Since taking office in January, Brazil President Luiz Inacio Lula da Silva has placed China at the center of his attempts to foster an industrial and economic renaissance in South America’s largest country.
But as leaders of the world’s major emerging market powers return home from their annual meeting in South Africa this week, the sudden struggles of the group’s most dominant member are starting to cloud Lula’s plans.
Officials across Brazil are closely monitoring the situation, which has already hit the country’s extractive sector and caused local assets to suffer. As a result, commodity prices are expected to ebb in second half of year. And a financial crisis surrounding Country Garden Holdings Co, China’s largest real estate developer, is perhaps even more worrying. The company has suffered hundreds of billions of dollars in losses, with the total fallout still yet to be determined.
Clarity on Beijing’s ability to deal with a potential default of Country Garden or its other economic issues didn’t emerge during the summit in Johannesburg, where Lula and Chinese leader Xi Jinping were both in attendance.
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