Brazil China Chamber of Commerce and IndustryCommerce and Industry

www.ccibc.comMare Forum Italy 2010

Introduction• 1949 – People’s Republic of China established

• 1974 Brazil and China re establish diplomatic relations• 1974 – Brazil and China re-establish diplomatic relations

• 1978 – Deng Xiao Ping begins economic reforms, by opening up and Cmodernizing the Chinese economy

• 1995 – Brazil accepted as a WTO member (Trade Flow U$2.2 Billion)

• 2001 – China accepted as a WTO member (Trade Flow U$ 3.2 Billion)

• 2009 – China overtook USA as Brazil’s largest trading partner (Trade g g p (flow U$36 Billion X U$35.6 Billion with USA)

• Population 1.35 Billion people 365 Million householdsLife expectancy: 71 years

• Country 9.6 million km² (Brazil 8.6

million Km²)million Km )World’s 3rd largest countryCapital: Beijing34 Ad i i t ti R i34 Administrative Regions:- 4 Cities under Central

Government Control- 23 Provinces- 5 Autonomous Regions- 2 Special Administrative

Regions

• Population198 Million people56 Million householdsLife expectancy: 73 years

• Country:Area: 8.6 M km² -World’s 5th largestOfficial Language: PortugueseOfficial Language: PortugueseCurrency: “Real” R$1.00=U$0.57 or RMB

3.87 (16/04/10) - Float SystemAd i i t ti R i 26 St tAdministrative Regions: 26 States and Capital: Brasília (Federal District)Main Cities: São Paulo, Rio de Janeiro,

Belo Horizonte, Salvador, Porto Alegre, Recife

Political System: Federative RepublicPresident: Luis Inácio Lula da Silva

Chinese/Brazilian Economy (2009 ): Sources: Economist, World Bank, MOFCOM, CIA

GDP PPP :U$ 8.7 trillion U$ 2.0 trillionGDP :U$ 4.7 trillion U$ 1.5 trillionGDP :U$ 4.7 trillion U$ 1.5 trillionGDP per Capita PPP :U$ 6.500 U$10.296GDP per Capita :U$ 3.615 U$ 8.300GDP Growth 2009 :8.7 % -0.2%GDP Growth 2010 (est.) : 9.5% 6%

GDP Per SectorAgric lt re 11 % 6 %

Chinese currency •Name: Ren Min Bi (RMB)•E h t (16/04/10)Agriculture 11 % 6 %

Industry 49 % 26%Services 40 % 68%

•Exchange rate (16/04/10): US$ 1 = 6.83 Yuan; R$ 1 = 3 82 YuanServices 40 % 68% R$ 1 = 3.82 Yuan

World U$ GDP PPP (2009) Source: IMF

Country U$ TrillionUSA 14 3

World U$ GDP PPP (2009) Source: IMF

USA 14.3China 8.7Japan 4 1Japan 4.1

India 3.5

Germany 2 8Germany 2.8

United Kingdom 2.2

F 2 1France 2.1

Russia 2.1

Brazil 2.0

Exports Brazil – BRICs (U$ billion) Source B il G t

20

Exports Brazil – BRICs (U$ billion) Source: Brazil Govt.

ChinaR iRussiaÍndia

1 13.5

996

997

998

999

000

001

002

003

004

005

006

007

008

009

1.10.50.2

3

1996

199

1998

1999

2000

200

2002

2003

2004

2005

2006

200

2008

2009

Imports Brazil – BRICs (U$ Billion) Source: Brazilian Govtp

16

ChinaÍndiaRússia

996 997 998 999 000 001 002 003 004 005 006 007 008 009

1.1

0 20.4

1.52.0

199

199

199

199

200

200

200

200

200

200

200

200

200

2000.2

BRICs Economies (2009) Fonte: CIA, IBGEBRICs Economies (2009) Fonte: CIA, IBGE

Brazil Russia India ChinaGDP growth rate 0 1% -8 5% 6 1% 8 7%GDP growth rate 0.1% 8.5% 6.1% 8.7%GDP per capita PPP $10.200 $15.200 $3.100 $6.500

