For the first time a trade operation between Brazil and China was conducted in a closed-loop system using local currencies, Yuans and Reais, without any involvement of US dollars. The transactions were financed and settled in yuan, directly converted into Brazilian real, without any involvement of the US dollar.
This milestone operation involved the export of pulp by Eldorado Brasil, a São Paulo-based company with a presence in Shanghai, China. The product was shipped from the port of Santos to Qingdao in August. Financial transactions took place the following month, with the final settlement in Brazilian currency on September 28.
The operation garnered significant attention in China, including coverage by the state-run CCTV and on the social media platform Weibo. It also received media coverage in Singapore and Taipei. It was hailed as a “landmark in the history of Sino-Brazilian trade, providing pathways for more companies.”
Shen Shiwei, a commentator for CGTN, an English-language news channel created by CCTV for international audiences, described it as “good news for the multi-polar world,” a geopolitical goal actively pursued by both countries and other emerging economies, such as India.
The news also recalled President Lula’s visit to Beijing in April, when he signed a memorandum of understanding with Xi Jinping to promote bilateral trade in local currencies. Similar initiatives have been underway since the beginning of the year, including actions by both central banks.
During his visit to Shanghai and the New Development Bank, the BRICS Bank, for Dilma Rousseff’s official inauguration as the institution’s president, Lula spontaneously proposed exploring alternatives to trade conducted in the US dollar, which was already exposed to high-interest rates.
“Why can’t we base our trade on our own currency? Who decided it had to be the US dollar? We need a currency that puts countries in a more comfortable situation because today, a country needs to chase after the dollar to export,” said Lula at the time.
Among other major Brazilian exporters considering negotiating in local currency with China are Suzano, also in the cellulose industry, and Petrobras. According to executives from both companies, this has been a demand from Chinese importers themselves.