BRICS Prod China's Hu to Import Value-Added Goods as Well as Raw Materials
President Hu Jintao was pushed by fellow BRICS members Brazil, Russia, India and South Africa to open the Chinese market to goods ranging from Indian drugs to Brazilian planes as leaders gathered on a tropical south China island for a summit.
Indian Prime Minister Manmohan Singh pressed Hu in a bilateral meeting yesterday to find ways to reduce India’s trade deficit with China by boosting imports of Indian information technology and pharmaceutical products, Indian National Security Adviser Shivshankar Menon said in Sanya, China.
“The prime minister mentioned that these would conceivably help to reduce the imbalance,” Menon told reporters. “President Hu Jintao said this was an issue that concerned them.”
China, Russia, India, Brazil and South Africa, brought together under the Goldman Sachs Group Inc.-coined acronym, are divided by a host of trade disagreements. Brazil and India are pushing China to buy more value-added goods. South Africa wants more iron ore and other raw materials processed at home before exporting them to China. Brazil and India have also complained that China’s yuan is undervalued, undermining their exports.
The countries “don’t have the same interests,” Jim O’Neill, chairman of Goldman Sachs Asset Management International, who came up with the term BRIC in 2001, said in an April 6 interview. “The wealth per head is very different, the politics is very different, and the philosophy and their natural economic edge is different.” South Africa was invited to join the BRIC this year, giving the group its “S”.
Chinese Commerce Minister Chen Deming assured his counterparts in a closed-door meeting yesterday that China would make it a priority to import more value-added products from BRICS countries, Indian Trade Minister Anand Sharma told reporters in Sanya.
Oleg Fomichev, Russia’s deputy economic development minister, said China had pledged to set up high-technology projects with Russia, “not just importing our resources and exporting industrial goods.”
The five nations yesterday agreed to push for Russia’s entry into the World Trade Organization and called for progress in the Doha Round of World Trade Organization trade talks. Chen told reporters that the BRICS nations “still face economic overheating issues such as inflationary pressure and asset bubbles.”
Today, the leaders will meet as a group and issue a joint statement.
The difficulties faced by Brazil, Russia, India and South Africa in increasing high-technology and manufactured exports to China was underscored this week by Brazilian aircraft-maker Embraer SA. (ERJ) The company failed to get China’s government to approve final assembly of its E-190 aircraft in China because of concerns it would compete with a domestic regional jet, Chief Executive Officer Frederico Curado said April 12 in Beijing. Embraer will build business jets in China.
“We had the goal of building the 190 here but the Chinese government didn’t approve the project,” Curado said. The government was concerned that there wouldn’t be enough demand for both the E-190 and China’s rival ARJ21, he said.
Complaints from Brazilian unions and industry groups, including toymakers and textile producers, have led the Brazilian government to enact 29 anti-dumping measures aimed at Chinese-made goods, more than those against any other country and almost four times more than directed at the U.S., according to the Trade Ministry.
The measures aim to limit imports on goods the government believes are being sold below cost. Last week, Brazil approved higher levies on Chinese-made viscose textiles.
--Michael Forsythe in Sanya. With assistance from Andre Soliani in Beijing, Stephen Engle and Christine Hah in Sanya. Editors: Peter Hirschberg, Mark Williams
To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +86-10-6649-7580 or firstname.lastname@example.org
To contact the editor responsible for this story: Peter Hirschberg at email@example.com
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.