“The expectation is that this decision will reduce costsBrazil’s trade and investment promotion agency, Apex Brasil, said the measure should “further enhance bilateral trade and facilitate investment,” the Apex statement added.
China is already Brazil’s largest trading partner, with trade worth US$150.5 billion last year. China’s total direct investment in Brazil has reached 70 billion US dollars. The agreement should also open Chinese markets to Brazilian products Especially in the agri-food sector.
For China, the advantage of trading its own currency with the largest economy in South America is Reducing dependence on the dollar while increasing the circulation of the yuan (renminbi)one of the guiding principles of its foreign and financial policy.
In fact, the Chinese trade strategy is globally questioned, because it is based on In an artificial devaluation of its currency against the dollar, in order to gain advantages in its exports.
“clearing house”
The agreement announced on Wednesday provides for the creation of a “clearing house” in Brazil, an institution that has sufficient liquidity in the Chinese currency so that a businessman can obtain the yuan (yuan) and immediately exchange it for the same currency. In the case of Brazil, the real one.
According to the agreement signed between Beijing and Brasilia in January, The bank designated by the Chinese central bank to act as a “clearing house” in Brazil will be the Industrial and Commercial Bank of China – Industrial and Commercial Bank of China and Bank of Communications BBM.
The agreement was announced on Wednesday at the conclusion of the Brazil-China Business Forum held in Beijing where the Brazilian president was initially expected to be as part of a state visit. Lula da Silva postponed his visit to China indefinitely after being diagnosed with pneumonia.
The forum brought together 523 participants, including Brazilian and Chinese authorities, as well as businessmen.
Predictability and markets
Brasilia was represented by the Minister of International Affairs of the Ministry of Finance, Tatiana Roseto, who He welcomed the “greater predictability of exchange rates” allowed by the agreement, which avoids two shifts and consequent losses.
Roseto emphasized that taxes on foreign exchange transactions are highly questioned by Chinese partners in Brazil. Thus, trade in the local currency can contribute to an increase in trade. RMB exchange rates, which are controlled by China’s central bank, also vary less and give businesses more predictability.
Establishing a “clearing house” is only a “first step” The secretary added that even because of the restrictions these institutions impose as an additional option for companies and since the idea is not to make the system mandatory.
At the same forum, China’s Vice Minister of Commerce, Gu Tingting, welcomed the establishment of a “clearing house” for the use of the yuan (RBM), noting that China and Brazil are strategic partners and have an “exemplary” relationship.
A Brazilian businessman told Exame that the agreement could be interesting if the non-participation of the dollar allows access to financing lines for exports from Chinese banks, at lower interest rates.
Expansion of the yuan (RMB)
Brazil is still able to trade directly through other currencies, Such as the euro, the Swiss franc and the pound sterling. More than 90 percent of Brazilian foreign trade is currently handled in dollars.The double designation of the Chinese currency sometimes causes some confusion in trade exchanges, as it is known as the Chinese yuan or the Chinese international yuan, the renminbi, or the renminbi, which can be translated as “people’s currency”. The renminbi is the official name for the currency, and the yuan, according to the letter designating round objects such as coins, is the main unit of account. This Thursday, one yuan corresponds to 0.13 euros.
Saudi Arabia and Russia also adopted the use of the yuan in trade with China.
The Chinese currency currently accounts for about 2% of payments globally and is growing, particularly in Asia.Beijing watershed.
A report by the People’s Bank of China, China’s central bank, indicates this At the end of 2021, there were 27 yuan (RMB) clearing bank outside mainland Chinain 25 countries and regions, including Canada, Germany, the United Kingdom, France, Luxembourg, Switzerland, Qatar, Taiwan, South Korea, Singapore and Australia.
In South America, Chile and Argentina have similar agreements. The United States itself has a “clearing house” for direct currency exchanges, China has indicated.
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