introduction

Brazil is the fifth largest country in the world, with a territory of over 8.51 million square kilometers and a population of 213 million, ranking sixth in the world. In 2022, Brazil's GDP is about 1.9 trillion US dollars, but in recent years, Brazil's economic growth has been very unstable, with a trend of slowing down. The Brazilian Institute of Geography and Statistics pointed out that the average annual growth rate of the Brazilian economy was around 1% from 2010 to 2020, and negative growth occurred in 2015, 2016, and 2020.

Since 2010, the Brazilian economy has grown rapidly, and the economic policies implemented by the government have also been conducive to sustained economic growth. The central government has promoted private investment through tax cuts, controlling the prices of basic inputs (energy and fuel), trade protection, and other means. From a fiscal perspective, the central government has increased its financial investment, implemented public procurement policies, and provided interest rate subsidies to enterprises. From the perspective of income distribution, the government has raised the minimum wage level and the transfer income of impoverished households.

In 2015, in response to high inflation, external constraints, and the continued surge in public debt, the central government's economic policies underwent significant changes. The central government implemented a series of restrictive measures, including raising interest rates, lifting price controls, significantly reducing fiscal subsidies and public spending.

The changes in economic policies led to a severe recession in the Brazilian economy in 2015 and 2016. From 2015 to 2016, Brazil's GDP declined by over 36.5%, making it one of the most severe economic crises in Brazil's history. After the 2016 political crisis (impeachment of Brazilian President Rousseff), Brazil's economic crisis further intensified. After Vice President Temer took office, he continued to implement restrictive economic policies, and from 2017 to 2019, Brazil's economic recovery was very slow.

The unemployment rate remained around 12% from 2017 to 2019, and this high unemployment rate persisted until 2021. In 2016, the central bank's interest rate reached as high as 14.1%, and it was not until the following years that interest rates began to decrease. In 2020, the interest rate dropped to its lowest point (see Table 1). The growth rate of Brazil's GDP in each quarter from 2010 to 2022 is shown in Figure 1.

In 2020, under the impact of the COVID-19, Brazil's domestic economy experienced a second recession, while the Brazilian economy at that time had not yet recovered from the economic crisis of 2015 to 2016, and its GDP declined by 3.3%. After the epidemic, the Brazilian economy has recovered somewhat in 2021-2022. The economic fluctuations and two severe economic recessions have had a huge impact on Brazil's per capita GDP. Since 2014, Brazil's per capita GDP has been declining.

表1 2010～2022年巴西宏观经济指标

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Table 1 Macroeconomic Indicators of Brazil from 2010 to 2022

Figure 1 Quarterly GDP Growth Data of Brazil from 2010 to 2022

Economic instability and political conflicts have a negative impact on the Brazilian economy. The industrial and service industries still face problems such as low investment levels, large technological gaps, idle production capacity, and weak competitiveness. However, some specific industries have shown outstanding performance from 2010 to 2020, such as the agricultural sector maintaining positive growth in output value, the mining industry increasing its share in the global market, and significant increases in production and export volume. The trade surplus has increased Brazil's international reserves, which is a key factor affecting price stability.

Most local manufacturing companies in Brazil focus on the domestic market, while multinational corporations that dominate the high-tech industry have a lower inclination towards exports. In fact, these companies are net importers. Due to the lack of strong growth in the domestic market of Brazil from 2015 to 2022, the problem of low manufacturing investment and idle production capacity is prominent.

Brazil's manufacturing industry relies on the domestic market, with low tech products and goods being the main export products, while imports of high-tech products, machinery, and services account for a large proportion. In 2005, Brazil's manufacturing industry accounted for only 0.85% of the world's recorded exports of manufactured goods; In 2020, the proportion of Brazil's manufacturing exports decreased to 0.43%. The pessimistic situation of the manufacturing industry has sparked extensive discussions in the political and economic circles about deindustrialization and the vulnerability of the Brazilian economy to external shocks.

