"Made In China" Occupies The Brazil Market.

From lipstick and handbag to plastic dolls in Buzz Lightyear, Priscila sells almost all of its products from small shops in the Parais poor polis of St Paul slums.

"Chinese goods are much cheaper," the shopkeeper pointed out.

From the little shop of the prince of the city of Casas, the only chain store in the city of polespolis, a family necessities retailer, Casas Bahia, is exactly the same.

Most of the lower priced appliances, such as electric drills, are labeled with "made in China".

With inflation in Brazil rising, the government led by President Dilma Rousseff is facing a dilemma.

By mid April, Brazil's inflation rate reached 6.44%, which was only a stone's throw from the upper limit set by the Brazil central bank by 6.5%.

Cheap imports from Asia help reduce

"Import has deflation effect and helps to curb rising prices," said Hugo Bethlem, vice president of P, O de A, car, Brazil's largest retailing company.

Driven by the rapid expansion of credit before the presidential election last year, Brazil's economy grew by 7.5% in 2010.

The Brazil government currently expects the economy to grow by about 4.5% this year.

However, such a slowdown is not enough to alleviate the overheating of the economy.

Economists predict that

However, interest rates in Brazil are among the highest in large economies.

Further increases in interest rates will only attract more hot money into the country, exacerbate the "exchange rate war" among Brazil's population, and push Brazil's currency Real to appreciate steadily against the US dollar.

In recent weeks, the Real exchange rate has risen from 1 US dollars to 1.65 Real to 1 1.55-1.60 against Real.

In order to enhance the effect of raising interest rates, the government is implementing capital controls aimed at restraining the growth of consumer credit.

The growth of consumer credit is one of the sources of overheated economy in Brazil.

In addition, the government has introduced related taxes to prevent businesses from borrowing dollars at low interest rates overseas and then returning capital gains back to Brazil, which is driving leal to strengthen.

At the same time, the government is trying to protect domestic manufacturing enterprises from the impact of Real's appreciation by raising tariffs, especially tariffs on Chinese goods.

The appreciation of the local currency is leading to the influx of cheap imports into Brazil.

President Rousseff conducted a 5 day visit to China this month.

Just a few days before her departure, under the pressure of more and more domestic lobby groups, the Brazil government decided to impose an anti-dumping duty of 4.1 dollars per kilogram on synthetic knitted fabrics imported from China.

But economists say these protectionist measures contradict the Brazil government's main battle against inflation.

Christopher Garman, Eurasia of the Eurasian Group, said: "they do not hold the abacus of" we will use cheap imports to fight inflation ". Christophe,

"In essence, the government has multiple strategies. They do not want to lose growth. They do not want to appreciate the currency. They do not want to have high inflation, but they cannot get both fish and bear's palm," he said.

In the end, the Brazil government may be doomed to lose a battle against cheap imports.

According to the Ministry of industry and trade of Brazil, although imports from China accounted for only about 14% of total imports in Brazil last month, Chinese commodities have monopolized certain industries in Brazil, such as the synthetic yarn textile industry.

Meanwhile, Brazil enterprises importing textiles from China insist that they will continue to buy goods from China despite tariff increases.

"The output of Brazil's textile industry simply can't meet the demand," said Schmidt, President of Association of Textile Importers in Brazil.

"We can only continue to import, and ultimately consumers will be paid."