Brazil warns over dangers of complacency in trade

By Qi Xiao (China Daily)
Updated: 2009-09-11 08:13

Although China has replaced the US as Brazil's largest trading partner, there is no room for complacency, said Rodrigo Tavares Maciel, executive secretary of the China-Brazil Business Council.

Speaking at the Annual Meeting of the New Champions 2009, commonly known as the Summer Davos, Marciel said: "I think the problem is still somehow the same issue we've faced since the very beginning - a lack of understanding between the two countries and their companies."

China and Brazil have been strategic partners as far back as 1993, but high expectations for the bilateral relationship between the two have not always been realized.

In April this year, China became Brazil's largest trading partner for the first time, overtaking the US, which had played that role for the past 80 years. At the time, the Brazilian trade minister was prompted to hail the change as a "historic moment". The latest data from the Chinese Ministry of Commerce indicates that the status will remain unchanged throughout 2009.

Maciel, however, struck a more cautionary note. He said: "This change should be put into perspective, as volume alone doesn't always speak volumes."

He said he was surprised and impressed with China's strong performance amid the ongoing crisis, but urged China and Brazil to do more to sustain their economic co-operation.

Highlighting the future prospects for the two, Maciel said: "The bulk of Brazil's exports are iron ore and soy beans. We have to diversify our exports to China. In fact, there are many sectors - agriculture, machinery, biofuels - that have a lot of potential but have yet to be tapped."

It is generally considered better to export manufactured goods rather than raw materials, as the former require more technology and labor. This means they represent added value, while the latter are also more susceptible to market volatility.

Statistics from China, Brazil and the US show some 70 percent of the goods Brazil exports to China are commodities, such as iron ore and soy beans, while 60 percent of the products Brazil exports to the US are manufactured goods.

Maciel's concerns have been echoed by Jose Augusto de Castro, vice-president of Brazil's Foreign Trade Association. He told Reuters: "The fact that China is (now) Brazil's main importer doesn't mean Brazil has (economic) sustainability."

According to Maciel, the root problem lies in the inadequate information available to companies on both sides.

Outlining the problem, he said: "Apart from its natural resources and raw materials, Chinese companies know too little about Brazil's vast business opportunities. The lack of regular high-level exchanges between Brazil and China are not helpful.