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Eurasia
01/04/2023 18:35
“The expectation is that this will reduce costs... promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement, according to the news agency.
"In many ways, this development is inevitable. As of 2021, China accounts for 31.3% of Brazilian exports and 22.8% of their imports, the most of any country. The United States comes a distant second, accounting for only 11.2% of Brazilian exports and 17.7% of imports. China has been Brazil’s largest trade partner for fourteen years," Irish economist Philip Pilkington writes in an op-ed on Unherd.
"The same day that the Brazilian trade deal was announced, another major story hit global currency markets: China settled its first LNG trade in yuan. This development alone would be important enough to bear scrutiny given that much-vaunted status of the US dollar as an energy currency — the ‘petrodollar’ — but reading beyond the headlines reveals something even more surprising," he points out.
"This energy deal suggests that ‘yuanisation’ will not be confined to the global periphery. Until recently, suggestions that the BRICS+ countries would dump the dollar and move to new currencies was met with derision. The Brazilian trade deal puts that scepticism firmly to bed," Pilkington stresses.
According to the economist, "yuanisation puts wind in the sails of the Chinese. Their goal is clearly to carve out an alternative global trade regime to rival the American-led model that has been in place since 1945. The countries that jump on board the BRICS+ bandwagon are also likely to be beneficiaries". The US is the most obvious loser in this regard, but for Europe the situation is less clear. "The Europeans have long been unhappy with playing second fiddle to the Americans in global economic relations, and counteracting this was part of the rationale for launching the euro around the turn of the millennium. Scholz’s Beijing visit signals that Europe could try to position itself between America in the West and China in the East, a potentially useful long-term ploy to benefit from developments in both large economies," he writes.