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BRAZIL AND CHINA: TRADE DEVELOPMENT AND INVESTMENTS

MR. IVAN RAMALHO, DEPUTY MINISTER

São Paulo, 23 de junho de 2010

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_______________________Presentation Overview

1. Brazilian Economy

2. Brazilian Industry and Investment Oportunities

3. Trade performance

4. Bilateral Trade

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_____________________________General Indicators

• Biggest Country in South America

• Population: 200 million

• Territorial coverage: 8.511.965 km2

• Greatest economy in South America and 8th in the world

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________________________________ Brazil - 2010

General indicators:

GDP: US$ 1,6 trillion;

International reserves: US$249 billion;

Public policies: macroeconomic estability, poverty

reduction and solid financial environment;

Source: IBGE/BACEN

_________________Brazilian Economy Dynamics

• From 2010 to 2013, US$ 735 billion are expected to be invested in industry and infra-structure projects;

• Pre-salt layer Programme: investment estimate is of US$ 400 billion;

• 32 million people upgraded from low to middle class in the last 7 years;

• In 2009, 1 million new job positions were created;

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______________________________Industrial Policy

Mobilizing Programs in Strategic Areas

Health Industrial Complex

InformationTechnology andCommunication

Nuclear Energy

Industrial Defense Complex

Nanotechnology Biotechnology

Programs for Consolidating and Expanding Leadership

AeronauticsOil, Natural Gas

and Petrochemicals

Bio-ethanol Mining Steel Pulp andPaper Meat

Programs for Strengthening Competitiveness

Automotive Complex

Capital Goods

Textile and Apparel

Wood and Furniture

Hygiene,Perfumery

and CosmeticsCivil

ConstructionServicesComplex

Naval and Shipping Industry

Leather, Footwear

And ArtifactsAgribusinessesBiodiesel Plastics Toys Electroelectronics Wheat

Productive Development Policy - PDP

___________________ Brazil-China Investments

• Bilateral investment flow faced a considerable increase in last years, but is still behind the potential of both economies.

• Outward Brazilian investments in China: led by Embraer (joint-venture Harbin Embraer); Weg (WEG Nantong Engines); Marcopolo and Random Commercial Representation.

• Inward Chinese investments in Brazil: 65,5% of chinese investments in Brazil is oriented to the commercial sector, followed by 14,05% to the mining sector.

• 6,7• 24,3• 38,42• 64,63

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__________________Brazilian Trade Performance

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-4,1

14,85,7 3,7

21,1

32,122,6

16,3

43,6

12,94,8

16,921,7

13,9 15,7 15,6

33,4

-24,4

16,6

-22,7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

World Brazil

Fonte: SECEX/MDIC

Brazilian and World Exports Evolution(2000-2009 / % yoy)

60.43973.203

96.677

118.529137.807

160.649

197.942

152.995

55.48372.093

55.119 58.287

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009(January-May)

2010(January-May)

__________________Brazilian Trade Performance

Exports Evolution Brazil-World(2000-2009 and January to May-2010 / US$ million)

Fonte: SECEX/MDIC9

__________________Brazilian Trade Performance

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Special Op.; 2,1%

Manufactured; 44,0%Basics; 40,5%

Semimanufactured; 13,4%

Exports by Product Categories(2009 / % share)

Fonte: SECEX/MDIC

__________________Brazilian Trade Performance

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2,2

4,9

5,7

10,3

22,2

13,0

10,3

23,3

25,8

Eastern Europe

Middle East

Africa

United States

European Union

LA & Caribbean except Mercosur

Mercosur

Latin America & The Caribbean

Asia

Fonte: SECEX/MDIC

Major Markets for Brazilian Exports(2009 / % share)

__________________Brazilian Trade Performance

Imports Evolution Brazil-World(2000-2009 and January to May-2010 / US$ million)

Fonte: SECEX/MDIC

55.85162.836

73.600

91.351

120.617

172.985

127.647

46.180

66.48455.602

47.243 48.326

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009(January-May)

2010(January-May) 12

_________________ Brazilian Trade Performance

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Capital Goods; 23,3%

Consumption Goods; 16,9%

Oil and Fuels; 13,1%

Intermediate Goods; 46,8%

Imports by Product Categories(2009 / % share)

Fonte: SECEX/MDIC

_________________ Brazilian Trade Performance

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1,6

2,5

6,6

15,8

6,7

10,3

17,8

22,9

28,3

Eastern Europe

Middle East

Africa

United States

LA & Caribbean except Mercosur

Mercosur

Latin America & Caribbean

European Union

Asia

Major Supplier Markets(2009 - % share)

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_________________Brazilian Exports to China

Source: SECEX/MDIC

1.805 1.902 2.5214.533 5.441

6.8358.402

10.749

16.403

20.191

8.41710.644

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009(January-May)

2010(January-May)

Exports Evolution Brazil-China(2000-2009 and January to May-2010 / US$ million)

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_______________Brazilian Imports from China

Source: SECEX/MDIC

1.222 1.328 1.554 2.1483.710

5.3557.990

12.618

20.040

15.911

5.6798.759

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009(January-May)

2010(January-May)

Imports Evolution Brazil-World(2000-2009 and January to May-2010 / US$ million)

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______________________________Bilateral Trade

BRAZILIAN EXPORTS TO CHINA2008 2009

BASICS 77,5% 76,8%

MANUFACTURED 22,4% 23,2%

BRAZILIAN IMPORTS FROM CHINA2008 2009

BASICS 4,3% 1,6%MANUFACTURED 95,7% 98,4%Source: SECEX/MDIC

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_______________ Issues for Further Development

Export potential to be developed:

Oil and fuels;Engines;Aircrafts;Chemicals;Equipments for air conditioniners;Energy distribution equipments;Siderurgic products;

_______________ Issues for Further Development

Trade Remmedies

Safeguards;

Dumping;

Subsidies;

WTO;

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_______________Issues for Further Development

China Agenda

Compendium of positive policies aimed at enhancing bilateral trade;

Identification of potential products to be offered to the chinese markets;

Identification of investment oportunities;Support to public and private trade missions;APEX office in China;

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THANK YOU

Mr. Ivan RamalhoDeputy-Minister

Ministry of Development, Industry and Trade

www.mdic.gov.br