This is the online version of today’s edition of the Por Dentro da Bolsa newsletter, which talks about the importance of the Chinese market to Brazil and the signs of a slowdown in China’s economy. To subscribe to this and other newsletters and receive them directly in your email, register here. UOL subscribers are also entitled to two more exclusive newsletters about investments.
China is the main importer of a number of Brazilian products, and is a nation with a central role in global commodity markets, such as iron ore, oil and food.
The importance of China in these markets can be seen when we look at the period known as the commodities boom, between the years 2000 and 2014.
During this period, Chinese demand for primary products exploded, benefiting the economies of underdeveloped countries, such as Brazil, which exported tons and tons of inputs to feed the Asian giant’s production chains.
Currently, however, China has shown increasingly clear signs of a slowdown in its economic growth, especially since 2021, when the crisis in the Chinese real estate sector broke out.
Sales of residential properties continue to fall, and the increase in the cost of debt has prevented many companies from seeking refinancing for their debts abroad.
In this scenario, many Chinese construction companies and developers are at risk of bankruptcy, and some of them have failed to honor their financial commitments.
In the early hours of Monday (4), global markets received the news that the Chinese developer Shimao had not made the payment of a debt security worth US$ 1 billion.
In addition, the Chinese government has ordered new lockdowns in Anhui province, in the face of a new outbreak of covid-19. After 287 new cases of the disease were reported on Monday, Beijing ordered the confinement of about 1.7 million people in Sixian and Lingbi counties.
The zero covid policy implemented in the country has contributed to the deceleration of the economy and the cooling of demand for a series of products and inputs.
China remains a robust and diversified economy, but it is undeniable that the current situation in the construction sector and the difficulty of liquidating the coronavirus are hard blows against the growth goals established by the Chinese government.
Read on ‘Investigando o Mercado’ (exclusive to UOL subscribers, who have full access to UOL Investimentos content): information about the first energy transmission auction of 2022.
A hug,
Rafael Bevilacqua
Levante’s Chief Strategist and Founding Partner
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