The governments of China and Brazil have reportedly struck a deal to conduct trade using the Chinese yuan, also known as the renminbi and the Brazilian real.
According to a report from Agence France-Presse on 30 March, the Brazilian government stated on Wednesday that it had reached an agreement with China to no longer use the US dollar as an intermediary currency in trade, instead opting for the adoption of their respective currencies instead.
The agreement allows China to directly engage in large-scale trade and financial transactions with Brazil, the largest economy in Latin America, by exchanging the yuan directly for the real and vice versa.
In a statement, the Brazilian Trade and Investment Promotion Agency (ApexBrasil) stated that “this is expected to reduce costs while promoting greater bilateral trade and facilitating investment.”
Chinese state-owned media reports that Beijing has entered similar agreements with other countries including Russia and Pakistan.
China is currently Brazil’s largest trading partner, accounting for more than one-fifth of Brazil’s total imports, followed by the United States. China is also Brazil’s largest export market, accounting for more than one-third of Brazil’s total exports.
Last year, bilateral trade between China and Brazil reached a record high of $150.5 billion. Currently, Brazil is the largest recipient of investment from China in Latin America, primarily in the areas of high-voltage transmission lines and oil extraction.