Announcement also includes plans for joint satellite launches, culture centres and language networks
Brazil and China have jointly reinforced their financial reserves with a $30bn swap arrangement that aims to offset further economic instability in Europe and the United States.
The deal was announced on Thursday as a first step towards the creation of a financial bloc of emerging economies that are trying to become less reliant on the dollar as a trading currency and on developed nations as markets.
Under the bilateral swap arrangement, Brazil is entitled to take 190bn yuan from the Chinese central bank, while China can take 60bn real from the equivalent body in Brazil. The money can be used for trade or to boost reserves during times of crisis.
The swap arrangement was at the centre of a wide ranging new partnership with China that also includes joint satellite launches, shared research on nanotechnology and cooperation in the field of oil and gas.
In unveiling the deal, Brazil’s finance minister Guido Mantega said it was a move towards closer intergration of the five BRICS (Brazil, Russian, India, China and South Africa), which together have $4tn of foreign exchange reserves.
Closer ties are designed to make emerging economies more resilient to financial shocks such as that in 2008, when, he said, world trade almost froze for two months.
“This reinforces our financial reserves at a moment when the global economy is stressed,” he said. “We recognise that developed economies are still in crisis. The BRICS are the most dynamic and we’ll continue to expand.
China has overtaken the US as Brazil’s major trading partner with a 17% share of the total. Critics say the trade is unbalanced because China buys commodities and sells higher-value goods.
Mantega said the new deal would involve more trade diversification, including Chinese purchases of aircraft made by Embraer, a Brazilian manufacturer and Chinese investment to build oil drilling platforms in Brazil. The two countries will also jointly launch two satellites, one this year and another in 2014 and set up culture centres and language networks in each other’s countries.
Trade will also continue to focus heavily on China’s demand for commodities, which have helped Brazil resist the downturn in the global economy.
“The expansion of trade with China can be infinite,” said Mantega, who was speaking on the sidelines of the Rio+20 sustainability conference.
“China is fast growing and wants to stimulate consumption so they will continue to buy our commodities. There are no limits.”