Beijing Tightens Trade Ties With Brazil
By Thomas Clouse
China and Brazil have agreed to strengthen cooperation in trade and development.
Chinese imports rise
China and Brazil agreed to strengthen cooperation in trade and development in April in a joint statement released in Beijing by Chinese president Hu Jintao and recently elected Brazilian president Dilma Rousseff. After the statement was released, Rousseff told media that Taiwanese electronics company Foxconn Technology Group, whose China-based factories produce a variety of products including the iPhone, was considering a $12 billion investment in Brazil. Following her trip to Beijing, Rousseff joined Hu and the leaders of Russia, India and South Africa at the BRICS Leaders Meeting in southern China. In a joint statement, the five countries called for greater representation of developing nations in international organizations such as the World Bank and International Monetary Fund (IMF).
China posted its first quarterly trade deficit in seven years in the first quarter of 2011, as strong domestic demand and rising commodity prices pushed up the value of imports by more than 32%. Exports also rose, more than 26%. The difference in total import and export values resulted in a $1.02 billion deficit, the first such deficit since the first quarter of 2004. While few analysts expect the deficit to continue, the figure will quiet some criticism from trading partners that the country’s exchange rate policy gives an unfair advantage to Chinese exporters. While criticism from overseas may soften, domestic pressure for a stronger currency could increase. Inflation also rose to a 32-month high in March, with the consumer price index up 5.38% year-on-year. A stronger renminbi would relieve some inflationary pressure by lowering prices of imported goods.
Chinese Internet company Qihoo 360 raised more than $175 million in its IPO on the New York Stock exchange in March. Shares were priced at $14.50 but more than doubled to $34 in the opening day of trading. Qihoo produces antivirus, gaming and Internet browsing software and posted profits of $8.5 million last year, an increase of more than 100% from 2009. Qihoo’s IPO marks the third success story for Chinese Internet companies in recent months, with video provider Youku and bookseller Dangdang listing in New York in December. China’s most popular search engine, Baidu, also made headlines last month as it agreed to remove links to free downloads of copyrighted material and remained silent about rumors of a possible cooperation with Facebook.