China is Brazil’s New Best Friend

By Clara Cavour, Contributing Reporter

RIO DE JANEIRO – Brazil has a new best friend. For the first time, China has surpassed United States as Brazil’s biggest trading partner, a role the Americans have played for the last 80 years. In April, the Ministry of Development, Industry and Trade reported the sum of China’s trade with Brazil reached US$3.2 billion, while the trade between Brazil and U.S. stayed at US$2.8 billion.

Moreover, president Luiz Inácio Lula da Silva met the colleague Hu Jintao in Beijing last week to discuss investments from Asia giant in the major economy of South America. Expectations are that China will expand investments in Brazil from 2008, when China recorded US$38.4 million, only the 42nd largest of Brazil’s investors.

The message Lula left to Hu Jintao was that Brazil is a big field to invest since the government is implementing the Accelerating Development Program (PAC). The Brazilian president came back home with at least US$15 billion in agreements signed. The partnership involves a loan of US$10 billion to Petrobras, US$800 million to BNDES (Development National Bank) and US$4 billion with the Eike Batista group, a major business tycoon in Brazil.

The leaders emphasized the importance of both countries as emerging economies, with a big potential to overcome the international financial crisis. They discussed the possibility of abandoning the use of dollar as currency used in bilateral trading, but didn’t reach an agreement. The Finance ministers of both countries will meet to continue discussions on this topic.

“Emerging countries are helping to write one of the most important chapters in the history of the 21st Century. There are signs of a new, more complex and interesting reality taking shape”, said Lula in an official report about the trip. He called of ‘success’ the Sino-Brazilian relations, offering as example the China-Brazil Earth Resources Satellite (CBERS) Program, launched in 1988 and expanded in this with the announcement of two more satellites to be launched in 2010 and 2013.

Brazil primarily imports industrialized products from China, such as electronics, as well as low cost textiles and shoes, and exports products such as soy (33%), iron ore (25%) and petroleum (10%). Exports to China reached a sum of US$5,627 billion between January and April of this year, while sales to U.S reached US$4,925 billion on the same period. The Ministry of Development, Industry and Trade predicts that China will continue to surpass the U.S. in the trade with Brazil through the rest of 2009.

The Ministry’s secretary of international trade, Welber Barral, last week, in Brasilia said “Probably, Asia will be a new dynamic center of international economy and it is necessary to Brazil to have a major participation there (China).”