Inflation rate 4.3% 11.9% 9.8% -0.7%

Exports $153 bi $296 bi $155 bi $ 1.2 triImports $128 bi $197 bi $232 bi $ 1triF i R & $238 bi $439 bi $282 bi $2 2 t iForeign Reserves & Gold

$238 bi $439 bi $282 bi $2.2 tri

Population 198 mi 140 mi 1.1 bi 1.3 biForeign Debt $216 bi $369 bi $232 bi $347 bi

Public Debt (% GDP) 46.8% 6.9% 60.1% 18.2%

Investment (% GDP) 17% 20% 34% 43%

Finances - Brazil x China 2009 Source: Economist, CIAFinances Brazil x China 2009 Source: Economist, CIA

Inflation p.a. (%)4.3

4

5Foreign Debt (U$ bi)

347

300350400

1

2

3

4

BrazilChina

216

100150200250300

BrazilChina

-0,7-1

0

Foreign Reserves (U$ tri)2 5

Public Debt (% GDP)50

050

100

2.2

1,5

2

2,5

Brazil

47

30

40

50

Brazil

0.20,5

1 China 18

0

10

20BrazilChina

0 0

Finances and costs Brazil-China (2009)( )Source: SAT - China State Administration of Tax, IBPT (Instituto Brasileiro de Planejamento Tributario)

Tax Rate (%)

353540

Brazil

Interest Rate (%)

14 Brazil

18

1520253035

China

8.7

5.368

1012

BrazilChina

05

10

024

Labour Tax (%)127

100

120

140BrazilChina

57

20

40

60

80

0

20

Foreign Trade 2009: Source: Brazilian Govt CIA China DailyForeign Trade 2009: Source: Brazilian Govt, CIA, China Daily

Exports U$ Var. Imports U$ Var.

Brazil→China 20 B +23% Brazil←China 16 B -20%

Brazil→World 153 B -22% Brazil←World 128 B -26%

China→World 1.2 T -16% China←World 1 T - 11%

Brazil-China surplus: U$ 4 B

C a o d 6% C a o d %

pBrazil-World surplus: Total U$ 25 BChina-World surplus: Total U$ 200 B

Largest Trade Partners China (2009)

Exports (U$Billion) Imports (U$Billion)

Largest Trade Partners - China (2009) Source: MOFCOM, CIA, US-China

Exports (U$Billion)

1) USA 221

Imports (U$Billion)

1) Japan 1311) USA 2212) Hong Kong 1663) Japan 98

1) Japan 1312) South Korea 1033) Taiwan 863) Japan 98

4) South Korea 545) Germany 50

3) Taiwan 864) USA 785) Germany 565) Germany 50

6) Netherlands 375) Germany 566) Australia 40

Largest Trade Partners - Brazil (2009) So rce Bra ilian Go t/ MDIC

Exports (U$Billion) Imports (U$Billion)

Largest Trade Partners - Brazil (2009) Source: Brazilian Govt/ MDIC

p ( )

1) China 20

p ( )

1) USA 201) China 202) USA 153) Argentina 13

)2) China 163) Argentina 113) Argentina 13

4) Netherlands 85) Germany 6

3) ge a4) Germany 105) Japan 55) Germany 6

6) Japan 4

5) Japan 56) South Korea 5

FOB P %

Souce: Brazilian Govt/ MDIC

Main Products Brazil imports from China (2009) FOB (U$ milhões)

