World Bank2014-09-082014-09-082014-07https://hdl.handle.net/10986/19988As Brazil and China have become two of the largest global economies, they have also become increasingly connected. Three decades of fast-paced growth and structural change have turned China into the world s second-largest economy and have transformed it into an upper-middle income country. Brazil, which had experienced its own episode of high growth between 1965 and 1974, has also become one of the largest economies. Over the last decade, Brazil and China have developed increasingly close linkages, which has come as no surprise given the scale of their economies, the complementary structure of resource endowments as well as the differences between the two countries in the structure of production and demand. This report examines how structural change in China is expected to present new opportunities and challenges for Brazil to enhance its global position and energize growth. Building on recent work (World Bank and Development Research Center, 2013), this report identifies three potential longer-term transformations of the Chinese economy structurally slower growth, a rebalancing on the demand and supply side, and a move up the value chain and examines their implications for Brazil. The report shows how the slowdown and rebalancing of China may also present new opportunities for Brazil, even if China s progression up the value chain is likely to present also new challenges. It lays out how Brazil could generate greater benefits from its interactions with China and how the changes in China would offer a new window of opportunity for Brazil to press ahead with its structural reform agenda. Overall, Brazil could gain tremendously from the anticipated structural changes in China, even though realizing these gains will require a proactive policy stance to enhance external ties and address internal growth and productivity constraints.en-USCC BY 3.0 IGOACCUMULATION OF CAPITALAGRICULTUREANNUAL GROWTHBILATERAL TRADECAPITAL ACCOUNTCAPITAL ACCUMULATIONCAPITAL FLOWSCAPITAL GOODCAPITAL GOODSCAPITAL INTENSITYCLOSED ECONOMYCOINCOMMODITIESCOMMODITYCOMMODITY EXPORTSCOMMODITY PRICESCOMPARATIVE ADVANTAGECOMPARATIVE ADVANTAGESCOMPETITIVE ADVANTAGECOMPETITIVENESSCONSUMER DURABLESCONSUMER GOODSCONSUMERSCONSUMPTION DEMANDCONSUMPTION GOODSCONSUMPTION GROWTHCROSS-BORDER INVESTMENTCURRENCYCURRENCY APPRECIATIONCURRENCY CRISISCURRENT ACCOUNTCURRENT ACCOUNT SURPLUSESCURRENT CAPITAL STOCKDEBTDEBT CRISISDEMOGRAPHICDEMOGRAPHIC CHANGEDEMOGRAPHIC CHANGESDEMOGRAPHIC TRANSITIONDEMOGRAPHICSDEPENDENCY RATIODEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT ECONOMICSDEVELOPMENT PATHDOMESTIC CONSUMPTIONDOMESTIC DEMANDDOMESTIC MARKETDOMESTIC MARKETSECONOMIC DEVELOPMENTSECONOMIC DYNAMISMECONOMIC EFFICIENCYECONOMIC ENVIRONMENTECONOMIC GROWTHECONOMIC IMPACTECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC POWERHOUSEECONOMIC REFORMECONOMIC STABILITYECONOMIC STRUCTUREECONOMIES OF SCALEELASTICITYENVIRONMENTALENVIRONMENTAL DEGRADATIONENVIRONMENTSEQUILIBRIUMEXCHANGE RATEEXCHANGE RATE APPRECIATIONEXCHANGE RATE FLUCTUATIONSEXCHANGE RATE VOLATILITYEXPANSION OF EXPORTSEXPORTEREXPORTERSEXPORTSEXPOSUREEXTERNAL COMPETITIVENESSEXTERNAL FACTORSEXTERNAL TRADEFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL REFORMSFISCAL POLICYFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTORFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN MARKETSFUNDAMENTAL DETERMINANTGDPGDP PER CAPITAGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELGLOBAL DEMANDGLOBAL ECONOMIESGLOBAL ECONOMYGLOBAL INTEGRATIONGLOBAL INTERESTGLOBAL MARKETSGLOBALIZATIONGOVERNMENT DEBTGROSS NATIONAL INCOMEGROWTH PERFORMANCEGROWTH RATEGROWTH RATESHIGH-INCOME COUNTRIESHUMAN CAPITALIMBALANCESIMPORTIMPORT BARRIERSIMPORT CONTENTIMPORT DEMANDIMPORT GROWTHIMPORT RESTRICTIONSIMPORTSINCOMEINCOME ELASTICITYINCOMESINDUSTRIALIZATIONINFLATIONINFLATIONARY PRESSURESINTEREST RATEINTEREST RATE DIFFERENTIALSINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL TRADEINVESTMENT CLIMATEINVESTMENT GOODSINVESTMENT RATEINVESTMENT RATESJOB CREATIONLABOR COSTSLABOR FORCELABOR FORCE GROWTHLABOR MARKETLABOR MARKETSLABOR PRODUCTIVITYLEVERAGELIQUIDITYLIVING STANDARDSLOSS OF COMPETITIVENESSMACROECONOMIC REFORMSMARKET MECHANISMMARKET SHAREMARKET SHARESMIDDLE INCOME COUNTRYMIDDLE-INCOME COUNTRYMULTINATIONAL COMPANIESNATIONAL INCOMENATURAL RESOURCENATURAL RESOURCESNET EXPORTSNEW MARKETNEW MARKET OPPORTUNITIESNOMINAL WAGEOILOIL RESERVESOPEN CAPITAL ACCOUNTOUTPUTOUTPUT RATIOPATENTSPER CAPITA INCOMEPOLICY MAKERSPOLLUTIONPRICE INCREASESPRIVATE CONSUMPTIONPRODUCERSPRODUCTION PROCESSESPRODUCTIVITYPRODUCTIVITY GROWTHPUBLIC GOODSPUBLIC INVESTMENTPUBLIC SPENDINGPURCHASING POWERRAPID GROWTHREAL ESTATEREAL WAGESRECESSIONREGIONAL TRADERELATIVE PRICERELATIVE PRICESSAVINGSSECTOR REFORMSLOW GROWTHSLOWDOWNSTRUCTURAL CHANGESTRUCTURAL REFORMSTRUCTURAL REFORMSSUPPLY CONSTRAINTSSUPPLY SIDESUPPLY-SIDESURPLUSSURPLUS LABORTARIFF BARRIERSTAXTAX SYSTEMTECHNOLOGICAL CHANGETECHNOLOGICAL PROGRESSTERMS OF TRADETOTAL COSTSTOTAL EXPORTSTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTOTAL IMPORTSTRADE BARRIERSTRADE PATTERNSTRADE POLICIESTRADING PARTNERTRADING PARTNERSUNCERTAINTIESUNCERTAINTYUNEMPLOYMENTURBANIZATIONVALUE ADDEDWAGESWORLD DEVELOPMENT INDICATORSWORLD ECONOMYWORLD INTEREST RATESWORLD MARKETSWORLD TRADEWTO10.1596/19988