In China, the government banks are shuffling millions intonew affordable housing projects. In Brazil, government banks like Caixa Economica Federal and Banco do Brasil fund the My Home, My Life project to help do away with favelas and illegal, faulty home construction in poorer neighborhoods throughout Brazil.

In China, the government uses its big four government banks to control the economy and credit environment. In Brazil, Caixa and Banco do Brasil work as counterweights to the private banks like Bradesco (BBD) and Itau Unibanco (ITUB), often forcing them to adapt to stimulus policies that later turn out to kick them where it hurts.  For example, recent changes to auto loan terms by the big government banks to shorter term payments led to a rise in sub-prime auto lending at Itau because, bank insiders tell me, their credit models were not updated properly, or fast enough, to calculate credit risks with the new loan maturities.

Moreover, Brazil’s behemoth National Social and Economic Development Bank, known by its acronym BNDES, has a larger lending portfolio than the World Bank. In Latin America, BNDES makes the Inter-American Development Bank look like a local savings and loan. BNDES drives all of Brazil’s big project development and in that case is a lot like China’s government banks that are used for massive fixed asset investing.

The Chinese government has been using reserve requirement ratios as a monetary policy tool to help control credit. Brazil has been doing the same.  China controls its currency’s exchange rate with the dollar, and while Brazil’s currency, the real, is subject to market forces, it is becoming less transparent. The Brazilian real, long considered a commodity backed currency, does not tightly correlate with commodities these days. It is now underperforming comodities.  And that is in large part because Finance Minister Guido Mantega has utilized various fiscal policies and macroprudential measures to weaken the currency from a strong point of R$1.65 in late February, to R$2.05 on Tuesday. Those policy impacts don’t last long, but they are an attempt at getting the exchange rate where Mantega would like to see it, which is around R$1.90.

At a recent Latin American CEO summit held at the glitzy New York Palace Hotel, Brazilian executives and investment managers shared their concern that the government of Dilma Rousseff, now in office for a year and a half, is more “developmentalista” than the pragmatic capitalist and former pres. Luiz Inacio Lula da Silva.

The development mindset in Brazil has taken its lumps.  It was in high gear in the so-called miracle years of the military dictatorship, when the government spent billions funding and usually running massive fixed asset investment projects like hydroelectric dams and roads cutting through parts of the Amazon. It’s back with Rousseff.

“Rousseff is more like party rival Jose Serra than she is like Lula,” said Carlos Constantini, head of global strategy and research at Itau BBA, Brazil’s biggest investment bank. “Everyone is concerned that the government has too much weight in the economy.”

Jose Serra of the Social Democrats lost to Rousseff in 2010 in his second failed attempt at unseating the Workers Party.

Brazil’s economy has stagnated over the last two quarters, with growth under 1% despite interest rates at historic lows. Something has to get it moving if the private sector cannot. So late Monday, the government announced more stimulus measures.  The latest measures are primarily for the important auto industry, which employes around 210,000 people in Brazil. Highlights of the measures include a reduction in the industrial production tax to as low as 3%, effective until Aug. 31. The government did the same thing in the crisis years of 2008-09, when Brazilian auto sales beat records month after month. The financial operation tax for consumer credit, auto loans included, was cut to 1.5% from 2.5%.

The government also announced interest rate cuts at BNDES for capital goods purchases, with extended maturities.

These measures are a repeat of the successful stimulus in 2009 that managed to revive the economy from a two quarter recession. This time around, however, markets will be more skeptical. The key reason, as Tony Volpon, managing director of Nomura Securities and head of their Latin America fixed income strategy team has argued, lies in the Brazilian consumer who is now much more constrained by debt service; the interest they are paying on their loans. According to the Central Bank, the household debt service ratio stood at 22% as of February, much higher than the 18% level in summer 2008.

“On the margin, we see the Brazilian consumer much less likely to keep on taking loans for further consumption,” Volpon said.

The same holds for China. Lower reserve requirements allows banks to lend more money, but companies and consumers are not looking for loans. Then again, money is much cheaper in China than it is in Brazil.

Rousseff is not horsing around. She’s not going to watch Brazil’s economy contract, a return to the boom and bust cycles of the past. And, like Beijing, she’s giving out her marching orders.

Ahead of International Labor Day on May 1, Dilma, as she is better known locally, said in a televised message that she didn’t want to be known as a president who is just concerned with economic development; she is also concerned about personal development. She outlined the government’s role in that, including a focus on improving the country’s public health care system, improving education from pre-school to college and building a society where Brazilians can see the fruits of their labor. That means working and reaping work’s rewards, which means material rewards. Brazilian incomes are already on the rise. Inflation is coming down from over 7% last year to around 5.5% now. What’s keeping spend-thrift Brazilians from buying and investing more? Interest rates, Dilma says.

“Part of this fight is to get interest rates down. The Brazilian economy doesn’t need interest rates this high anymore — not for companies, and not for consumers either. Our firm position within the government is for banks and financial companies to lower their interest margins. It is unacceptable that we have one of the strongest banking sectors in the world and they charge such high interest rates,” Dilma said about the spread between the rates at which banks borrow money from one another and the rates at which they lend to customers, always in the double digits. Brazil’s benchmark Selic rate is 9% and expected to fall to 8.5% in the next month, according to Barclays Capital’s forecast.

For Dilma, and like Lula before her, the banking system has failed to explain why these spreads are so high. Banks in Brazil are learning to live in a more stable inflation environment, which wasn’t the case for generations. Getting comfortable with that is taking some time, but just as the banks get comfortable with inflation, along comes a year like 2010 and 2011 with out of control inflation. Banks are asking the government to be patient.

Caixa and Banco do Brasil have no time to be patient. They do what Dilma says and have been lowering their banking spreads. For some lenders, Caixa and Banco do Brasil can happily have the sub-primers out there. That will clean up the books at places like Itau. But as Caixa and Banco do Brasil offer more attractive rates, the big private lenders will have to fall in line on some products.

Dilma sent out her warning, smiling before the cameras in late April. “I hope that the private banks follow Caixa’s example. Consumers will go to the banks that offer them the best conditions,” she said. The private lenders understood.

Late Monday night, banks pledged to reduce interest rates and extend maturities for auto loans again. In exchange, they’ll get a reserve rate cut by the Central Bank, expected to free up about R$18 billion ($9 billion).

Of course, China and Brazil have lots of differences. China is a top-down economy, with everything managed from Beijing. It is less individualistic. Brazil is also a top-down economy too, but provides more room for entrepreneurs and is more open than China.

Around half of Brazil’s major companies came out of the government, from airplane manufacturer Embraer (EBR) to mining company Vale (VALE). What makes Brazil similar to China is that — since the fall of Lehman Brothers and the slow death of the old 1990s Washington Consensus model — emerging nations have been loathe to look to the U.S. as a finance model. There are many things Brazil does that are strictly Brazilian. There are some things Brazil does that are much like the American way. But increasingly, in the crisis years, Brazil has turned to Beijing as a model and now feel comfortable in their skin.

If the U.S. model means “government is bad”, and the China model means “government is good”, Brazil has taken the side of China.