http://www.bbc.co.uk/news/business-21949615
The article talks about how China and Brazil agreed for their central banks to exchange up to thirty billion dollars of the local currencies. This is supposed to facilitate trade between the two countries and prevent any problems that were to arise. For a long time now, China has always been a trading partner with Brazil. Over the past decade the trade between the two countries has grown enormously. In 2003 the trade volume was roughly seven billion dollars, now the trade volume is nearly seventy-five billion dollars. Some key components that cause this drastic growth are that the Chinese have a really have high demand for Brazilian resources such as iron ore and soy products. Also, Brazil has become a key country to export to for Chinese manufactured goods. The reason for this is that China wants to promote the Chinese yuan as an alternative currency for a global reserve currency.
I believe that this is a good idea because it'll promote foreign trade and investment. This way both Brazil and China can have their economies benefit from doing business with each other. This may also lead to other countries making agreements with them to promote further trade.
ReplyDeleteChina and Brazil are two of the biggest rising powers in the global economy and this agreement is both a economical one and a political one as well. This deal will not just boost trade between the two countries temporarily, but is a start and an indication of growing economic relations between the two in the future.
ReplyDelete