SIDE EFFECT ON THE GLOBAL ECONOMY

Let us return to July 6, 2018, the beginning of a trade war between the two largest economies in the world. On one side, the United States, and on the other, China—bringing more harm than benefits to themselves and their trade partners. Two years later, in early 2020, they signed an agreement aimed at ending this dispute.

This moment invites reflection. Normality seemed close for the international market when, suddenly, we were faced with a new and even more delicate situation—perhaps one of the most turbulent in recent centuries—sweeping across the world like a tidal wave of uncertainty.

Moreover, the consequences appear immeasurable and will take a long time to repair.

As obscure as media scenarios may seem, there is still an opportunity to better prepare for the opportunities that will arise in the post-pandemic period.

At this moment, the global economy appears weakened, especially its largest powers, which have been directly impacted.

Recently, the United States became the new epicenter of the global pandemic, while China—after announcing the gradual reopening of its economy and preparing to meet both domestic demand and growing international demand (especially for medical equipment)—now faces the possibility of a second wave of COVID-19 following new cases in Hubei.

We must not forget that the global economy is on life support and will likely remain so for a considerable period.

What lessons can we draw, particularly in economic terms? Many countries were unprepared to meet their own domestic needs. Several nations, especially developed ones, chose to outsource production and significantly reduce their industrial base. This led to internal market collapses, as seen in Italy, Spain, and even the United States, forcing them to rely on the Chinese market to supply essential goods.

In this context, it is not surprising that some companies may seek economic advantages by strengthening certain sectors through the acquisition of foreign companies. Situations like this have already been reported in the United States, where President Trump opposed the sale of certain aircraft components to China, arguing that approval would depend on whether such exports would not strengthen a serious competitor to Boeing or increase China’s military capacity.

Recently, several similar initiatives have been reported worldwide: the European Union is imposing restrictions on the acquisition of companies by Chinese investors, and Japan is offering incentives for domestic production to return to the country.

Given this scenario, looking at the Brazilian market, one might ask: considering the current pandemic, what is the limit of state intervention in the negotiation of the purchase and sale of Brazilian companies by foreign investors?

The answer is certainly not simple and depends on many circumstances and variables.

Objectively, it can be said that private autonomy exists and must be respected. If the State intervenes, it is recommended that public order prevails through regulations that represent the common good.

In principle, the State has the duty to preserve economic development and growth, protect weaker economic actors, and modernize government structures. That is what is expected.

Arthur Martinho – International Vice President of IBREI

Rafael Bernardi – Director of Government Relations at IBREI