Partc. %Total

T O T A L 16 Bi 1001 Parts/ Components for Radio/ TV receptors 477 3%

2 LCD Displays 427 2.7%

3 Parts/ Components for Telephones/ Mobile Phones 414 2.6%3 Parts/ Components for Telephones/ Mobile Phones 414 2.6%

4 Colored Computer displays 239 1.5%

5 Integrated Circuits 195 1.2%

6 Gliphosate Salt 172 1.1%

7 Mobile Phones 168 1.%

8 Microprocessors 167 1.%

9 Printed Circuits 160 1%

10 Electric accumulators/ parts 153 0.1%

M i P d t B il E t t Chi (2009) FOB P t %

Source: Brazilian Govt/ MDIC

Main Products Brazil Exports to China (2009) FOB(U$)

Partc. %Total

T O T A L 20 Bi 1001 Iron Ore – Non aglomerated and fines 6.3 bi 31.5%

2 Soyabean grains 6.3 bi 31.4%

3 Crude Oil 1 3 bi 6 6%3 Crude Oil 1.3 bi 6.6%

4 Celulose – wood pulp/ paste 891 mi 4.4%

5 Iron Ore - Aglomerated 657 mi 3.2%

6 Soybean Oil 399 mi 1.9%

7 Dried tobacco leaves 368 mi 1.8%

8 Airplanes and components , weight>15000KG 349 mi 1.7%

9 Niobium ore 346 mi 1.7%

10 Cast iron slabs/ products 342 mi 1 7%10 Cast iron slabs/ products 342 mi 1.7%

Brazil-China Trade Flow Source: Brazilian Govt/ MDICBrazil China Trade Flow Source: Brazilian Govt/ MDIC

24

20

25

Exports Imports 20

* Projected

22

2020

n)

Exports Imports

16

20

Brazilian importing companies → 16.853Brazilian exporting companies → 2.263

8 411

16

13

10

15

$ (B

illio

n 16p g p

1 9

54.52.5

68.4

5.6

8

5

10

U$

0.2 0.4 0.7 0.8 1.2

1.1 1.1 0.9 0.6 1.1

1.9

0.1 0.1 0.3 0.5 1.1

1.11.1 1.0 0.8 1.2

1.3 1.5 24.7

0

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 *

199

199

199

199

199

199

199

199

199

200

200

200

200

200

200

200

200

200

200

201

Brazil ChinaTrade BalanceBrazil-ChinaTrade Balance Source: Brazilian Govt/ MDIC

$10Brazil China Surplus

$6$7$8$9

$10

)

1.50.92.3

1.70.50 30 40 3

4.3

$1$2$3$4$5$

(Bill

ion)

0.4 -0.1-0.1-0.1-0.08-0.02

0.180.30.40.30.1

-2-$3-$2-$1$0$1

U$

-3.6-$5-$4$3

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2

Infrastructure (2009) Source: CIA World Factbook, Gazeta Mercantil, China Daily

Telecom (million) China Brazil

Fi d h li 366 261Fixed phone lines 366 261

Mobile phone lines 720 174p 720 174Internet users 384 67

I f (2008/2009)

Transport China Brazil

Infrastructure (2008/2009) Source: CIA World Factbook

Transport China Brazil

Rail (000’s miles) 48.7 18.1

Paved Roads (million miles) 1.8 1.2

Waterways (000’s miles) 68.7 31.2

Airports (paved runways) * 205 128**Runways longer than 1 mile

Shipping In Brazil - OverviewShipping In Brazil Overview• The Brazilian shipbuilding industry is a sleeping giant. In the late 1970s, the industry was second only to Japan in terms of output, but production slowed in the 1980s and 1990s as the sector found itself crowded out by China and other expanding Asian marketssector found itself crowded out by China and other expanding Asian markets.

• The Brazilian National Development Bank (BNDES) plans to invest BRL 18.2bn (US$10.2bn) over the next few years in developing the country's shipbuilding sector

• Financing will be provided by the government's Merchant Marine Fund (FMM). BRL 12.8bn (US$7.1bn) will be invested in developing prospective projects with the remainder going towards projects already in the early stages of developmenttowards projects already in the early stages of development.

