China and Brazil Ditch Dollar,amid crashing US dollars

Brazil and China have reached an agreement to abandon the US dollar in their trade and finance transactions, choosing to use their respective national currencies instead. This deal, which promotes bilateral trade and investment while reducing costs, was reached in January 2023 after a high-level China-Brazil business forum in Beijing.

China is Brazil's largest trading partner, accounting for over 20% of all imports. The United States comes in second in Brazil's imports, while China remains Brazil's largest export market, accounting for over 30% of all exports. In fact, China overtook the United States as Brazil's top trading partner in 2009. Brazil is now the biggest recipient of Chinese investment in Latin America, with significant investments in high voltage power lines and oil exploration. The decision to ditch the US dollar is significant, as it weakens the global dominance of the dollar and consequently, America. Saudi Arabia and other BRICS observer nations had hinted at plans to abandon the dollar in foreign trades, following similar agreements made by China and Russia. The new agreement will allow Brazil and China to transact directly, exchanging only Yuan for Reals and vice versa, without the need to convert to the US dollar before transactions. This development is expected to further promote bilateral trade and facilitate investment. Brazil's new President, Lula da Silva, who took office in January, has moved to strengthen ties with Beijing, after a period of strained relations under his predecessor, Jair Bolsonaro. Lula's plans to visit Beijing last weekend were cancelled after he contracted pneumonia, but a delegation of ministers, senators, lawmakers, and hundreds of businessmen were set to accompany him on what would have been his first official visit to China since taking office. This latest development is crucial in the global geopolitical landscape, particularly following several other diplomatic breakthroughs by China and Russia. Saudi Arabia's decision to join the Shanghai Cooperation Organization (SCO), led by Beijing and Moscow, as a "dialogue partner" state, is another significant development. The recent recognition of the Syrian government under Bashar Assad by the United Arab Emirates and Saudi Arabia is also noteworthy, given that it was deemed impossible. All these events may signal a weakness in Biden's foreign initiatives and provide China and Russia with a strategic advantage. In summary, Brazil and China's decision to abandon the US dollar in their trade and finance transactions is significant and is expected to promote bilateral trade and investment while reducing costs. The move weakens the global dominance of the dollar and consequently, America. This development is part of a series of diplomatic breakthroughs made by China and Russia, which may indicate a weakness in Biden's foreign initiatives.