During his recent state visit to China, Brazil’s President Luiz Inácio Lula da Silva voiced his support for developing countries to explore alternatives to the US dollar in international trade. This initiative aligns with China’s efforts to challenge the global dominance of the US dollar in commerce. President Lula’s call came during his first state visit to China since taking office in January 2023. He specifically urged the BRICS group of nations, consisting of Brazil, China, Russia, India, and South Africa, to work together to establish their own currency for trade purposes.
In his speech at the New Development Bank in Shanghai, also known as the “BRICS bank,” President Lula questioned the necessity for all countries to rely on the US dollar for international trade. He expressed his desire to explore the possibility of conducting trade transactions using their own national currencies. His remarks received enthusiastic applause from the audience, which included Brazilian and Chinese dignitaries. President Lula’s call to reduce dependence on the US dollar aligns with China’s efforts to promote the use of the renminbi (RMB) in cross-border commodity trades. Chinese policymakers are actively seeking to enhance the role of the RMB in the global financial system, signaling China’s aspiration to assert itself further as the world’s second-largest economy.
Under President Lula’s leadership, Brazil has shifted its foreign policy towards a more multilateral approach. This approach emphasizes not only maintaining strong ties with the United States, as evidenced by President Lula’s visit to President Joe Biden in February, but also strengthening relations with China and other developing nations. Over the past decade, bilateral trade between Brazil and China has surged to $150.4 billion in the previous year. China has become a significant buyer of Brazil’s agricultural commodities and minerals while simultaneously investing in Brazil’s extensive consumer market and infrastructure sector. The deepening economic partnership between the two countries has spurred discussions on increasing the use of their respective currencies in bilateral trade. Recently, the Brazilian branch of the state-owned Industrial and Commercial Bank of China completed its first transaction directly in renminbi within Brazil, as reported by Chinese state media.
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