Nearshore Americas

BRIC to BRIC: Brazil President Rousseff Heads to China to Strengthen Ties

Source: AFP

BRASILIA — President Dilma Rousseff was set to leave Friday for China in her first major foreign trip as president, aiming to improve ties with a country that is Brazil’s top trading partner but also its main rival in Latin America.

Less than a month after US President Barack Obama’s visit to Brazil, Rousseff will meet China’s President Hu Jintao in Beijing and participate in a summit meeting of the large emerging economies called the BRICS — Brazil, Russia, India, China and South Africa.

“China plays a very important role… we will aim for a qualitative leap in our relations,” said Maria Edileuza Reis of the Brazilian Foreign Ministry.

China has in recent years become Brazil’s largest trading partner, overtaking the United States, and in 2010 was the largest investor in the South American nation, pumping in some $30 billion.

For China, Brazil is an importance source of raw materials — oil, iron ore and soybeans account for 80 percent of Chinese imports and 90 percent of its investments in the largest Latin American economy.

The visit suggests that Rousseff “has an international agenda that favors its main economic partners, without regard to political ideology of the previous government” of Luiz Inacio Lula da Silva, said Joao Augusto de Castro Neves, analyst at the political consultancy CAC.

“Brazil has a lot to gain from its relationship with China,” Castro Neves told AFP, saying that Brazi’s trade surplus with China “is more than $5 billion based on bilateral trade of $56 billion.”

At the same time, Brazil is finding itself in competition with China for manufactured goods, especially in Latin America where Brazil has been a major force.

The foreign ministry’s Reis said that Brazil wants changes in the trade relationship. “We want to include more high value-added products in its trade with China,” she said.

One problem for Brazil now is the surging value of its currency, the real, which makes its exports more expensive against items priced in dollars and especially with a Chinese currency that many say is undervalued.

Foreign investors have poured money into the booming Latin American giant in recent years, helping the real achieve 4.6 percent growth against the dollar in 2010 and a stunning 32.7 percent in 2009.

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Rousseff will be accompanied by some 300 business leaders including some from key firms like aircraft maker Embraer which wants to expand in China.

The business community does not expect any immediate changes in policy but hopes for “an opening of the Chinese market to Brazilian products including foods like beef products which now face barriers,” said Joao Augusto Fernandes, executive director of Brazil’s National Confederation of Industry.

The visit comes a year after China’s Hu and then-president Lula launched a strategic action plan to boost ties between the two major emerging economies.


Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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