Volume 43, Number 168,
January-March 2012
Threats and Opportunities for Brazil's Trade
with China: Lessons for Brazil
Fernando Augusto Mansor de Mattos and Marcelo Dias Carcanholo *
Date submitted: February 22, 2011. Date accepted: August 7, 2011

Abstract

In 2009, China became Brazil's biggest trade partner. The intensification of trading relations between both countries in the last few years has led to rapid changes in aggregate results and to Brazil's trade balance profile. On the one hand, this has permitted the significant expansion of Brazil's exports, although these are highly concentrated on low technology content products, such as agricultural raw materials and minerals. On the other hand, this has led to a considerable increase in the share of Chinese manufactures in Brazil's domestic market, affecting industrial production in Brazil. In addition, the data presented in this article provides evidence that China's products are displacing Brazilian manufacturing exports in third markets, especially in Latin America.

Keywords: China, Brazil, Brazil-China foreign trade, Brazilian exports, Brazilian imports.
INTRODUCTION

The recent evolution of Brazil's foreign trade has shown significant changes, both in what is referred to as the rapid reduction of trade surplus, and to the change in product profile of exports and imports.1 Throughout the change to Brazilian foreign trade, China's contribution has been decisive.

After the mid-1990s, when there were increasing trade deficits each year, the Brazilian economy began to generate dynamic trade surpluses, particularly from 2004, reaching almost 46.5 million dollars in 2006. Furthermore, from 2007, this surplus decreased rapidly, more so the import trend (which doubled between 2006 and 2010) than exports, which grew nearly 46% in the same period.

Between 2007 and 2008, Brazilian imports grew to 23 millions of dollars, an increase of 44% from one year to the next. Imports from China represented almost 15% of this growth. Between 2008 and 2010, Brazilian imports increased 5%, equivalent to some 8.5 billion dollars and China's contribution to this growth was an impressive 66%.2

There has also been significant Chinese presence in the recent movement of exports. From the values obtained both in 2007 and 2010 there was a positive jump of nearly 40 billion dollars, 50% of which is due to increased trade with China.

Evaluating China's contribution to recent movements in Brazil's Foreign Trade, it can be concluded that there is increased depth in the "division of labor" between both countries. More precisely, Brazil exports agricultural commodities and minerals to China, while importing basic products or manufactured primary materials from China, most of which have increased value added. This profile, markedly pronounced since at least the latter half of the 1990s, has increased significantly in recent years. The weight of primary commodities in Brazil's total export pattern for China rose from 68% in 2000 to 76% in 2009 and 83% in 2010.

There has also been an increase in the Brazilian export pattern to China in recent years, in relation to some specific products. In 2010, 63% was concentrated on two products, (iron and soya and derivatives) representing 57.5% of Brazil's total exports to China in 2008. Grouping together the five main products exported by Brazil to China, they amounted to 76.3% of the total in 2008 and 82.6% in 2010. In turn, the pattern of imports from China was always more diversified and directed towards manufactured goods combining high or medium grade technology. In 2008, the five main products imported by Brazil from China represented 12.45% of imports from the country and 10.85% in 2010.3

* Research Professors at the Faculty of Economics at the Fluminense Federal University (uff) Brazil. Email: fermatt@uol.com.br and mdcarc@uol.com.br

1 Product profile is based on technological content. In the first and second sections of this study eclac's classification will be used: (a) primary commodities , including mainly food, wood, coal, crude petroleum, minerals etc. (b) natural resource based manufacturing including mainly drinks, wood products, base metals (except steel), petroleum derivatives, bedrock, precious stones, glass etc. (c) low- tech manufacturing, which mainly includes products from the textile industry, leather and other manufactured goods, ceramics, furniture, jewelry, plastic goods, etc. (d) medium-tech manufacturing, which includes, among other things, passenger vehicles and parts, synthetic fibers, commercial vehicles in general, motorbikes, chemical products in general, fertilizers, plastics, iron and steel, machinery, engines, simple industrial machinery, boats, watches, etc. and finally (e) high-tech manufacturing, in particular data processing machinery, computers in general, telecommunications equipment, televisions, pharmaceuticals, turbines, transistors, airplanes, optical and pressure tools, photographic equipment etc.

2 Source: The Central Bank of Brazil (www.bcb.gov.br) and the Ministry of Development, Industry and Foreign Trade (www.mdic.gov.br).

3 Data obtained from information supplied by the Brazilian Ministry of Development, Industry and Foreign Trade (www.mdic.gov.br), and Bauermann et al. (2010) also demonstrates this trend based on product share indicators for China's export pattern. In this study, the authors demonstrate a similar situation for India and Russia.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 193, April-June 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Moritz Cruz. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: June 27th, 2018.
The opinions expressed by authors do not necessarily reflect those of the editor of the publication.
Permission to reproduce all or part of the published texts is granted provided the source is cited in full including the web address.
Credits | Contact

The online journal Problemas del Desarrollo. Revista Latinoamericana de Economía corresponds to the printed edition of the same title with ISSN 0301-7036