China increased leadership in Brazilian import source in 2020

RIO DE JANEIRO, BRAZIL – The main origin of Brazilian imports since 2019, China has continued to advance in Brazilian foreign trade in 2020. According to a survey released by the National Confederation of Industry (CNI), the Asian country accounted for 21.9% of Brazilian foreign purchases last year, with technology products leading the advance.

Over the past 15 years, China has evolved considerably in foreign trade. In 2006, the country supplied 8.6% of Brazilian imports. Traditionally the main supplier of products to Brazil, the European Union saw its share drop from 20.3% in 2006 to 19.1% last year.

In the same period, the United States maintained a relatively stable share in Brazilian imports, with a slight increase from 15.7% to 17.6%, retaining the 3rd position. The main loser in the origin of Brazilian imports was South America. From 2nd place in 2006, responsible for 17.6% of Brazil’s foreign purchases, the continent dropped to 4th place, with 11.4% in 2020.

Industry

In addition to increasing its exports to Brazil, China also began to sell increasingly sophisticated products, distancing itself from the image of an exporter of low-complexity industrialized goods. By analyzing 15 industry sectors, the survey found that China’s imports grew in 11, maintained their level in 3, and fell in only one sector.

Among the sectors in China with the largest advance between 2006 and 2020 are: machinery and equipment (from 10% to 23%); chemical products (from 10% to 29%); and electrical materials (from 24% to 50%). Even segments in which the Asian country had little tradition gained significant market shares: vehicles and automobiles (from 2% to 11%); and fine chemicals (from 1% to 14%).

Concurrently, the Brazilian industry began to buy less from other regions and countries. Of the 15 sectors surveyed, 11 started importing less from the European Union and Japan, and 13 began to buy less from South America and the United States.

Proposals

For the CNI’s National Integration Policies Manager, Fabrizio Sardelli Panzini, the growth of trade with China has resulted in a harmful dependence for the most developed sectors of the Brazilian economy. With 75% of exports to the Asian country concentrated in soy, iron ore and oil, and importing increasingly complex goods, Brazil has been experiencing a deterioration in the quality of foreign trade.

“For several years we have been waiting for the diversification of trade with China, but it is not coming. The most room to expand trade with China is in agribusiness, with more meat exports and some market gain,” he says.

The CNI manager advocates the swift approval and implementation of the trade agreement between MERCOSUR and the European Union so that Brazilian industry will regain space in exports. Unlike China, Brazil has a more balanced trade with European countries, exporting both basic and industrialized products. The agreement has potential gains because it provides for a faster drop in tariffs and trade barriers for MERCOSUR products in the European market than for European products here.

“The European Union is a traditionally important partner for Brazil, with complementary trade and high industry share on both sides. When the European Union loses market, Brazil loses trade quality. There are many European companies investing here and exporting to Europe. With China, there is no counterpart in the growth of exports of Brazilian industrialized goods,” explains Panzini.

Latin America

According to Panzini, the signing of the EU-MERCOSUR agreement is also important to reestablish trade in Latin America. He points out that Brazil has trade agreements with several Latin American countries, but exchanges within the continent are declining with the growth of trade with China.

“More and more, Latin American countries are selling commodities (primary goods) to Asian country and less among themselves. The continent has become economically re-primarized, hence the need to enable European investments here, with improvements in the business environment, so that Brazil can export to Latin America,” he says.

The CNI manager also recommends internal Brazilian improvements, with the approval of economic reforms, particularly tax reforms, which would reduce the “Brazil cost” and align taxes with those of the Organization for Economic Cooperation and Development (OECD) countries. “If Brazil does its homework, it will improve competitiveness and take even greater advantage of the gains from the agreement with the European Union,” he adds.

Source: Agência Brasil