Monday, May 18, 2009
Significant, not just because China and Brazil are among the largest emerging market economies, but also because Brazil is the largest economy in South America, formerly a US economic preserve. US preoccupations with the Middle East and Central Asia, combined with the severity of the global recession, continue to drive a decline in US military and economic influence there.
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.
The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.
From the Brazilian and Chinese perspectives, it may be a reflection of the urgency that each places upon reducing their dependence upon US markets. As you may recall, James Petras is forecasting a collapse in the South American manufacturing sector over the next few years, while there have already been numerous reports of plant closures in China. Hence, the need to create new links of global economic interdependence to replace the old ones.