Bolsonaro meets Xi

. Oct 25, 2019
President Jair Bolsonaro meets with Chinese leader Xi Jinping Bolsonaro at the Great Wall of China. Photo: Isac Nóbrega/PR

This newsletter is for PREMIUM subscribers only. Become one now!

Good morning! We’re covering Jair Bolsonaro’s meeting with Chinese leader Xi Jinping. The financial recovery of mining giant Vale. And the suspense of the Supreme Court’s “trial of the year.” (This newsletter is for platinum subscribers only. Become one now!)

Bolsonaro meets Xi

President Jair Bolsonaro meets with Chinese leader Xi Jinping today in a much-anticipated encounter after

some diplomatic bumps between the two countries. Greeted with grandeur, Mr. Bolsonaro has changed his tune when it comes to the Asian power. At a forum in Beijing, he said: &#8220;[China and Brazil] were born to walk together. I now shake President Xi’s hand as a sign that our governments are completely aligned, in a way that reaches beyond our commercial and business relationship.&#8221;</p> <p><strong>Why it matters.</strong> The Brazilian economy has never been so dependent on China. It is Brazil&#8217;s main partner (both for imports and exports) and is a leader in foreign investments.</p> <p><strong>Visa exemptions.</strong> Mr. Bolsonaro announced future visa exemptions for Chinese tourists as a strategy to boost tourism. Per the <a href="">China Tourism Academy</a>, Chinese tourists made 149 million trips overseas in 2018—spending roughly USD 130 billion. Brazil has finally seen that China is the future of global tourism, with its 1.3 billion population and a rising middle-class eager to discover the world.</p> <p><strong>Yes, but …</strong> While the potential upside of the move is clear, experts warn that it will take more than visa exemptions to lure groups of Chinese tourists. French companies, for instance, invest in hiring Mandarin-speaking staff members to deal with this high-spending clientele.</p> <p><strong>Deals.</strong> China is set to sign sanitary protocols to clear Brazilian crushed cotton and processed meat. Negotiations on other products, like soybean crush or fruit exports, are ongoing. Agriculture Minister Tereza Cristina wasn&#8217;t disappointed, though, praising the fact that she now has a &#8220;direct line&#8221; with her Chinese counterparts.</p> <p><strong>5G.</strong> Mr. Bolsonaro has been coy about Chinese telecom giant Huawei&#8217;s participation in the upcoming auction of 5G frequencies in Brazil (scheduled for early 2020), saying the issue &#8220;wasn&#8217;t on his radar.&#8221; The U.S. accuses Huawei of providing confidential data to Beijing, something that remains unproven. In May, VP Hamilton Mourão said Brazil had no intention of blackballing Huawei.</p> <hr class="wp-block-separator"/> <h2>Nine months after Brumadinho, Vale profits again</h2> <p>Mining giant Vale has posted BRL 6.5 billion in Q3 2019 net profits—up 13.7 percent from last year. The result comes only nine months after the Brumadinho dam collapse—when a tailings reservoir spilled over 12 million cubic meters of sludge, killing 251 people and <a href="">severely damaging the nearby ecosystem</a>.</p> <p><strong>Why it matters.</strong> Brumadinho was Vale&#8217;s second major environmental disaster since 2015, when <a href="">another dam owned by one of its subsidiaries also collapsed</a>. And it seems that for the second time, the company will recover just fine—despite the trail of death and destruction it has left in its wake.</p> <p><strong>Still a &#8220;buy&#8221;. </strong>Reporter Natalia Scalzaretto anticipated Vale&#8217;s good results, saying that markets continue to see Vale as a good investment. The company has recovered its financial results and has been clever to dodge serious criminal responsibility.</p> <p><strong>Importance. </strong>Vale is the third-largest mining company in the world, as well as the largest producer of iron ore, meaning that global supply is linked to the company’s struggles. As a result of the supply cut, benchmark iron ore prices traded in China reached 5-year highs. Even after a slow down, the Dalian Commodity Exchange contract for January has still gained 24 percent this year.&nbsp;</p> <div class="flourish-embed" data-src="visualisation/821152"></div><script src=""></script> <hr class="wp-block-separator"/> <h2>Trial of the year suspended. Again.