The Chinese Model, an Example

International trade, an activity that began in time immemorial, is of fundamental importance to all countries because no nation produces everything it needs, which obliges them to seek more and more partners. There are many examples of countries that made significant leaps in development by strengthening their business ties with the outside world, including Germany and Japan, which were the first nations to focus on rebuilding their economies after World War II (1939-1945). Not to mention the United States, which, with its victory, became the great commercial beneficiary.

This example was later copied by other countries, including China, which, although it still presents itself as governed by a communist regime, opted for a state capitalism that, starting in 2000, transformed the country into the world’s largest supplier of industrial products. This phenomenon practically forced most major multinational companies to establish units in that country, attracted by more favorable labor conditions and less burdensome tax burdens, which do not leave room for competition with European and American products.

In this way, China not only revolutionized production but also eliminated all the bureaucracy in international trade operations, putting an end to paperwork, stamps, seals, colorful ribbons, seals, and other embellishments that adorned Chinese products. Chinese banks also modernized, allowing business flows to gain speed and security. For all these reasons, it seems to us that today the Chinese model is the most efficient, which means that it should be copied in many of its aspects. But unfortunately, the current Brazilian government still seems seduced by the American model, which, in the Trump administration, is driven more by empty words than by actions.

In any case, it is essential for Brazilian foreign trade to move away from the uncomfortable dependence on the export of agricultural products, increasing the list of manufactured goods, especially at this moment when the real is trading well below what would be normal, creating a unique opportunity to place our products abroad. Moreover, in the short term, it seems that the real will return to its previous level, as the conditions that put it in this condition are clearly speculative.

In addition, the astronomical spending by the US government on the coronavirus (COVID-19) pandemic will certainly create room for the real’s value to be restored against the dollar. Fortunately, today the Central Bank has good management that will undoubtedly know how to seize this opportunity.

Furthermore, it should be noted that no country will emerge unscathed from this pandemic. Just look at Japan, which is already feeling the effects of this situation with a recession comparable to the post-World War II period, with a contraction of -3.4% in the quarter, while in the United States, a decline of up to -7% is already predicted. Therefore, the post-pandemic scenario will be truly quite cloudy, but its extent will depend on each government’s ability to get the recovery measures right (or not).

In our specific sector, the Port of Santos has not yet been affected by the crisis, mainly because China resumed activities after the peak of the pandemic, but the trend is that it will show the effects of COVID-19 in some cargo flows in the coming months. That’s why, among entrepreneurs and workers, unity takes on a greater significance from now on, as integration at this moment is of fundamental importance since the exchange of experiences is what is fueling all of us in this arduous task of staying commercially alive and upright.

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Milton Lourenço (1953-2020) was the founder of the Fiorde Group, consisting of the companies Fiorde Logística Internacional, FTA Transportes e Armazéns Gerais, and Barter Comércio Exterior (trading company). Email: fiorde@fiorde.com.br. Website: www.fiorde.com.br.

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