China Takes Another #1 Title From the U.S.

China has overtaken the U.S. in yet another category of global influence this morning.

This time it’s Brazil. China is now Brazil’s No. 1 trading partner, snapping a nearly 80-year tradition of Brazil depending primarily on exports to America.

Brazil announced over the weekend it had conducted $3.2 billion in business with China during April — a 12-fold increase in Sino-Brazilian trade from 2001. April also marks the second consecutive month that the U.S. has ranked No. 2.

What’s the trade? Iron ore. Brazilian officials say the Chinese have been buying the stuff hand over fist since the start of 2009.

As one consequence, Brazil’s stock market, the Bovespa Index, is outpacing the American equity rebound. Brazil’s version of the Dow has recouped the majority of its crisis losses. Check it out:


Brazil and China are just two areas of rich investment opportunity we’ll be focusing on with the new BRIC report we conceived with our Indian partners last week in London. Specific details on the report are forthcoming.

“The Brazilians are gearing up for the first battle of the next war,” says Byron King. “They intend to survive as a prosperous, industrialized country in the 21st century, despite intense future competition across the world for energy fuels and other natural resources.

“Down in Brazil, they’re in something like national rapture at the prospect of drilling up the deep pre-salt hydrocarbon plays in the offshore basins. The estimates are that the deep basins off Brazil hold between 20-100 billion barrels of oil. Maybe more.

“The entire nation of Brazil, apparently, revels in the prospect of investing over $120 billion in offshore development in just the next eight years. They have a plan. It’s their moonshot. The Brazilians believe that the offshore environment will bring their industries firmly into the modern era. Brazil wants to be a world power in the 21st century. And the oil? Well, of course they have plans for that oil.

“Petrobras has plans to emplace HUNDREDS of subsea systems on the deep ocean bottom to bring that oil into production. The Brazilians will lay thousands of miles of underwater pipeline, with all the associated ship support and other equipment that entails.

“The Brazilians are not living in the frozen past. They’re not hostage to paralyzing myths. The Brazilians envision a future for their nation, and they’re acting on it. They see hundreds of deep-water oil wells pulling petroleum out of the crust from many miles down and piping it ashore to their refineries and industries. Indeed, Brazil plans to win that first battle of the next war. And it’s cutting the steel with which to do it.”

The Daily Reckoning