</h2> <p>The Supreme Court&#8217;s trial on whether convicted felons can begin serving their jail sentences before exhausting all appeal routes is taking another break—and will only be resumed on November 6. So far, the score is 4-3 in favor of keeping the current understanding, that prison sentences can be carried out after a single failed appeal. But that majority is unlikely to hold.</p> <p><strong>Why it matters.</strong> Among the prisoners who could benefit from this decision is former President Lula, who—despite being ineligible for office due to his multiple convictions—could shake up the political scene, finally giving President Jair Bolsonaro a rival at his level of bravado and ability to galvanize supporters.</p> <p><strong>What will happen?</strong> Barring a major surprise, the vote should be a 5-5 split to be decided by Chief Justice Dias Toffoli. In 2016, he voted in favor of the provisional execution of jail sentences but said that &#8220;the responsibility of the chief justice position&#8221; could change his understanding of the law. Experts see two likely outcomes:</p> <ul><li>The Chief Justice joins the five justices who believe that the presumption of innocence persists until all appeal routes are exhausted;</li><li>He proposes a third solution, saying that prisons may be enforced after two appeal trials are lost (instead of just one). This would then require the support of five other justices in order to form a majority in the 11-member court.</li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <p><strong>Petrobras. </strong>Boosted by soaring oil production in deepwater reserves, Petrobras improved its financial and operational results in Q3 2019. Net profits were at BRL 9.1 billion (up 37 percent from one year ago). The company also reduced its net debt and continues to alter its debt profile—extending payment deadlines and reducing interest rates. On the other hand, Petrobras announced losses with legal contingencies (BRL 2.9 billion) and accounting write-offs (BRL 2.4 billion). Only four years ago, Petrobras was the world&#8217;s most indebted oil company.</p> <p><strong>Energy.</strong> <a href="">Leonam Guimarães</a>, CEO of Eletronuclear (Brazil&#8217;s state-owned nuclear power firm), told <em>Reuters</em> that work on the long-delayed Angra 3 plant will be resumed soon, by way of a partnership with either EDF (France), CNNC (China), or Rosatom (Russia). The plant will cost the partner around USD 3.7 billion and should produce energy no sooner than in 2026. Angra 3 was first planned in the 1980s, but construction was dropped for financial reasons. Works resumed in 2010 but were suspended in 2015 due to a graft scandal—70 percent of the site has been finished, and 80 percent of the nuclear reactor equipment purchased.</p> <p><strong>Protests.</strong> Following <a href="">recent protests in Chile</a> (which have killed at least 18), President Jair Bolsonaro told his Defense minister to keep Brazil&#8217;s Armed Forces prepared to &#8220;maintain law and order in the case of need.&#8221; Mr. Bolsonaro said he wouldn&#8217;t allow any social unrest like Brazil experienced in 2013 when hundreds of protests broke out nationwide (with some of them being violent). Ironically, many political analysts say that Mr. Bolsonaro&#8217;s election was only possible due to the popular rage sparked in 2013.</p> <p><strong>Private data.</strong> The state government of São Paulo failed to protect the personal data&nbsp; (including tax information and scanned documents) of 28,000 people who applied for a cultural subsidies program. The episode is yet another example of <a href="">Brazilian authorities&#8217; inability to handle sensitive data</a>—less than a year before the country&#8217;s new Data Protection Law comes into effect.</p> <p><strong>Plastic surgery. </strong>Brazil has seen 83,655 plastic surgery procedures performed on 13-to-18-year-olds, more than any other country in the world. Most of these patients are female and opt for nose jobs and/or breast implants. Medical anthropologist Alvaro Jardim writes that while plastic surgeries are risky, <a href="">many patients think that not doing them is <em>riskier</em></a>. &#8220;Beauty is perceived as being so central for the job market, so crucial for finding a spouse and so essential for any chances at upward mobility that many can’t say no to these surgeries.&#8221;

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at