Brazil needs to develop a strategic vision in order to cooperate with China in a new era, said Marcos Troyjo, a Brazilian economist and co-director of the BRICLab at Columbia University, in a recent exclusive interview with Xinhua.
According to Troyjo, the way China's economy progressed over past 30 years following the country's reform and opening-up policies is called "China 1.0."
During that period of time, China took advantage of public-private partnership, cheap workforce and a favorable approach to foreign capital to become the largest manufacturing park in the world.
According to Troyjo, China has now entered a new stage, which he calls "China 2.0," and it should no longer rely on governmental investment and foreign trade to simulate its economic development.
For Brazil, Troyjo said, cooperation with "China 1.0" helped meet the country's demand for capital and infrastructure and increase the exports of Brazilian comparative advantages like agriculture and mineral resources.
China is now Brazil's largest trade partner in the world and also its largest exporting and importing markets. Trade volume between the two countries surpassed $90 billion last year and the figure is expected to increase this year. Brazil also enjoyed a trade surplus of $8.7 billion last year.
In his opinion, China's new economic model dubbed "China 2.0" is less about exports and governmental investment and more about strengthening its domestic market, expanding its imports, reducing its overproduction and focusing on the production of high value-added goods.
Some Brazilians are worried that "'China 2.0' will close the door of opportunities for exports of agricultural and mineral commodities to China from countries like Brazil," said Troyjo.
However, Troyjo believed "China 2.0" will continue offering an excellent pathway for Brazil to get the necessary resources it needs in order to lead a sound development.
"Because on the one hand, as income grows in China, there is going to be more consumption for food-related goods, which will impact positively on the demand of Brazilian food products," he said.
"It's also true that the infrastructure in China has expanded dramatically but there are still a lot to do. One of the ways China has tried to minimize the global crisis is to create the demand for bigger infrastructure projects. This is going to continue. Therefore there is a very big window of opportunities for the exports of mineral products," he went on to say.
According to Troyjo, Brazil should have done more to help strengthen the bilateral trade with China.
"It's up to Brazil. Brazil has to do the homework. Brazil has to use the bilateral trade with China, especially the surplus it has, to undertake the necessary domestic reforms to become more competitive and attractive to China."
Troyjo said that BRICS countries like Brazil and China should be diverted to tech-intensive sectors, where the future of the global economy lies.
"Throughout 'China 1.0', one of the central competitive factors was cheap labor, but right now China is building competitive advantages not based on cheap labor but on knowledge and technique. I believe China is fully aware of the importance of this process," he said.
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