Lula Wants Brazilians and Chinese to Eliminate Dollar for Trade Between Them

Chinese yuan Brazil and China will start conducting business with each other in their own currencies instead of the dollar, a publication quoted Brazil's president Luiz Inácio Lula da Silva as saying ahead of his trip to Beijing.

In an interview published Friday in Caijing, a respected Chinese business magazine, Lula said it was important that the two countries "establish a trade that is paid for in our own currencies."

"We don't need dollars." Lula was quoted as saying in the transcript posted on Caijing's Web site. "It's crazy that the dollar is the reference and that you give a single country the power to print that currency."

The Brazilian president has been urging the end of the use of the US dollar in South American trade, saying it will reduce transaction costs for both exporters and importers, especially those operating on a smaller scale.

Brazil and Argentina have already agreed to trade with each other using their own currencies and negotiations for a similar accord with Uruguay are advancing.

In recent years, China and Brazil have been forging stronger ties. In February, Lula met with Chinese Vice President Xi Jinping during Xi's visit to Brasilia. Talks yielded an agreement in which Brazil would supply up to 100 million barrels of crude oil a day to China in exchange for a loan of up to 10 billion US dollars.

Lula's trip to China with the 35th anniversary of relations between the two countries. China's Foreign Ministry had commented on the meeting between Lula  and President Hu Jintao during Lula's May 18-20 trip:

"They will have an extensive and in-depth exchange of views on deepening bilateral strategic partnership, expanding pragmatic cooperation in various fields as well as regional and international issues of common interest," ministry spokesman Ma Zhaoxu said this week.

In the Caijing interview, Lula da Silva said talks with the Chinese would focus on renewable fuels, the prevention of global protectionism and the ongoing economic crisis. He added he hoped to sign agreements in banking, ports, infrastructure projects and the fight against transnational crime.

Lula was expected to sign a "voluminous" financing agreement for government managed Petrobras. said Energy Minister Edison Lobão.

Lobão did not detail the amount of the loan, but separate reports said that the agenda during Lula's visit includes discussion of a US$ 10 billion US dollars financing package agreed under a memorandum of understanding signed in February by Petrobras and the China Development Bank.

Petrobras Chief Executive Officer Jose Sergio Gabrielli, who was expected to accompany Lula on the journey to China earlier this month, told state media that the corporation would soon finalize the agreement with China to finance sub-salt oil development offshore Brazil.

Petrobras is open to having Chinese state-owned oil companies take equity stakes in oil exploration and production in Brazil as part of a package deal involving the 10 billion in financing, according to a report by Dow Jones Chinese Financial Wire.

Apparently Petrobras is in talks with four Chinese companies about possible equity stakes and also on the volumes of crude oil Brazil would supply as part of a credit-for-oil deal they hope will be ready by early next week, when Lula da Silva visits China.

As part of the Brazil-China outline agreement in February, Petrobras is to sell China Petrochemical Corp. (Sinopec), 60.000-100.000 barrels per day of heavy crude oil as part of the credit deal. Other four Chinese companies could also be involved in the operation, PetroChina Co.'s Chinaoil, Sinopec's Unipec, Sinochem Corp., and Zhuhai Zhenrong.

Mercopress

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  • Show Comments (6)

  • Joao da Silva

    asp
    How is the weather down there in the paradise, ASP?

  • Joao da Silva

    [quote]It was supposed to be a five day visit- reduced to three.(estadao opiniao-visita a Pequim ezvasiada 19/05). As usual China manages to outplay the visitors at their own game.Political promises-to invest in oil exploration, maybe buy chicken, pork and beef in return for the chinese super car(?) – the chery- soon to be made in Brazil![/quote]

    Yeah, I read this news. By reducing the visit to two days, the Prez saved some tax payers’ money though. 😉

  • DU 48

    China 3 Itamaraty-Planalto 0 (mixed team). Sustitutes not used:Br-China Business Council
    It was supposed to be a five day visit- reduced to three.(estadao opiniao-visita a Pequim ezvasiada 19/05). As usual China manages to outplay the visitors at their own game.Political promises-to invest in oil exploration, maybe buy chicken, pork and beef in return for the chinese super car(?) – the chery- soon to be made in Brazil! OMG.

  • Joao da Silva

    Ch.c
    [quote]Joao….. of course.[/quote]

    Hey Ch.c, it was our distinguished fellow blogger ASP who asked the question and your answer was directed to me! Couldnt resist saying hello to you all. I am currently in a place where the people I talked to have been confirming what you have been saying about U.S. economy 😀

    [quote]Just for fun Joao,. recently I looked at Monaco real estate prices.
    LOW prices 30-40’000 EUROS…PER SQUARE METERS.
    MID prices 40-60’000 Euros
    HIGH prices…60’000 and up to 100’000.- EUROS per Square Meter.

    I saw a 380 Sqm condo with 370 Sqm of terraces & balconies offered at…EUROS 50 MILLIONS !!!!
    [/quote]

    BUT…BUT…., if I had that kind of money, I would rather buy properties in CA !

    BTW, my forecast is that the U.S. economy will pick up only in the second half of 2010.BUT…BUT… I think that Obama has brought in some new kind of leadership and therefore am unwilling to write him off as an incompetent manager. 🙂 😉

  • ch.c.

    Joao !
    Joao….. of course.
    Just refer to Ohlala 10 years budget proposals made a few months ago.

    Total U.S. country debt will double…..using his own numbers…in 5 (yess..FIVE) years.
    And this is looking at the conservative way. Some re-adjustments were already made that will put the total deficits and total country debts even HIGHER !

    the US$ has lost 75 of its value against my country currency in 40 years.

    As I told you so many times just look at SECULAR CHARTS (40 years). It is all there.

    Europeans currencies did not do any better outside of the Deursche Marks !

    Against my own currency the BP went from 12 Swiss Francs to 1 BP….to 1,70 to 1 !

    And strong currencies countries ALWAYS have LOWER interests rates. Look at the JY or Swiss francs interests rates over the decades.

    Weak currencies such as the Brl and all others MUST THEN ATTRACT foreign money at a HIGHER RATES by definition which
    penalize not only the country governement budgets but also THE WHOLE ECONOMY AND SOCIETY since companies will at their turn have to borrow money ALWAYS at higher rates than their government rates…also by definition.
    it is a snowball effect.

    Just look at YOUR individual borrowing rates. 12 % or so for mortgages, 30 % for cars, 40 % rates for ysour small and medium size companies, well over 50 % for consumers and around 180 % for overdrafts.

    In my country, mortgages are at 2,5-3 %, car rates at around 5 %.
    Ohhhh and we had Noooooooo real estate meltdown…thus far.

    Just for fun Joao,. recently I looked at Monaco real estate prices.
    LOW prices 30-40’000 EUROS…PER SQUARE METERS.
    MID prices 40-60’000 Euros
    HIGH prices…60’000 and up to 100’000.- EUROS per Square Meter.

    I saw a 380 Sqm condo with 370 Sqm of terraces & balconies offered at…EUROS 50 MILLIONS !!!!

    OUCH…OUCH !

    😀 😉 😉

  • asp

    why not ?
    the future of the dollar doesnt look clear right now. america will be printing up a lot of money and going through its declining currency thing unless they really make an effort to get a handle on that. i wish i could see signs they were talking about it more.

    for sure they have had several articles in the nytimes stating that a weak dollar could do the states in , especialy if china wants to call in its money from usa treasury bonds. but, nobody is making it a priority. no one is really hammering home the real posibility of what could happen with inflation if they have to keep printing up money….

    please tell me im wrong on this one , ch c

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