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Brazil: China's Missing Piece?

Globalist Factsheet > Global Economy
The Emerging China-Brazil Axis

By The Globalist

As the world’s economies try to recover from the aftermath of the financial crisis, many are seeking advantages over their competitors by managing their exchange rates and intervening in the markets. Increasingly, there is talk of a “currency war,” as countries try to out-do one another to keep their economies growing. But is such talk overblown? Our Read My Lips takes a closer look.

How do their economies stack up?

China has a GDP of $10 trillion (adjusted for purchasing power), accounting for 13% of the global economy. In comparison, Brazil accounts for 3% of the global total, with a GDP of $2.2 trillion.

(IMF World Economic Outlook)

The United States had been Brazil's principal trading partner for nearly 80 years, but now China is Brazil's largest trade partner. (UK Telegraph)

How do their populations compare?

China has 1.35 billion people, accounting for 20% of all people on earth. In comparison, Brazil has 195 million people, ranking fifth in the world and making up 2.8% of the global population.

(UN Population Division)

Which country has the higher standard of living?

China has a per capita GDP of $7,500 (adjusted for purchasing power), ranking 93rd in the world. In comparison, Brazil has an average income of $11,300, ranking 71st in the world.

(IMF World Economic Outlook)

How do wages stack up?

Wages in China are still equivalent to about one-fourth of Brazilian salaries.

(Bank of America)

How quickly have both countries reduced poverty in recent decades?

In China, the number of people living below the poverty line ($1.25 a day in 2005 prices) declined from 60% to 16% between 1990 and 2005. In Brazil, the level fell from 15% to 7% over the same period.

(United Nations Development Program)

Chinese firms have bought stakes in Brazil's electrical grid and are building car plants and a telecommunications infrastructure in the country. (Washington Post)

Which economy has grown faster?

From 2000 to 2010, China’s GDP expanded at an average annual rate of 10.3%, compared with 3.7% for Brazil.

(IMF World Economic Outlook)

Which grew quicker last year?

Estimated annual GDP growth for 2010 in China was 10.5%, compared with 7.5% in Brazil. Among the other BRIC countries, India grew 9.7% and Russia 4%.

(Wall Street Journal)

Do the two countries have close trade ties?

The United States had been Brazil's principal trading partner for nearly 80 years, but a sudden surge in Chinese demand for Brazilian iron ore in the first quarter of 2009 dislodged the United States, making China Brazil's largest trade partner.

(UK Telegraph)

Just how large is their trade relationship?

Brazilian imports from China rose 12-fold from 2000 to 2009, and exports increased 18-fold. China consumed almost 14% of Brazil's exports in 2009 — and sent back almost 13% of Brazilian imports.

(Reuters)

China has a GDP of $10 trillion, accounting for 13% of the global economy. In comparison, Brazil accounts for 3% of the global total, with a GDP of $2.2 trillion. (IMF)

What goods do they exchange?

Manufactured goods make up about 90% of what Brazil imports from China, while Brazil mainly sends back raw materials such as iron ore, oil and soy.

(Global Post)

How quickly has China ramped up its investment in Brazil?

In the first half of 2010, China's investment in Brazil topped $20 billion, more than ten times all of China's previous investment in the country. China was Brazil's largest investor in 2010, compared with just 29th in 2009.

(Washington Post)

What was that money spent on?

Most of China's biggest Brazil deals announced in 2010 were for commodities — including the $1.2 billion purchase of an iron mine in the state of Minas Gerais and $7.1 billion to buy the Brazilian oil operations of the Spanish company Repsol.

(Global Post)

What resource is China particularly interested in?

China wants to help realize Brazil's plans — estimated at more than $250 billion — to tap its offshore oil reserves. The China Development Bank has given Petrobras, Brazil's main oil producer, $10 billion as a down payment on future business.

(Washington Post)

Manufactured goods make up about 90% of what Brazil imports from China, while Brazil mainly sends back raw materials such as iron ore, oil and soy. (Global Post)

Beyond commodities, what other investments is China making?

Chinese firms have bought stakes in Brazil's electrical grid and are building car plants and a telecommunications infrastructure in the country. Chinese firms also have the inside track on landing an important high-speed-rail contract.

(Washington Post)

Which country is home to more of the world’s biggest companies?

On the 2010 Fortune Global 500 list, China had 26 companies, ranking behind the United States (139) and Japan (71). Brazil lagged far behind, with just seven.

(Fortune)

Is corruption a problem?

Brazil ranks 69th place in the Corruption Perceptions Index — making it the best-performing of the four so-called BRIC nations. In comparison, China is considered the 78th cleanest country in terms of corruption, close to India in 87th place — while Russia, at 154th, ranks near the very bottom.

(Transparency International)

Which population trend have both countries experienced in recent decades?

The fertility rate in Brazil fell sharply over the past half-century, from more than six children per family in 1960 to about two by 2000. This drop is comparable to that of China, but without any government family-planning measures.

(Inter-American Development Bank)

The China Development Bank has given Petrobras, Brazil's main oil producer, $10 billion as a down payment on future business. (Washington Post)

Which country is more "wired"?

In Brazil, 39% of the population uses the Internet, compared to 29% in China.

(Comscore/ITU)

And finally, what’s one place in China where you can find a strong Brazilian influence?

The largest Brazilian community in China lives in Dongguan city, 56 miles north of Hong Kong. The 3,000-strong community works mostly in the footwear industry, providing much-needed expertise in shoe design that makes up for a skills shortage among native Chinese.

(The Economist)

 

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