China Overtakes the US in Trade With Brazil

Wednesday, May 13, 2009
Hu Jintao and Lula

In the midst of the U.S. economic downturn, China has surpassed the United States as Brazil’s biggest trading partner, a role the U.S. has played for the last 70-80 years. In April, the sum of China’s trade with Brazil reached $3.2 billion, exceeding the $2.8 million in trade with the U.S. by a significant margin. Brazil primarily imports industrialized products from China, such as parts for making telephones and LCD screens, as well as cheap textiles and shoes, and exports products such as soy (33%), iron ore (25%) and petroleum (10%). Miguel Jorge, Brazilian Minister of Development, Industry and Trade, predicts that China will continue to surpass the U.S. in its trade with Brazil through the end of 2009 at the very least, and acknowledged that the weakened economic state of the U.S. made this more likely. Brazil’s overall trade has been hit by the crisis as well, experiencing a drop of almost 20%, as compared to its performance in the first four months of 2008.

 
In a move to further cement the displacement of U.S. influence in the region, Brazilian President Lula Inácio Lula da Silvaannounced at April’s G20 Summit the possibility of discontinuing the use of dollars as the medium of exchange between Brazil and China, and instead using each country’s local currency. This proposal was made in a meeting between Lula and Chinese Premier Hu Jintao, and follows statements by Brazil’s Minister of the Economy, Guido Mantega, who identified a problem with the use of the dollar stemming from “unbalanced capital flows, with the result that all the capital is leaving emerging countries and going to advanced countries.” These developments fall in line with the declared intentions of China, Brazil and the other emerging economies to command a larger role in the international financial system.
-Amira Elmallah
 
China (AllGov)
Brazil (AllGov)

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