Il Brazil is the first trading partner of China at a global level, above all for the export of raw materials, and therefore even the slightest sign of weakness arriving from the Asian giant has strong repercussions on the economy of the South American locomotive. Proof of this is that the negative figures on Chinese GDP in the second quarter, with growth of just 0,8%, are putting problems not only in the sector Brazilian agribusiness, that depends on Beijing for 37% of the value of its exports (equal to almost 100 billion dollars), but also the same Sao Paulo Stock Exchange, which in August returned from ten consecutive bearish sessions, the worst trend since 1984.
The mining giant Vale is down
Weighing on the negative performance ofBovespa index the shares of the have also been in the last few days mining giant Vale, which on Monday lost more than 3% but above all, precisely, fears about the slowdown of the Chinese economy, moreover shaken in recent days by the Country Garden case, the large real estate company on the verge of bankruptcy and whose stock was suspended at the Hong Kong Stock Exchange after losing more than 14% in the single session of Monday 16 August. The building construction market in China was worth 25% of GDP in the past, but it has been in crisis for some time and Country Garden today has a debt estimated by Bloomberg at almost 200 billion dollars.
News from China worries Brazil
For Brazil, whose GDP growth in 2023 it was recently revised to increase to 2,2% (which, however, is now overestimated according to economists), this is not good news, given that its economy, recovering after Lula's return to the presidency, is heavily dependent on its Asian partner. And not just for the soy, which still remains by far the commodity most in demand in the East: this year 70% of the soybeans exported by the South American country were destined for China, ie 50 million tons out of the total of 72,5 million tons. Beijing also buys 12% of Brazilian exports of soybean oil and 85% of almond oil, and in recent years it has increasingly diversified the partnership by importing meat, cotton and cellulose.
The export of meat is growing
In particular, themeat export has increased by 6% to over 5 million tons, with a boom in pork and chicken, while practically half of the pulp leaving Brazil arrives in China. The Chinese turmoil is not a good sign for South America's largest economy, just in the days when its neighbor Argentina is shaken by an unprecedented crisis and a possible political upheaval after the victory of the far right in the presidential primaries.