In 2022, Brazil's soybean exports reached 46 billion US dollars, crude oil exports reached 42 billion US dollars, iron ore exports reached 25 billion US dollars, grain exports reached 12 billion US dollars, fuel exports reached 10 billion US dollars, sugar exports reached 9.5 billion US dollars, and coffee exports reached 8.5 billion US dollars. The total export value of these products accounts for about 50% of Brazil's total export value. The mining and agricultural sectors account for a relatively large proportion of the total export value, indicating that Brazil has long been a major supplier of commodities (raw materials and food) and low-end manufacturing. The reason why most large export companies have strong competitiveness is that they engage in natural resource intensive industries and often use cheap labor with low education levels.

Although Brazil has a competitive advantage in the commodity industry, its share in the world's total exports from 2010 to 2018 has not changed, at around 1.3%. In terms of import trade, Brazil imports high-tech products and services from developed countries. Since 2010, Brazil's position in the world rankings of major importing countries has continuously declined, dropping from 21st place in 2010 to 29th place in 2017.

It can be seen that Brazil not only has not increased its share in international trade, but also relies on the import of high-tech products. At the same time, the contribution of manufacturing to GDP and employment rate is also declining. Brazil's technology intensive manufacturing industry has a high deficit, while the mining, agriculture, and food industries have significant surpluses. Although Brazil's international trade balance fluctuates greatly, it is mostly in a trade surplus.

Brazil's performance in international trade is greatly influenced by China's economic growth. The growth in demand for products in China has driven up the quantity and prices of most goods, not only those exported from Brazil, but also from many Latin American countries such as Chile and Argentina. In 2010, China became Brazil's main exporter, accounting for 15.3% of Brazil's total exports. At the same time, China is also Brazil's second largest importer, accounting for 14.7% of Brazil's total imports. In 2022, China has become Brazil's largest importer. For Brazil, China is both the largest external market (accounting for 26.8% of Brazil's total exports) and the largest import supplier (accounting for 22.3% of Brazil's total imports). In 2021 and 2022, Brazil's trade surplus with China was $40.057 billion and $28.684 billion, respectively. Since 2010, Brazil has been in a trade surplus in China Pakistan trade, while it has been in a trade deficit with the United States (see Table 2).

表2 2010～2022年巴西对中国、美国、阿根廷贸易差额

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Table 2 Brazil's trade balance with China, the United States, and Argentina from 2010 to 2022

The huge export volume and high competitiveness of the commodity industry make people mistakenly believe that the Brazilian economy has a high share in manufacturing, mining, and agriculture, but even in 2020, the total share of the three industries combined only accounted for 30% of GDP. There are significant differences between Brazil's domestic economic structure and its international trade structure: Brazil is an urbanized economy, with a high proportion of output from the service and trade sectors, accounting for approximately 70% of GDP. An important issue facing the Brazilian economy at present is how to develop the service industry and enhance the competitiveness of the manufacturing industry. From the perspective of international cooperation, China and Brazil should seek cooperation and development in the service and manufacturing industries to achieve mutual benefit and win-win outcomes.

Brazilian Industry and Service Industry

（1） Overview of Industry and Service Industry

The employment rate and proportion of added value of Brazil's major economic sectors from 2000 to 2020 are shown in Tables 3 and 4. Among them, the agricultural sector includes animal husbandry, forestry, fisheries, and aquaculture. The industrial sector includes the mining industry (such as iron ore mining and crude oil industry), manufacturing industry (such as food, textile, metal industry, and automobile manufacturing), construction industry (building and housing construction, highways, railways, urbanization engineering, and infrastructure), and industrial infrastructure sector involves energy production and distribution, natural gas, water pipelines, waste management and purification, and other public and private activities. The public service sector includes public education, medical insurance, and national defense and security. The service industry includes trade, transportation, warehousing and transportation, information and communication, finance, insurance, and other activities.

