Brazil and China sign 30bn dollars swap to boost trade and better weather global turbulence
Brazil and China will sign an agreement in the coming weeks to swap as much as 30 billion in their two currencies, Brazil Finance Minister Guido Mantega said.
The currency swap, worth 60 billion Reais or 190 billion Yuan, will be the first step in a broader agreement with Russia, India and South Africa to allow members of the so-called BRICS group of emerging markets to pool resources to better weather the global financial crisis, Mantega told reporters in Rio de Janeiro.
The agreement, which was discussed this week by leaders of the BRICS at a Group of 20 summit in Mexico, marks another step in a deepening trade between the world’s two largest emerging markets.
China overtook the US in recent years to become Brazil’s biggest trading partner, though Mantega said that the 76 billion dollars in bilateral commerce last year, 17% of Brazil’s total, is just the beginning.
“There’s no limit to how much trade can grow,” Mantega said.
The agreement to swap currencies was reached during a meeting between Brazilian President Dilma Rousseff and her counterpart, Chinese Premier Wen Jiabao, visiting Rio for the United Nations environmental conference.
As part of a series of bilateral accords signed, both governments pledged to boost cooperation and investment in aerospace, beginning with the launch this year of a joint weather satellite.
Brazil’s central bank will also increase the amount of information it shares with the China Banking Regulatory Commission to better supervise affiliates of the two nations’ financial institutions.
Mantega said the agreements will help boost the sale of Embraer SA-manufactured jets and other industrial goods so that bilateral trade isn’t dominated by Chinese demand for Brazilian iron ore, soy and other commodities.
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Mind you, the Chinese are not so stupid as to LEND the Agies a Pesos.
There is no doubt that diversity in trade partners gives stability without hegemonical influences, even in (especially in) these turbulent economic times.
Over-tying itself to China brings the obvious risks .... doubly so if the China reciprocality is tied to ore export with its huge commodity price fluctuations.
The problems in Paraguay will lead to Venezuela entering (a moribund) Mercosur; Argentina's economy is collapsing; Brasil's trading activities are hampered by Argentina's stance. Brasil needs trading freedoms, but more than this, it needs to evolve 'a balanced hand'.
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