•The investment is expected to help the expansion of Brazil's liquid bulk and offshore sector as well as the country's naval fleet.

• Since 2000, the industry has experienced a revival of the industry, led, in large part, by the growth of the country's offshore oil sector

Shipping In Brazil - OverviewShipping In Brazil Overview• Discoveries of new crude reserves off the south-east coast have led to an increased demand for tankers and offshore supply vessels from the state energy firm Petrobras and its ship owning subsidiary Transpetro. p g y p

• As Brazil gears up to become a net oil exporter, companies have looked at ways to reduce transportation costs

• Petrobras utilizes a fleet of 180 tankers, of which they own 53 vessels. In 2008, Petrobras spent US$619mn on chartered vessels from foreign owners.

• After lying largely dormant throughout the 1980s and 1990s, Brazilian shipyards may lack the technology and knowledge base to compete on a level playing field with Asian builders. • A lack of skilled labor has been cited as a major concern and there have been suggestions that many yards may resort to sourcing workers from overseas to fill labor shortagesthat many yards may resort to sourcing workers from overseas to fill labor shortages.

• To improve their knowledge base, shipyards have begun to establish relationships with Asian builders, and in February 2009 the world's largest shipbuilder, South-Korea's Hyundai Heavy Industries (HHI), bought a 10% stake in OSX Brazil SA (OBX).

Brazilian Ports (2009) Fonte: ANTAQ

Port Nº of containersd (i th d )

Total Cargo moved ( illi t )

Brazilian Ports (2009) Fonte: ANTAQ

moved (in thousands) (million tons)Santos 23000 28Paranaguá 630 9Paranaguá 630 9Rio Grande 629 7Navegantes 398 4Navegantes 398 4

Rio de Janeiro 350 5Suape 242 3pVitoria 209 4Itaguaí 206 3*

Brazilian Ports Fonte: China Transporte LogísticaBrazilian Ports Fonte: China Transporte Logística

• Port of Santos - Largest port in South America, responsible for handling around 25% of Brazil’s foreign trade (by value) Santos lies 65 km from São Paulo which is Brazil’s largestBrazil s foreign trade (by value). Santos lies 65 km from São Paulo, which is Brazil s largest city and the capital of the country’s economically most important state.

•Port of Rio de Janeiro – Located in the Guanabara Bay at the center of Brazil’s second biggest city. Rio de Janeiro is Brazil’s sixth biggest port and has excellent infrastructure logistics, linking it to the country’s most important airports, highways and railroads.

•Port of Vitoria (Tubarão) - Located on the northern stretch of Brazil’s South-east Coast it isPort of Vitoria (Tubarão) Located on the northern stretch of Brazil s South east Coast, it is the second largest in the country in terms of cargo value. Vitória is one of the ports most likely to benefit from Brazil’s recent major off-shore oil discoveries.

f á f f•Port of Paranaguá – Largest port for exports of soy beans in Latin America, but it can handle all types of cargo. It is Brazil’s largest port for shipping grains and the second largest maritime terminal. Covering more than 2.3 million square meters, Paranagua port has a storage capacity of over 1 2 million tons of bulk cargocapacity of over 1.2 million tons of bulk cargo.

Shipping In China - OverviewShipping In China Overview• A major effort has been made to increase mechanization and containerization at major international ports in China.

• China's shipping industry and container transportation has reached international standards both in handling efficiency and building networks

•The China Containerized Freight Index measures shipping costs for exports from 10 major Chinese ports to 11 regions worldwide. Those costs have risen 17% since Jan/2010.

•The jump in the index means more goods are being transported from China raising demand•The jump in the index means more goods are being transported from China, raising demand for shipping and increasing charter prices.

•This is a Chinese-only phenomenon. Shipping rates throughout the rest of the world, as measured by the Baltic Dry Index, fell sharply at the end of January and were flat throughout February.

