The development sees China looking to diversify its dependence of soybeans from the U.S. to Brazil.
On Monday, as per a senior Chinese diplomat, Brazilian and Chinese companies could potentially form joint ventures for the processing of soy. The development aims to boost Brazil’s export potential of processed soy to its top buyer of raw soybeans.
Although Chinese firms overwhelmingly process soybeans in their domestic plants rather than buy soymeal directly from Brazil, however Chinese companies will opt for whichever route gives them the best profits, said Qu Yuhui, minister-counselor in charge of political affairs at the Chinese embassy in Brasilia.
“If a Chinese and Brazilian company together found a joint venture in Brazil to process soybeans, that is a good choice for both side’s profits,” said Qu Yuhui while adding that the potential partnership could ease the financial burden of Brazilian logistics.
He went on to add, currently there are no ongoing discussions for China to provide Brazil a soymeal quota which attracts low import taxes.
In 2017, Chinese investment in Brazil jumped to its seven-year high stoking debate over bilateral relations ahead of the Brazilian presidential election in October. The purchase of mining operations and land by Chinese companies have drawn strong criticism from Brazilian right-wing candidate Jair Bolsonaro, who is leading the race.
“China isn’t buying in Brazil, it is buying Brazil. This is a big problem that we should be worried about,” said Bolsonaro at a recent television interview.
The surge in bilateral trade between the two countries has not been without friction.
China had imposed anti-dumping measures on Brazilian chicken in June 2018; it is also weighing a hike in import tariffs on Brazilian exports of sweeteners.
“I am relatively optimistic that this problem should be able to get an appropriate solution in a relatively short period of time,” said Qu Yuhui in reference to Brazil’s exports of sugar. He also expressed similar sentiment regarding the country’s chicken trade.