表3 2000～2020年巴西各经济部门就业率

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Table 3 Employment rates of various economic sectors in Brazil from 2000 to 2020

In 2020, the employment rate of the service industry was 68.6%, and the added value of the service industry accounted for 70.9% of GDP. In 2020, the employment rate in the industrial sector was 18.7%, with no growth compared to 2000. The number of employed people in agriculture and animal husbandry decreased sharply and increased slightly in 2020, from 12.4% in 2019 to 12.7%. This small increase may be affected by the COVID-19 epidemic.

The industrial and service industries have strong heterogeneity and high degree of diversification. In 2020, trade activities (retail, wholesale, distribution, and sales) employed nearly 18% of workers; The employment opportunities provided by public management services account for about 12% of all employment opportunities, with the majority concentrated in the fields of education and health services.

The proportion of added value of various economic sectors in Brazil from 2000 to 2020 is shown in Table 4. Among them, the service industry has the highest proportion of added value, accounting for 70.9% of GDP in 2020. Although the employment rate in the industrial sector remains unchanged, its proportion of added value in GDP has decreased from 26.8% in 2000 to 22.5% in 2020. Although the proportion of added value in agriculture and animal husbandry increased during the 2020 pandemic, the average annual proportion from 2000 to 2019 was only 5.1%.

表4 2000～2020年巴西各经济部门增加值占比

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Table 4 Proportion of Value Added by Various Economic Departments in Brazil from 2000 to 2020

According to Table 5, over 42% of Brazil's service industry added value is concentrated in 15 larger cities, with S ã o Paulo accounting for 19.70% of Brazil's service industry added value. According to regional organizations in Brazil, the service industry is highly concentrated in major cities. Industrial activities are more dispersed, with the total added value of manufacturing in 15 cities accounting for 21.17%.

The concentration of the service industry is significantly higher than that of the industrial sector. Domingues et al. pointed out that the agglomeration of the service industry is closely related to industrial sectors that are more concentrated in terms of tacit knowledge and specific assets, and is closely linked to professional supplier networks. Therefore, the Brazilian economy exhibits spatial dispersion, which makes it very difficult to increase per capita income in impoverished areas, and other countries may also face similar situations.

表5 2019年巴西经济活动集中度（增加值占比）

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Table 5 Concentration of Economic Activities in Brazil in 2019 (Proportion of Value Added)

The proportion of service industry revenue in Brazil's domestic market is shown in Table 6. It can be seen that almost all service activities are dominated by domestic enterprises and consumers, which makes the development of the service industry dependent on the growth of domestic demand. Although the external market share of Brazil's service industry is very small, there are still some foreign investments entering, including multinational companies that provide nationwide services in the fields of telecommunications, finance, air transportation, and information and communication. However, in terms of international trade, these companies do not engage in service trade exports. They are mostly net importers of mechanical equipment, technology, and high-tech engineering services. The surplus of the commodity sector is the source of international foreign exchange for the service sector's imports.

表6 2017～2020年巴西国内市场服务业收入占比情况

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Table 6 Proportion of Service Industry Revenue in Brazil's Domestic Market from 2017 to 2020

（2） Global value chain and 'smile curve'

In developed economies, the proportion of the service industry has increased while the proportion of the manufacturing industry has decreased, which has sparked a series of heated debates on the impact of international trade on economic growth, such as technological capabilities, income distribution, employment, nationalization of strategic industries, and even national security has become an important issue. From the perspective of the company's business, the "smile curve" is one of the methods that can comprehensively reflect such debates.

In the early 1990s, Acer Group CEO Shi Zhenrong proposed the "smile curve" at a company meeting. At that time, the general view was that manufacturing created very little added value, so the core business of large companies should focus on innovative activities and complex services, which could generate higher added value. The "smile curve" and "inverted smile curve" are shown in Figure 2. Suppliers create value in the manufacturing industry, forming an inverted 'smile curve'.

