Trade agreement between Brazil and China to abandon the US dollar

Brazil and China struck a deal to ditch the US dollar, in favor of their own currencies, in trade transactions.

Officials from both countries reached a tentative agreement to dump the US dollar in January 2023, and the deal was announced, after a meeting between high-level officials from China and Brazil in Beijing.

The significance of the deal

The deal, announced yesterday, Wednesday, March 29, will enable China and Brazil to conduct direct commercial and financial transactions, exchanging the yuan for the real, or vice versa, instead of first converting their currencies into the US dollar.

According to a report by US Fox Business Channel on March 29, the new deal is expected to reduce costs, further promote bilateral trade and facilitate investment.

Brazil's largest trading partner

According to Fox Business, China is Brazil's largest trading partner, accounting for more than a fifth of total imports, followed by the United States. China is also Brazil's largest export market, accounting for more than a third of all exports.

The American channel indicated that China overtook the United States as Brazil's largest trading partner in 2009. Today, Brazil is the largest recipient of Chinese investment in Latin America, especially in the field of power transmission lines and oil extraction.

Strengthening relations with Beijing

Fox Business noted that Brazilian President Lula da Silva, who was sworn in in January 2023, sought to strengthen relations with Beijing after a period of tense relations under his predecessor, Jair Bolsonaro, who used anti-China rhetoric in the election campaign and in office.

And the American channel reported that the Brazilian president was scheduled to visit Beijing at the end of last week, as he had to cancel his trip after he contracted pneumonia.

Da Silva was to be accompanied by a delegation made up of ministers, senators, lawmakers and hundreds of businessmen, including more than 100 from the agricultural sector, during his first state visit since taking office.

The United States is blocking China's efforts

According to a report published by the American magazine Foreign Affairs, on March 29, 2023, the Chinese leader, Xi Jinping, described the United States and its allies as the main causes of China's current problems.

He said, "Western countries, led by the United States, surrounded us from all directions and repressed us, which brought serious and unprecedented challenges to the development of our country."

For its part, US President Joe Biden's administration confirmed that Beijing is preparing for a new, more confrontational era, according to the American magazine.