Brazil's president has arrived with geopolitical ambitions

Lula arrived in China on Monday for a six-day state visit focusing on trade with the booming Asian economic giant.

He is also hoping to strengthen the G20 group of developing nations born at the World Trade Organization's Cancun conference in September 2003.

Brazil and China are prominent members of the alliance, which aims to wrest the WTO agenda from wealthy nations.

Lula's entourage includes eight ministers and more than 300 business people.

Steel and soy beans

Before leaving home, the Brazilian president said he viewed the visit to China as an important one for his presidency.

In a televised speech, he said Brazil "cannot and will not lose this opportunity" as stepping up exports to China's huge market was "one of the most secure ways to increase our domestic growth".

Following talks with President Hu, Lula will travel to Shanghai, the country's main commercial centre, where he will attend a World Bank-backed conference on poverty reduction.

Poverty reduction is one of the declared aims of the G20 bloc, which has since expanded to 22 developing nations.

Trade between Brazil and China has grown four-fold in just four years from $1.54bn (�859m) in 1999 to $6.68bn in 2003.

Most of the growth has come from expansion in Brazil's exports to China, whose fast growing economy is swallowing Brazilian iron ore for steel production to fuel its rapid industrialisation, as well as farm goods, especially soy beans.

Brazil's exports to China were worth $4.5bn in 2003, figures from the south American country's Ministry of Development and Foreign Trade show.

Soy beans made up roughly 30% of exports, and iron ore more than 10%.

Important partner

Brazil's economy shrank in 2003, so its left-wing, populist president is keen to find fresh sources of growth.

China is also benefiting from trade growth through construction contracts for a multi-billion dollar revamp of Brazil's clogged ports and railways, and China's Baosteel group is building a $1.5bn steel mill in Brazil's Maranhao province.

A new railway linking Brazil to the Pacific to speed up shipping times to Asia is also under discussion.

Some Brazilian firms - notably plane-maker Embraer and bus firm Marcopolo - either have factories in China or are considering opening them. Labour costs there are one-third of Brazilian rates, Marcopolo chief executive Jose Rubens de la Rosa told the Financial Times.

During his visit, Lula will formally open the Beijing offices of Brazilian oil firm Petrobas.

Diversification

Brazil's Trade Minister Luis Fernando Furlan has said, "We don't just want to sell basic goods to China." Instead, he sees a market among China's middle-class consumers for more sophisticated finished items.

But there is one cloud on the horizon. China's leaders are trying to cool down growth rates that - at 9.1% in 2003 - they fear may be too rapid to be sustainable. Success could mean cutting imports of basic commodities, leading to falling demand and price cuts.