图2 “微笑曲线”和“倒微笑曲线”

Figure 2 "Smile Curve" and "Inverted Smile Curve"

From the perspective of business model, it is particularly important for enterprises to conduct internal research and development, innovate product processes, explore new technologies, and maintain consumer relationships in order to make their products stand out in the market and obtain new demand information. The company not only provides services, but also serves as a manufacturer and supplier, even if the company itself is not engaged in manufacturing. Manufacturing business activities will be undertaken by low-cost specialized subcontracting companies, most of which are located in overseas countries far away from Brazil, so outsourcing is another way.

By limiting technology, cost, quantity, quality, and even packaging and transportation procedures through contracts, companies can maintain a vertical business model. Products and process technologies are protected by exclusive agreements, non competitive clauses, patents, and trade secrets. The economic entities in the production system are also subject to strict legal constraints.

This business model has given rise to the Global Value Chain (GVC), Original Design Manufacturing (ODM), global outsourcing, and division of labor between countries and companies. The United Nations Conference on Trade and Development (UNCTAD) elaborated on the global value chain in its 2013 World Investment Report, mentioning that developing countries can gain new opportunities through international flows of goods, services, and finance. The formation of global value chains is closely related to the participation of Asian countries, with Malaysia, India, China, and South Korea all playing important roles in it. However, the report also mentions that the global value chain will constrain growth in certain aspects.

People are concerned that in places where the proportion of product import and export is high and the participation in the global value chain is low, the contribution of the global value chain to added value will be limited. Multinational corporations and their subsidiaries can provide opportunities for local companies to participate in the global value chain, creating additional added value through local procurement (usually through non equity relationships). For developing economies, a significant portion of the added value in the global value chain comes from subsidiaries of multinational corporations. This has raised concerns about capital flight, such as transfer pricing in related party transactions. Part of the subsidiary's earnings will flow back to the domestic market, which may have an impact on the balance of payments, although there is evidence to suggest that in most cases, this impact is very limited.

In short, the business model represented by the "smile curve" and global value chain is a global business organization model that emerged in the early 1990s. There have been some studies on industrial organization models that analyze the uneven distribution of industrial activities and added value on a global scale, such as Dedrick et al., Linden et al., Shin et al., Moreira and Lee, Lee et al., Stark et al. These studies analyzed the reasons for the unequal distribution of wealth (added value) in the production and manufacturing of typical products such as mobile phones, electronic touch screens, computers, coffee, textiles, clothing, and others in the global value chain.

As new connections are established between industry and service industries, people are also beginning to re-examine the Fordism industrial structure. Mizzo, Soete, and Castellacci introduced a service classification based on technological connections between manufacturing and other service sectors. This classification determines the types of services, including supplier led departments, scale intensive physical network departments and information departments, and science based professional supplier departments. The second and third types of services correspond to the IN and SD activities of the "smile curve" respectively, which are firmly controlled by multinational corporations to ensure their governance of the global value chain.

St ö llinger concludes that countries with an "industrial economy" often receive less added value and are at a disadvantage compared to those with a "headquarters economy". The asymmetric distribution of added value among different countries participating in the global value chain strengthens the "core periphery structure" in the global production network. Insufficient research and development capabilities and lagging technological levels are decisive factors for a country to fall into the 'middle-income trap'.

Baldwin and Ito analyzed the organizational patterns of economies, changes in the creation process of added value, and the roles of manufacturing and service industries. They used the "smile curve" as a theoretical framework to analyze the economic servitization (tertiary industrialization) of countries in the middle of the "smile curve", such as the United States. The study also focused on the economies of Indonesia, Malaysia, the Philippines, Thailand, China, South Korea, and Japan.

This study analyzed the "smile curve" model from 1985 to 2005 and concluded that it fully predicted the significant changes that these economies will undergo in the coming decades. However, China's transition from the "inverted smile curve" to the "smile curve" is a special case, and although other Asian countries have also undergone similar changes, the process has been very slow and peaceful.

