Brazil's Trade Relationship with China

In 2009, China became Brazil's largest trading partner in the world, overtaking the position that the United States has held since 1930. Brazilian exports are increasing rapidly to meet China's immense demand for raw materials and commodities. On the other side of this trade relationship, cheaper goods imported from China are opening new horizons for Brazil's growing middle class. This commercial relationship between these countries is continuing to grow and has reached an entirely new level.

This past year, the flow of commerce between Brazil and China reached $56 billion—a growth of 52 percent since 2009. Brazil's trade with China allowed Brazil to accumulate financial reserves by increasing its exports. However, domestic concerns are beginning to arise as powerful local industries claim that the increase of imports prevented the creation of 46,000 jobs in Brazil last year. Other Brazilian businesses say it's difficult for their company to compete with China's low-cost manufacturing. The $5 billion trade surplus of Brazil is certainly a good thing but the government is taking protective measures to address these domestic concerns.

Last week, the Brazilian government issued anti-dumping laws against China and imposed a new tariff of $4 per kilo on Chinese synthetic fibers. These policies are intended to help local businesses but Brazil must be careful when dealing with China. Over the last years, China has become an essential partner for Brazil and has been a critical factor in Brazil's emerging economy. Brazil's relationship with China will continue to help Brazil's economy and perhaps reshape domestic businesses in Brazil. Competition from abroad might force Brazilian businesses to create more efficient infra-structures and find ways to reduce production costs in order to compete with China.

As Brazil's economy continues to benefit from international trade with China, domestic concerns regarding foreign competition may continue to accumulate. However, addressing these worries is a difficult task and may have a large impact on Brazil's commercial relationship with China. With new commercial agreements being signed by China and Brazil this past week, the trade relationships between these two countries will strengthen and continue to grow despite any concerns.

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