CEIC Data Blog

Brazil’s Booming Trade with China


CEIC Data Talk: The total trade between Brazil and China has expanded aggressively during the past 12 years. Brazil’s exports to China grew by a Compound Annual Growth Rate (CAGR) of 46.9% annually while imports from China grew by a CAGR of 37.8% annually from 1999 to 2010. The growth rates are high compared to its aggregate exports and imports which saw a CAGR of 12.7% and 11.5% respectively. In 2009, growth in Brazil-China trade has catapulted China as Brazil’s largest trade partner, overtaking the United States, as China presently accounts for 14.7% of Brazil’s total trade flows. Brazil’s trade relationship with China since 1999 has generally resulted in trade surpluses, with the exception of four years. In 2009 and 2010, trade surplus with China stood at USD4.48 billion and USD5.20 billion respectively.

Brazilian Trade Flow with China
Brazil China Trade
Chart provided by: CEIC Data

The growth in Brazil’s exports to China are largely commodities based, led by iron ore, soybeans and crude oil. Total exports of iron ore amounted to USD13.34 billion in 2010, representing 43% of Brazil’s exports to China. At the same time, soybeans and crude oil combined exports constituted USD11.19 billion or 36.34% of Brazil’s exports to China. These commodities have been displayed an upward export trend since 1999, coinciding with China’s increasing demand for commodities and fuel sources, as China broaden its net beyond its established suppliers in Asia and the Middle East.

Notwithstanding Brazil’s burgeoning exports, some have argued that the trading relationship between China and Brazil has a pernicious aspect, especially for Brazil’s manufacturing sector. Manufactured products constitute a substantial portion of Brazil’s imports from China, which has adversely affected on Brazil’s local manufacturing industries as the Brazilian industries are struggling to compete with China’s low cost advantages arising from both China’s undervalued currency and low costs.

As a result, Brazil has since imposed several protectionist measures, which includes new tariffs on Chinese synthetic fibres, against China in light of perceived dumping activities by China. At the same time, this issue was highlighted in President Dilma Rousseff’s first official state visit to China on 12 April 2011. Despite these developments, mutual net gains from trade meant that China is expected to remain as Brazil’s main trade partner for the coming years, barring drastic changes in relationship.

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Very good data and observations,

It is very likely for us to see more tension between the Brazilian manufacturers and the Chinese importers in the near future.

The Brazilian export to China consists of only tree good (iron ore, soy and crude oil). This definitely is not a good sign.

We could also add that Brazil has lost its market share to China in major trading partners such as Argentina.

As always the picture is complicated because of the cheap yuan.

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