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Carol Hills: That’s the view from China, but what about the reaction in countries with economies heavily tied to China’s? Like Brazil, which relies on commodity exports to China. Joining me now is Claudia Antunes from Rio. She’s an independent journalist and former international editor with Folha de SÃ£o Paulo, Brazil’s largest newspaper. Claudia, first off, when you watch the news about the economic crisis in China, what’s your own personal reaction to it?
Claudia Antunes: Well, I’m puzzled by it because most of the analysts and economists can’t predict what kind of crisis this one is. I don’t know if its an accommodation to what the Chinese call the “new normal,” a different level of growth, or if it’s the beginning of a catastrophe, something like the Asian crisis almost 20 years ago. But I’m sure this will have an impact on Brazil, as well.
Hills: Claudia what commodities does Brazil export to China?
Antunes: Well, you know, since 2009 China has become the main Brazilian trade partner, and the main commodities Brazil exports: iron ore, crude oil, and soy.
Hills: Iron ore, crude oil, and soy. How important are these exports to Brazil’s overall economy?
Antunes: They are very important. In fact, one of the main factors that led to the huge growth in the Brazilian economy between 2006 and 2010 were the Chinese imports from Brazil. But the overall bilateral trade has fallen 17% this year, and one of the main Brazilian mining companies, Vale do Rio Doce, the revenues this year have fallen almost 30% because of the decrease of the demand from China.
Hills: Those are pretty significant--17% reduction in trade overall and almost 30% for a particular mine.
Antunes: But the fact is that the Chinese factor only adds to a crisis that was both economic and political, that was already ongoing in Brazil, you know.
Hills: Yes, you’ve already had your currency devalued over the past year You’re also dealing with a big corruption crisis; your president, Dilma Rousseff is under a lot of pressure herself. What I’m wondering, you mentioned that big drop in trade with China and a particular mine. Has that resulted in a loss of jobs in certain parts of Brazil?
Antunes: I don’t think that the mine is laying off people because I think they are waiting to see what’s going to happen in the long term.
Hills: What about the reverse? Is there much Chinese investment in Brazil?
Antunes: Today, the United States and Germany are still the main foreign investors in Brazil. But Brazil is counting a lot on China’s investment. We had a visit here last May of the Chinese prime minister, Li Keqiang, and he promised a total of $53 billion in investments in the next years, you know.
Hills: So you’re going from an export relationship with China to courting Chinese investment. How’s Brazil’s stock market doing?
Antunes: Well, Brazil’s stock market had also been falling before the events in China because of the local political and economic crises. So, Brazilian stocks are now on the same level that they were in 2009. But, of course, the stocks fell yesterday as in every part of the world and are rising a bit today.
Hills: Journalist Claudia Antunes is in Rio. She’s a former international editor with Folha de SÃ£o Paulo, Brazil’s largest newspaper. Thanks so much, Claudia.
Antunes: Thank you.