Brazil Takes a Second Look at China Ties

Growing trade between Brazil and China is driven by China’s demand for Brazilian raw materials. China is Brazil’s biggest trade partner. Brazil may enjoy a large trade surplus, but the government increasingly recognizes that the relationship is imbalanced and not benefiting Brazilian ambitions. Exporting raw materials and importing manufactured goods challenges the Brazilian industrial sector, costing jobs, keeping wages low and slowing economic growth. The divergence is partly explained by monetary policy, explains Sean Goforth for World Politics Review. The Brazilian real has appreciated in recent years, while the Chinese yuan remains artificially undervalued, making China’s manufactured goods relatively inexpensive for Brazilians. Brazil responds by raising some tariffs and allying with the United States to press China on ending currency manipulation. Goforth suggests that the trade relationship between Brazil and China is more competitive than complementary. – YaleGlobal