Democracy is, undisputedly, the hottest topic of the first quarter of 2011. The second most discussed issue has definitively been China. With a GDP of US$ 6 trillion, it officially became the world’s second largest economy. Personally, I don’t consider China like “Japan from the 80’s” as some argue. I believe my kids will speak English AND Chinese, unless some tech company comes up with an efficient instantaneous translator. By the way, if anyone knows of a company which is developing such technology, please let me know.
The Financial Times has revealed that in the past two years China has loaned more money to countries “in development” (poor and not so poor, Brazil included) than the World Bank. Only through the bank of Development from China and the Eximbank of China, China loaned at least US$ 110 Billions to governments and companies of poor countries in 2009-10. The newspaper doesn’t mention but this value does not take into consideration operations like loans from Chinese companies, loans from government to government and not even investments made directly by Chinese companies.
China is Brazil’s main commercial partner. The bilateral commerce between Brazil and China was R$ 56 bi in 2010, with China registering R$ 5 bi surplus. The relationship is primarily based on Brazil’s exports of commodities (mainly iron ore and soybeans) and imports of manufactured goods.
However, Dilma’s agenda for its visit on April is still not determined. There are some controversial issues that could be addressed: currency depreciation and not so obvious price formation schemes, like triangular commercialization to avoid anti-dumping barriers. On the other hand, China will probably complain about protectionism. Last week Fernando Pimentel, Brazilian minister, stated that Brazil will have new rules to the importation of manufactured goods. One of the measures is that security criteria will be the same as national products. For instance, today, toys are only subjected to such control after being already in the retail stores. This new rule is not only directed to product Chinese but it is clear that they will be the most affected.
I look forward to seeing how Dilma and her delegation will behave on China. Let’s not forget that it was Mantega, Brazil’s Finance minister that created the term “currency war.” Will Dilma be pushy about Brazilian interests on controversial topics? Or will this visit only consist of Chinese promises of further investment in Brazil(as Hu Jintao does with every head of state he meets)?