens its ambitions in artificial intelligence, telecoms and autonomous vehicles. Chinese manufacturers work with an engraving fineness of 28 nm or more, far from those of Intel, Samsung or TSMC. They are unable to produce processors for high-performance PCs.

China's aerospace industry is also lagging behind the West. There are also no Chinese players among the top 20 life science companies on the stock market and there are doubts surrounding the efficacy of Sinovac and Sinopharm's COVID-19 vaccines. As of 2019, the country files more patents per year than the U.S., but far fewer are converted into marketable products.

Beijing knows its weaknesses and is working to eliminate them. Adopted in March, the nation's 14th five-year plan calls for a 7% annual increase in R&D spending between now and 2025, compared with 12% under the previous plan. Big data aside, that is basic math anyone can understand.
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