Brazil and China: how is the trade relationship going?

The relationship between Brazil and China has solidified a lot in recent years. It is a very interesting partnership to be analysed, as it is an exchange of resources for natural products that helps the economy of both countries. In recent months, trade between Brazil and China has taken place pragmatically, without ideological interference by Brazilian political representatives. Thinking about the importance of this subject, we decided to elaborate on this article.

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In it, we will show the challenges posed by the relationship between Brazil and China, as well as the opportunities that can be generated in this market. Check it out!

How did the relationship between Brazil and China begin??

The commercial relationship between Brazil and China became closer during the 1990s. In the book “O Poder da China” (The Power of China), by Ricardo Geromel, people from the financial market described Brazil as a “derivative” of China. But that has changed considerably over the years. According to the same study, our country accounted for 55% of investments originating from Chinese companies.

Moreover, in 2015 the current Chinese ruler Xi Jinping stated that the goal was to make trade between the country and Latin America reach 500 billion dollars by 2025 — with Brazil as the number 1 participant in this solidification of the commercial relationship.

What are the main products sold?

Currently, Brazil and China transact several types of products. Brazilian companies acquire Chinese goods and products, just as China acquires items from Brazil in large volumes. But we have three products that are the basis of the relationship between the two countries. These are soybeans, iron ore and oil.

In the last three years, soy has shown a subtle growth in Brazilian exports. But, from 2020 to 2021, there was a surprising increase in the volume of iron ore and oil to the Asian country. This data was published by the Organization of Petroleum Exporting Countries (OPEC) and demonstrates the huge volume of resources that are transacted in these operations.

How important is China to Brazil?

China has established itself as one of the biggest buyers of Brazilian products and has been increasing its relevance even more by investing in Brazil. Investments range from purchase of private companies supplying energy and controlling activities of Brazilian ports to the acquisition of companies that promote the exploration of pre-salt resources.

Between 2003 and 2019, China invested US$ 72 billion in Brazil. Numbers like this prove the importance of China. This is because they corroborate the fact that the eastern giant is responsible for increasing the surplus of the Brazilian economy. Brazil exports more than it imports thanks to consolidated commercial partnerships with China. Having a surplus economy means fighting possible crises more safely.

What are the market opportunities?

The trade relationship between Brazil and China is not one of dependency. Trade agreements bring benefits to both sides. Translating into good old Portuguese it’s like we have a “win-win” relationship”.

It means that it is possible to extract several opportunities from this relationship. One of them is the possibility of producing agricultural items that are sold to the Asian country. But implementing a culture depends on a series of elements that require a very specific physical structure (land, machinery, etc.) and technical knowledge.

In the middle of the process between production and arrival of products in China, there are several services required. Some examples are those related to tax procedures for imports, various advisory services and chartering, for example.

The relationship between Brazil and China began with the supply of national agricultural products exported to the Asian country. Although there are other markets being explored, agriculture has always been more expressive. However, it is important to understand that there are other sectors that can benefit from this relationship — especially those linked to technology.

China has become a relevant world power in the technological environment. The country is a global leader in e-commerce and is home to the largest companies in the sector. Therefore, this relationship is interesting for those who want to acquire technological products to be used or sold in Brazil, as well as it makes it possible to develop elements that can be used in technological tools adopted by technology companies located in China.

Brazil can become a major producer of technological elements thanks to some products that have been used as electrical conductors that depend on minerals produced in our country.

Finally, we can conclude that the relationship between Brazil and China brings opportunities for many of the companies that wish to operate in the foreign market. Therefore, it is necessary to pay attention to forecasts for the coming years and identify how your company can act in this process.

Did you like this article? How about learning more about the relationship between Brazil and other countries, this time in relation to maritime transport?