•These data suggest a wave of exports coming out of China The indexes do not indicate whatThese data suggest a wave of exports coming out of China. The indexes do not indicate what goods are being shipped.

Shipping In China - OverviewShipping In China Overview• Two of China’s main shipping lines saw their revenue fall by more than 40% last year on the back of declining volumes. However, Cosco and CSCL both remain bullish in their outlook for 20102010.

• China Shipping Container, which is listed in both Hong Kong and Shanghai, is a unit of Shanghai-based China Shipping (Group) Co., the world's eighth-largest shipping company by capacity and parent of China Shipping Development Co.

•China Shipping Container Lines Co. said it swung to a net loss last year as the global financial crisis depressed its freight rates and squeezed traffic volumefinancial crisis depressed its freight rates and squeezed traffic volume.

•China Cosco Holdings Co, the world's largest operator of dry-bulk ships predicts container volumes may increase 8 percent to 5.67 million twenty-foot containers in 2010.

•China Cosco, China Shipping Container, A.P. Moeller-Maersk A/S and 12 other lines agreed to seek an increase in rates ($800 per 40-foot box increase in Asia-US west coast shipping rates in contract) to recuperate from losses in 2009 due to overcapacity and slumping traderates in contract) to recuperate from losses in 2009 due to overcapacity and slumping trade.

Chinese Ports (2009) Fonte: China Daily, Ship Technology, htcenstatd.gov.hk

Port Nº of containers (20’)moved (millions)

Total Cargo moved (million tons)

Chinese Ports (2009) Fonte: China Daily, Ship Technology, htcenstatd.gov.hk

moved (millions) (million tons)Shanghai 25 368Hong Kong 21 243Hong Kong 21 243Shenzhen 18 194Qingdao 10 315gNingbo 15 570Guangzhou 11 375Tianjin 9 380Dalian 4 202

*

** 2008 data

Chinese Ports Fonte: China Transporte Logística • Shanghai Port - One of the most important ports in the world. Acts as one of China's main access points to foreign commerce.

•Dalian Port - Situated in the north-east of the Pacific Ocean representing the entrance point•Dalian Port - Situated in the north-east of the Pacific Ocean, representing the entrance point for this region of China. Ideal for international transport between South-east Asia, North America and Europe.

•Tianjin Port- The largest artificial port in China. One of the most important commercial ports in the north of the country.

•Guangzhou Port - The largest port in the south of China One of the ports that has beenGuangzhou Port The largest port in the south of China. One of the ports that has been experiencing the largest growth in cargo as it is located in the capital city of the most industrial province of the country.

•Ningbo Port – Largest port in the world in terms of moved cargo, concentrated mostly in grains, petroleum and minerals.

• Qingdao Port - The largest port of china for foreign trade of iron ore and brute PetroleumQingdao Port The largest port of china for foreign trade of iron ore and brute Petroleum, ending 2009 with a total earnings of 315 million tons.

Ji i T l N ji B iji F bidd CitJiming Temple - Nanjing Beijing – Forbidden City

Shanghai Pudong HangzhouShanghai - Pudong Hangzhou

Foz do Iguaçu Rio de JaneiroFoz do Iguaçu Rio de Janeiro

BrasíliaSão Paulo Brasília São Paulo

Sources:• BID• IBGE • MDIC – Ministério de Desenvolvimento, Indústria e Comércio• Asian Development Bank• CCPIT - Chinese Chamber for Promotion of International Trade• MOFCOM - Ministry of Commerce of China• IMF - International Monetary Fund• State Statistics of PRC• Forbes• Forbes• CIA – World Factbook• The Economist• FGV – Fundação Getúlio Vargas• EPI – Earth Policy Institute• GettyImages - Gettyimages.com• Business Monitor Online• ANTAQ – National Agency of Maritime Transportantion g y p• World Port Source• ShippingChina.com• Dow Jones• China Daily• China Daily• ChineseShipping.com