China and Brazil have struck a new trade deal that will allow them to trade in their own currencies, bypassing the need for the US dollar as an intermediary.
This agreement marks a significant move by China to reduce its reliance on the dollar and establishes the country as a formidable rival to the US in the global economy.
The deal was announced by the Brazilian government on Wednesday and will enable the two nations to conduct their financial transactions directly, using Chinese Yuan for Brazilian Real and vice versa.
Brazil’s biggest trading partner is China with bilateral trade worth a record USD 150.5 billion in 2022.
For Brazil, this deal represents a significant shift away from the traditional reliance on the US dollar as the world’s primary currency. According to the Brazilian Trade and Investment Promotion Agency, ApexBrasil, the agreement is expected to reduce costs and promote even greater bilateral trade.
The move away from the US dollar as an intermediary in international trade could have far-reaching implications for the global economy. Other countries may follow suit and start conducting their trade and financial transactions in their own currencies, potentially undermining the dollar’s position as the world’s primary currency.
This is not the first time that China has taken steps to reduce its dependence on the US dollar. In recent years, the country has been promoting the use of the yuan in international trade and investment, and has signed currency swap agreements with other countries to facilitate trade in their own currencies.
The shift away from the US dollar comes at a time of growing tensions between China and the US, with both countries engaged in a trade war and competing for global influence. As China seeks to establish itself as a major player in the global economy, this move is just one example of the country’s efforts to assert its economic power and challenge the dominance of the US.
