MercoPress. South Atlantic News Agency

China making inroads into Brazilian trade with Argentina, says CNI

“We are losing our market in Latin America. Our competitiveness is being constantly called into question”, complains Carlos Abijaodi

Argentina's economic situation has hit Brazil harder than its other commercial partners, as China has been making inroads into Brazilian trade with Argentina. Chinese exports to Argentina have more than tripled in the last ten years, according to a study carried out by Brazil's National Confederation of Industry, (CNI).

 In 2005, Brazilian products amounted to 36.5% of Argentine imports. Last year, this figure was 26.5%, and in the first two months of 2014, it had fallen further, to 24.8%.

Meanwhile China has made significant advances, and not only at the expense of Brazil. US industry has also suffered, although the European Union increased its trade with Argentina during this period.

Argentina is important for Brazil manufacturing since it imports essentially industrial products. That is why poor Argentine economic performance has had such a negative effect on Brazil's trade balance. In the first quarter of this year, the drop in exports to Argentina represented more than a quarter of the total 1.5 billion dollars reduction in Brazilian exports.

“We are losing our market in Latin America. Our competitiveness is being constantly called into question. We have to broaden our relations with other commercial partners,” says Carlos Abijaodi, director of Industrial Development at the CNI.

Of the ten commercial sectors which export most to Argentina, nine have recorded falls in sales since 2011, when Brazil's exports to its neighbor were at record levels.

The CNI study suggests that if Brazil had maintained this level, it would have received another 2.2 billion last year - enough to double Brazil's trade balance in 2013.

Chinese firms are well known for being highly competitive, offering low prices and having access to generous export financing. Moreover, the type of goods currently being offered by China are more compatible with the Argentine economic situation than those being sold by Brazil.

“Brazilian products got more expensive. As well as that, Brazil sells finished vehicles and equipment, making trade more difficult. China essentially sells just parts,” says Matias Carugati, chief economist at the Argentine consulting firm M&F.

Chinese parts are then used in the production of local goods. It is no coincidence that the sectors that have most shrunk recently in Argentina are electronics and information technology.

Argentina has been trying to set up new factories, which has meant that the market is less open to Brazilian products. Exports for cellular phones, for example, which were once worth 740 million dollars, fell to $200,000 in 2013.