China-Brazil trade can be settled in local currency, experts: Promote the expansion of trade exchanges and investment scale between the two countries

China-Brazil trade can be settled in local currency, experts: Promote the expansion of trade exchanges and investment scale between the two countries

Reported by Shao Shijun, Global Times correspondent in Brazil

On March 29 local time, the Brazilian Ministry of Foreign Affairs quoted a statement from the Brazilian Trade and Investment Promotion Agency announcing that Brazil and China had reached an agreement to allow bilateral trade transactions in their own currencies.

Brazil's "g1" news network reported on the 29th that according to the content of the agreement, China and Brazil can bypass the US dollar as an intermediate currency when conducting large-scale trade and financial transactions, and directly exchange RMB (6.8587, -0.0123, -0.18% ) are interchangeable with reals. The agreement is not mandatory and U.S. dollars can still be used in transactions. The agreement also stipulates that the People's Bank of China can choose an institution approved to operate foreign exchange business in Brazil as the "Brazilian Offshore Clearing Bank". "g1" quoted the Central Bank of Brazil's introduction to the agreement as saying: "This is a Chinese initiative that has been carried out in more than 25 countries."

According to Brazilian media, Tatiana Rossito, Secretary of International Affairs of the Brazilian Ministry of Finance, said that the Central Bank of Brazil and the People's Bank of China reached a preliminary agreement on this in January this year. In February, the People's Bank of China announced on its official website that it had signed a memorandum of cooperation with the Central Bank of Brazil to establish a RMB clearing arrangement in Brazil. Rossito emphasized that "greater predictability of the exchange rate" is very important for investors and businessmen, with foreign exchange taxes being a major concern of Brazilian businessmen, and trading in the local currency helps to increase bilateral exchanges. The Brazilian Trade and Investment Promotion Agency stated in a statement that the settlement in local currency will reduce the cost of trade between the two countries, while promoting greater development of bilateral trade and facilitating investment.

Jin Xiaowen, a researcher at the National Academy of Development and Strategy at Renmin University of China and secretary-general of the Latin American Studies Center, told the Global Times reporter on the 30th that the settlement of local currency between China and Brazil will inevitably reduce the investment cost of enterprises, which will promote the expansion of trade exchanges and cooperation between the two countries. investment scale. In the past, Brazil had a serious tendency towards trade protectionism. Direct settlement in RMB was to some extent a signal to welcome Chinese companies to invest in Brazil. In addition, Brazil is the largest economy in Latin America. This agreement has a certain spillover effect, and other Latin American countries are likely to be willing to sign related agreements with China. This will help expand the influence of the RMB in Latin America and promote China and China. Latin American trade and investment go further.

Since 2009, China has been Brazil's largest trading partner. According to Chinese customs statistics, the bilateral trade volume between China and Brazil in 2022 will be US$171.49 billion, of which Brazil's trade surplus with China will reach US$29 billion, accounting for almost half of the country's total trade surplus. In addition, Brazil is the main country for Chinese investment in Latin America. Between 2007 and 2020, Chinese investments in Brazil amounted to US$70.3 billion.

Bloomberg reported on March 25 that before Brazilian President Lula's visit to China, hundreds of representatives of Brazilian agricultural enterprises "swarmed into Beijing" this week, seeking to increase export cooperation with China and attract investment. Reuters also stated that the delegation to China this time was large in scale, including several cabinet ministers, governors, congressmen and 240 business leaders. Most of Brazil's beef, soybeans and wood pulp are exported to China. Brazil hopes to expand trade with China beyond exports of iron ore, soybeans, soybean oil and meat, and is ready to sign agreements on technology, innovation and sustainable development, a Brazilian foreign ministry official said.