Brazil: It’s Better to Sell 20 or 30% of Something to China than 100% of Nothing
Today, China is the destination for 27% of Brazilian exports, the US accounts for 12% only.
As a matter of fact, China is Brazil’s biggest trading partner now and the largest source of foreign investment. Last year, bilateral trade rose to a record $100 billion.
Brazil and China, the members of BRICS – group of major emerging economies – Russia, India, and South Africa, have said BRICS countries must strengthen their unity, increase cooperation and uphold multilateralism.
Politician plans of China are willing to increase its imports of agricultural and industrial goods from Brazil in order to enhance bilateral trade
The world political circumstances play in favour of Brazil
As China and the United States – the world’s top two economies – battle over trade, Beijing has increasingly turned to invest in Brazil.
And with China now entangled in an escalating trade war with Washington, Beijing has even more incentive to move closer to Brazil and its other partners in the BRICS group of emerging economies – Russia, India, and South Africa.
Castro Neves says he regrets the lack of a broader Brazilian strategy to benefit from this massive influx of capital.
“Unlike the other great partner we have, the US, China effectively needs Brazil,” Roberto Jaguaribe, head of Brazil’s Trade and Investment Promotion Agency.
According to Jaguaribe, however, China isn’t, nor will be, a predictable and self-sufficient partner: “It will have great demands on three fundamental sectors: energy, food and minerals. Those are three sectors Brazil is highly qualified to serve.”
What Brazilian commodities are experts’ predictions
A light of government failure to stimulate powerful economic growth in the last four years, experts hope Brazil can seize the multiple opportunities the Chinese market presents.
Today, Brazil exports mainly three products to China: soybeans, iron ore and oil. Together they account for more than 80% of exports. Experts say Brazil needs to diversify and demand from China’s growing middle class will bring opportunities.
China ´s market also demands Brazilian commodities like sugar, cotton and ethanol, soy and cotton meal.
“We have to create strategies for each sector so we can reach the shelves,” said Jaguaribe, adding that Brazil needs to better understand the Chinese market. Coffee and China’s newfound interest in football also present opportunities, he said. Brazilian investors should look to China despite the misconception that this might mean exporting jobs.
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