Brazil and China completed their first bilateral trade settlement using the Chinese Yuan, a key step toward deeper commercial relations. The transaction was handled by the Industrial and Commercial Bank of China (ICBC), which was appointed by the Chinese government to function as a clearing institution for Brazilian corporations.
According to observers, this step paves the door for more cost-effective and efficient payments between the two countries.
The Chinese Yuan offers stability and cost reduction for institutions engaged in trade, according to Guo Haiping, honorary president of the General Chamber of Chinese Entrepreneurs in Brazil. He emphasized the significance of the yuan in reducing market risk and trade costs.
TLC, a Chinese electronics conglomerate, told Global Times that the integration of yuan payments makes investments cheaper and less hazardous because no transfers to a third currency are required.
Lula Proposes Replacing US Dollar with Alternative in Global Trade
This historic deal occurred before Brazilian President Luis Inacio “Lula” da Silva’s travel to China, where he met with President Xi. Experts predict further announcements on increased economic integration, including the possibility of Brazil joining China’s “Belt and Road” plan. As Brazil and China expand their commercial connections, this partnership represents a deliberate shift away from reliance on the US dollar in global commerce.
”I ask myself every night why all countries have to base their trade on the dollar. Why can’t we trade using our own currencies? Who decided that the dollar would be the dominant currency after the gold standard disappeared?”Lula, in a speech at the event in Brazil.
The agreement between Brazil and China heralds the start of a new era in global commerce. This partnership not only strengthens bilateral cooperation but also signifies a purposeful shift away from the US currency in international trade.