Lula Criticizes the Hegemony of the Dollar During Visit to China

The president of the New Development Bank (NDB), Dilma Rousseff, received the president of the Republic of Brazil Luiz Inácio Lula da Silva for the inauguration ceremony at the head of the bank. This was the first activity on the official agenda of the president during his state visit to China.

Lula and Rousseff held a closed-door meeting with directors of the financial institution before starting the ceremony. First to speak, Rousseff, who was one of the founders of the BRICS bank, talked about the need to expand the institution’s capacity.

“It is fundamental to expand the bank’s reach and impact. On the one hand, we have expanded the number of member countries, strengthening our cooperation platform. On the other hand, we are financing key development projects. From sanitation to social and digital infrastructure,” Rousseff said.

The New Development Bank was established in 2014 at the sixth BRICS conference in Fortaleza and has an authorized initial capital of USD 100 billion (about 490 billion Brazilian reals).

In October 2022, the bank announced that it will lend USD 30 billion to support the overall growth and sustainable development projects of the countries it finances over a five-year period.

40% of these loans are set to go to climate change mitigation and adaptation projects. Other important areas are clean energy, transportation infrastructure, urban development, water resource management and sanitation, and social and digital infrastructure. About 30% of the loans will be made in the currencies of the bloc’s member countries.

President Lula gave a 15-minute speech in which he said that the “New Development Bank meets all the conditions to become the great bank of the Global South.” “For the first time, a development bank of global scope is established without the participation of developed countries in its initial phase. Free, therefore, from the shackles of conditionalities imposed by traditional institutions on emerging economies. And more: with the possibility of financing projects in local currency.”

After reading the speech, Lula took off his glasses and addressed the audience for another 15 minutes, this time without a script. The president said that the bank arose from the dialogue he had with the presidents of Russia, China, India, and South Africa prior to the G7 meetings, to which the presidents of emerging economies were invited.

In this context, Lula was cheered when he criticized the hegemony of the dollar in the world economy and the role of international financial institutions commanded by the Global North.

“A development bank has to have more functions, not just one. Every night I ask myself, why are all countries obliged to make their trade backed by the dollar? Why can’t we trade in our own currency?” said Lula. “A president cannot govern with a knife in his neck,” he defended, in reference to the conditionalities imposed by institutions like the International Monetary Fund (IMF).

The expectations on the State visit

Lula brought to China an important delegation with 19 federal deputies, seven senators – including the president of the Senate, Rodrigo Pacheco – five governors and seven ministers, including Fernando Haddad, Minister of Finance, Marina Silva, Minister of Environment, and Paulo Teixeira, Minister of Agrarian Development and Family Agriculture. The delegation also includes representatives from trade union centrals and the Landless Rural Workers’ Movement (MST).

One of the members of the committee was federal deputy Jandira Feghali of the Communist Party of Brazil (PCdoB), who, in a conversation with Brasil de Fato, stated that the trip is fundamental for the country’s reindustrialization objectives.

“Brazil needs to generate a national development project, Brazil needs to add value to its industrialization, it needs to generate employment. So, Brazil cannot avoid a great negotiation and construction of agreements with a country like China, which is leading the way in innovation, science, and technology,” said the congresswoman.

After the meeting at the headquarters of the New Development Bank, Lula and part of his delegation headed to Huawei’s innovation center in Shanghai. Among those present was the governor of Bahia, Jerônimo Rodrigues of the Workers’ Party of Brazil (PT), who has been in China since the end of March, when the state visit was canceled due to the president’s mild pneumonia.

Last week, the governor signed a Memorandum of Understanding with the company to expand agreements between the state and the technological giant in areas ranging from education to public safety.

Lula also met with executives from BYD, the electric car manufacturer that surpassed Tesla in sales last year, and with China Communications Construction Company (CCCC), a Chinese state-owned infrastructure giant.

On Friday April 14, Lula and his ministerial team will meet with the president of the state-owned energy company State Grid, Zhang Zhigang, one of the companies likely to be part of the major agreements to be signed.

The agenda continues with a meeting with the chairman of the National People’s Assembly of China, Zhao Leji, at the Great Hall of the People, and a flower laying ceremony at the Monument to the Heroes of the People in Tiananmen Square, the square of Heavenly Peace.

In the afternoon, before the expected meeting with his counterpart Xi Jinping, Lula will meet with representatives of the All China Federation of Trade Unions and China’s Prime Minister Li Qiang.

This piece was first published in Portuguese at Brasil de Fato.