What is the impact of China on the Brazilian economy?

Understand the slowdown of the Chinese economy and its impact on Brazil

Estimated reading time: 3 minutes

The Chinese economy has been slowing lately due to the effects of the Covid-19 pandemic on the country. Some economic sectors have recently not shown positive results. The real estate sector, for example, is in crisis in the Asian country. Given this reality, what is the impact on the Brazilian economy?

China is Brazil’s main trading partner. In this sense, the implications for the Chinese economy directly impact the national scenario.

Current moment of the Chinese economy

The zero covid policy implemented by the Chinese government contributed to the deceleration of activities in the country. Lockdowns took place in important industrial and commercial areas, which shook productions. In the last month of July, the productive results were lower than expected.

In addition, the real estate sector is going through a severe crisis. The Chinese are stopping to pay the installments of the financing after the construction companies stop the works. The attitude is extremely worrying as the sector accounts for about a third of China’s economic output.

In the international market, the deceleration of the Asian giant has caused the devaluation of commodities, such as oil and iron ore.

Impact in Brazil

Given this situation, Brazilian exports to China showed a reduction of 11.5% in the comparison of the first semesters of 2021 and 2022, according to data from the Secretariat of Foreign Trade (Secex). In relation to ferrous minerals, exports fell by 33% in volume in the same period.

In this way, it is already possible to perceive that the demand for national products has decreased. There is still the disorganization of the production and logistics chains, since the ports in China operate with reduced capacity, which impacts the supply of important Chinese inputs that affect the prices of products here in Brazil.

Chinese inflation, however, is below the world average, which can be considered a positive factor that can help to face the crisis. The Central Bank of China, after the release of the latest economic results, cut the interest rate by ten percentage points to 2.75%.

Factors contributing to China’s slowdown

The main factor that favored the Chinese slowdown is in fact the Covid-19 control policy, as explained above. However, there are a few others that also contributed to the country’s lower growth. Look.

  • Greater regulatory pressures in the information technology segment;
  • Crisis of the large developer Evergrande in the real estate sector;
  • High world inflation that compromised Chinese exports, which have a large share of GDP (Gross Domestic Product).

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Image: Freepik/Slon

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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