From the perspective of the "smile curve" and "inverted smile curve", it is necessary to guide enterprises in high-tech and high wage countries to transfer labor-intensive manufacturing businesses overseas, while keeping high-tech service industries domestically. We have found some evidence to support this view: developing countries reduce the added value of self outsourced services, while developed countries retain higher added value of self outsourced services. We also found that the added value of services from China and other countries compensated for the reduced added value of outsourced services.

（3） Reanalysis on the basis of global value chain

Based on the global value chain and the "smile curve", taking Brazil as an example, analyze the relationship between the service industry, industry, and agriculture. As a developing country, Brazil's economic organization should be close to the "inverted smile curve". The proportion of added value in traditional industrial activities in developing countries is relatively high, while the proportion of added value in high value-added service activities is relatively low. However, the data in Tables 3 and 4 show that in recent years, Brazil's industrial employment rate has remained relatively stable, and the proportion of industrial added value to GDP has decreased. The employment rate and proportion of added value in the service industry have both increased. Therefore, Brazil does not fully follow the pattern of the "inverted smile curve".

Taking the global value chain as an example, from 2000 to 2020, Brazil's production structure and international trade did not undergo significant changes. The proportion of domestic output value in the manufacturing industry has declined, and its share in international trade has also shown a downward trend. In terms of exports, the proportion of industrial commodity exports to total exports has increased. Although Brazil has imported many high-tech products, the scale of finished product exports has not changed significantly. Brazil remains an exporter of natural resource intensive products, low tech products, commodities, low skills, and cheap labor. Therefore, in terms of the new global value chain that emerged after 1990, Brazil is in a weak position and has played a very limited role in it, so it cannot achieve the goal of creating added value in the global value chain in the early 1990s. Therefore, the global value chain and the "smile curve" are not the best theoretical tools to explain the Brazilian economy.

From 2000 to 2020, Brazil's economic activity productivity (value added per worker) is shown in Table 7. The economic activities with high productivity are mainly industrial activities, with only a few coming from the service industry, which is consistent with the "smile curve". Economic activities with a high proportion of added value and employment rate have relatively low productivity, including trade, agriculture, transportation, and construction, which cannot be fully reflected in the "inverted smile curve".

The productivity of most industrial activities in Brazil is higher than that of the service industry, which can be explained by the "inverted smile curve". But from 2000 to 2020, the proportion of industrial activities decreased. People thought that high productivity usually meant high growth rates, but the situation in industry was clearly unexpected. Some people used the import substitution model to explain this, which was consistent with the Brazilian economy from 1930 to 1990. Domestic and multinational companies in Brazil tend to develop in the domestic market and rarely engage in export operations. This trend of tilting towards the domestic market resulted in most industrial activities not being included in the new global value chain that emerged after 1990.

The productivity of Brazil's service industry is relatively low, and according to the "inverted smile curve" and global value chain theory, the growth momentum of Brazil's service industry is not strong. However, on the contrary, the added value of Brazil's service industry accounts for a larger proportion of GDP and contributes relatively more to the employment rate. The proportion of added value of the service industry to GDP has increased from 2000 to 2020. The Brazilian service industry has not been integrated into the global value chain, and its main market is domestic. Therefore, the high proportion of employment and value added in the Brazilian service industry cannot be explained by the "inverted smile curve" or the global value chain.

表7 2000～2020年巴西经济活动生产率

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Table 7 Productivity of Brazilian Economic Activities from 2000 to 2020

In the most productive industrial activities, there are some that belong to the existing global value chain, such as oil, petrochemicals, mining, and commodity trade. In terms of exports, natural foods and low industrial level foods (such as meat, soybeans, and corn) account for a relatively large proportion. These activities form upstream and downstream relationships with industrial services, manufacturing, large-scale transportation, and distribution. But these export activities do not require complex services, inputs, and complementary goods, and are similar to the IN and SD activities in the "smile curve". The service industry is integrated into the global value chain through the export trade of industrial complexes, but the production mode of goods does not require high-tech industries and service industries, nor does it encourage their development. In addition, although trade openness makes it possible to import high-tech products, it will also have a negative impact on the research and innovation of domestic high-tech machinery and equipment.

