Global Equity Brazil

04.20.2010 - China and Brazil to boost co-operation

The second Brics summit was cut short last night when the Chinese president, Hu Jintao, returned earlier than planned to his country because of Wednesday's earthquake that killed at least 600 people in a remote Tibetan region.

Meetings in Brasília between the heads of state of Brazil, Russia, India and China were brought forward from today and took place alongside meetings of the heads of state of India, Brazil and South Africa, originally scheduled to precede the Brics summit.

Mr Hu and Luiz Inácio Lula da Silva, Brazil's president, held closed talks but did not discuss China's currency, a Brazilian government official said.

Henrique Meirelles, governor of Brazil's central bank, said this week the undervalued renminbi was having a negative impact on the global economy, adding to mounting international pressure on China to allow its currency to appreciate. But a senior diplomat said before the meeting the issue was not on the agenda and neither was the replacement of the US dollar as a global reference currency.

In a joint plan between Brazil and China due to be signed by the two presidents yesterday evening, the countries said they would work towards using their own currencies in bilateral trade, an idea they first proposed last May.

The 8,000-word document contains a host of proposals for bilateral co-operation in areas such as politics, economics, trade, energy, mining, financial services and agriculture.

The proposals are at times contradictory. On trade, the two countries say they are "ready to jointly oppose protectionism in any form" but later call for measures "that protect the interests of farmers in developing countries".

The document also reflects the slow pace at which bilateral relations have developed. Brazil recognised China as a market economy in 2004 but has yet to implement that recognition. In yesterday's agreement it promises to address the issue. China promised to invest billions of dollars in Brazil. That too has failed to materialise.

However, yesterday's agreement says: "Both countries put emphasis on the joint development and processing of minerals, such as iron, aluminium, nickel, copper and coal. Therefore, both sides agree to extend China's investment in Brazil, including investments in infrastructure to support exports to China, as well as the process of adding value to the production and processing of minerals on a local basis."

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