BRIC by BRIC

Brazil's President Luiz Inacio Lula da Silva, left, and China's President Hu Jintao clap during a signing ceremony at the Great Hall of the People in Beijing May 19, 2009. (Jason Lee/Reuters)

SAO PAULO, Brazil — Judging from the headlines, it has been a big month in Brazilian-Chinese relations. First China jumped ahead of the United States as Brazil’s top trading partner for the month of April. Then President Luiz Inacio Lula da Silva headed to Beijing, business leaders in tow, to conclude a series of deals with the Chinese and push for others. And news spread that Brazil and China were discussing plans to abandon the dollar and trade in yuan and reais.

So you’d be forgiven for thinking that as the crisis-ridden American economy staggers to get back on track, less-affected Brazil and China were headed off to party on their own, leaving the United States in the international trade dust.

That is an exaggeration, of course, but the relationship between the two BRIC countries is growing steadily. As recently as last year, China was the third biggest of Brazil’s trading partners, behind not just the United States but also Argentina; in April, it out-traded the United States $3.2 billion to $2.8 billion, imports and exports combined.

“It’s difficult to say whether China has definitely taken first place from the United States,” said Andre Loes, HSBC’s chief economist for Brazil. “But China used to be a much less important partner five or seven years ago, so I would say this is the final achievement of a very strong trend this decade.”

Still, comparatively speaking, Brazil remains relatively isolated: Despite being the world’s 10th biggest economy, it does not even make the top 20 list of importers or exporters, and U.S.-China bilateral trade is still much bigger than U.S.-Brazil or China-Brazil trade.

What happened in April? In two words: commodities stockpiling. Brazil may have a few flashy industrial products, like Embraer jets and car plants scattered around the country, but it mostly produces lots of commodities like iron ore, soy and petroleum. Iron ore was particularly responsible for the April numbers, as lower world prices led to a spike in purchases by the Chinese, who are huge steel producers.

For Rubens Ricupero, who served as Brazilian minister of finance in the 1990s and was secretary general of the United Nations Conference on Trade and Development, Brazil’s importance to China is all about the raw materials. “What is really meaningful in China’s rise,” he said, “is that they constitute a very important factor for commodities-producing countries now that mature industrial societies were not increasing demand for commodities.”

Lula’s visit to China was in part portrayed here as a meeting of giants. “No economic discussion is possible that does not take into account China, Brazil, India and Russia,” he boasted while there, and upon his return declared it the most successful of his foreign trips. But all signs pointed to the visit not meeting expectations, at least in the short term. It broke little new ground and largely saw the signing of deals that had been virtually concluded, most notably a $10 billion loan from China to the Brazilian state oil company, Petrobras, and an agreement to allow Brazilian chicken into China.

http://www.globalpost.com/dispatch/brazil/090526/brasilia-bejing