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President Lula's visit to China

May 22,2023 | Autdrone

President Lula's visit to China

President Lula's visit to China and China's $10 billion loan to Brazil is a multiple gain, why is it a multiple gain?

In recent years, China has emerged in international financial markets as one of the largest creditor countries in the world. Brazil, in turn, is one of the largest economies in Latin America. China's recent $10 billion loan to Brazil is considered a "win-twice" deal.

Why is this a "double advantage" business? Let's take a closer look at the details of this agreement.

First, China lends US$ 10 billion to Brazil. Brazil can use this $10 billion to pay off its $10 billion debt to the US. This means that Brazil managed to avoid the risk of default on its debt, while avoiding high interest rates. This was Brazil's first victory.

Em seguida, a China comprou soja brasileira no valor de US$ 10 bilhões, pagando por ela com RMB 69 bilhões. Esse acordo impulsionou o comércio entre o Brasil e a China, ajudando a China a obter os produtos de que precisava, enquanto o Brasil aumentava suas receitas de exportação. Foi uma segunda vitória para o Brasil.

Por fim, o Brasil usou os 69 bilhões de RMB para pagar a dívida de US$ 10 bilhões da China. Isso significa que a China conseguiu reduzir suas reservas em dólares e, portanto, seu risco. Essa também foi a primeira vitória da China.

In addition, this agreement allowed the US dollar to return to the US and the US debt to be recovered. That was America's first victory.

In short, the agreement has been beneficial to all parties involved. Brazil received the necessary funds and export revenues, China managed to acquire commodities and reduce its reserves in dollars, and the US managed to recover its debt. Therefore, it was considered a win-win agreement.

At the end of his visit to China, President Lula went to social media platforms to express his excitement for having obtained orders from China totalling almost RMB 70 billion and affirming with confidence that Brazil had reopened its doors to the world. It is interesting to note that when Lula visited the United States earlier, he obtained only $9.5 million in trade, or about 65.3 million. Brazil also borrowed $10 billion and returned it to the US. On the other hand, it is understandable that President Lula was so excited.

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