MercoPress. South Atlantic News Agency

Brazil preparing plan to stimulate industry and cut knick-knack Chinese imports

President Rousseff concerned over the misbalance in trade with China

Brazil imports too many knick-knacks from China complained Brazilian president Dilma Rousseff, who next month makes an official state visit to the Asian giant, according to reports in the Sao Paulo press

Last Friday President Rousseff met with labour leaders and said she was concerned with the misbalance in trade with China.

“There’s a misbalance in our relation with China. Brazil exports commodities and imports too many knick-knacks. This happens particularly between Christmas and Carnival. I’m told that 80% of this year’s Carnival costumes came from China”, the Brazilian leader remarked during the meeting according to the union leaders.

“We need to inject added value to our exports, this is essential” insisted Ms Rousseff.

The Brazilian president is scheduled to travel to China April 10 when she will meet her Chinese peer Hu Jintao and later will be attending a summit of the Brics group (Brazil, Russia, India, China and South Africa).

Rousseff’s statements came in the midst of strong pressure from local manufacturers who want a stricter monitoring of imported Chinese produce. In 2009 and 2010, China became Brazil’s main trading partner, ahead of the US.

According to government sources Rousseff also mentioned the strong appreciation of the Real vis-à-vis the US dollar as a big door for Chinese produce, but also mentioned a battery of measures taken to counter such an effect.

However when labour leader Paulo Pereira, head of Brazil’s second largest union complained that the government was surrendering to the market, she replied that “the market had not taken over the government”.

Even when Brazil had a trade surplus of 5.2 billion US dollars with China in 2010, for the Brazilian Foreign Trade Association the ‘Super Real’ has a 40% competitiveness lag compared to China. Similarly the lack of free flotation of the Chinese currency, Yuan gives Beijing a 30% edge over Brazilian prices.

The Brazilian media advanced Sunday that the Rousseff administration is planning to limit or ban states from granting tax exemptions on imports in a bid to stimulate domestic industry.

The plan allegedly is part of the government’s tax-reform proposal to be sent for congressional approval by April.

Apparently Rousseff is also planning to propose cutting payroll taxes for some industries and lowering levies on investments and small companies, according to Folha de Sao Paulo.