2. Service trade

（1） Service trade in Brazil

The service industry is the dominant sector of the Brazilian economy, with its added value accounting for 70% of GDP in 2021. Since 2000, the proportion of added value in the service industry to Brazil's GDP has been consistently increasing.

Although the service industry dominates in Brazil, its performance in international trade is not outstanding. According to World Bank data, the value added of Brazil's service trade accounted for only 5% of GDP in 2021, and the proportion of service trade has remained stable at around 5% over the past 10 years. In addition, the import and export volume of service trade accounts for about 13% of Brazil's total trade import and export volume.

There are three main characteristics of Brazil's service trade: relatively few companies engaged in exports, a small number of target countries for exports, and a single export product.

Brazil has a structural trade deficit in services. As shown in Figure 3, the import value of Brazil's service trade has always been higher than the export value in the past 20 years, indicating that Brazil's service trade has been in a long-term deficit state.

Figure 3 Import and Export of Service Trade in Brazil from 2001 to 2021

In 2021, Brazil's trade in services began to recover after the COVID-19 epidemic, and the export volume of trade in services reached 33.1 billion US dollars, an increase of 16% year on year. The import volume of service trade was 50.3 billion US dollars, up 1.5% year on year, and did not return to the level before the COVID-19 epidemic. Therefore, Brazil's service trade deficit in 2021 was around 17 billion US dollars, while the service trade deficit in 2019 was around 35 billion US dollars.

From the perspective of composition, Brazil's exported services mainly include other commercial services, transportation services, telecommunications, computer and information services, and tourism services (see Figure 4). In 2021, the total export value of these four types of services accounted for nearly 85% of Brazil's total service exports. In the same year, some service industries recovered after the epidemic, such as transportation services and other commercial services, but some important sectors such as tourism services have not yet recovered to pre epidemic levels.

Figure 4 Export situation of various sub sectors of Brazil's service industry from 2018 to 2021

From the perspective of service imports, Brazil has the largest proportion of other commercial services, with transportation services, telecommunications, computer and information services, and tourism services also accounting for relatively high proportions. Moreover, these four types of services are important areas in import and export trade. In 2021, the total import volume of these four types of services will return to 80%, but it has not yet recovered to the level before the COVID-19 epidemic, which is mainly due to the impact of the epidemic on the international tourism industry. The import situation of various sub sectors of Brazil's service industry from 2018 to 2021 is shown in Figure 5.

Figure 5 Import situation of various sub sectors of Brazil's service industry from 2018 to 2021

From the perspective of international service trade partners, Brazil's trading partners exhibit a highly concentrated characteristic. In terms of export trade, the United States is Brazil's main exporter, accounting for 44% of Brazil's service exports in 2021, followed by the United Kingdom at 6%. Brazil's important partners in goods trade, such as China and Argentina, have relatively low proportions in service trade. In 2021, both China and Argentina accounted for less than 1% of Brazil's service exports. Brazil's import service trade is similar. The United States, as the main importer of Brazil's service trade, accounts for 43.6%, followed by the Netherlands at 7.3%, while China only accounts for 1%.

The main companies involved in service trade in Brazil can be divided into two categories. The first category is communication and information technology service companies, such as Cisco, International Business Machines, Lynk&Co, Sprint, Oracle, etc., including subsidiaries of multinational corporations. The second category is intermediary companies, including logistics, financial services, consulting, and entertainment companies. The most important companies in this category are public and private banks (Banco do Brasil, Bradesco Bank, Itau Bank), airlines (Gol Airlines, Blue Brazilian Airlines, South American Airlines), business consulting firms (Ernst&Young, Deloitte), logistics companies (FedEx), and entertainment companies (Brazilian Global Television Network).

（2） China Pakistan Service Trade

According to statistics from the World Trade Organization in 2018, China was the fifth largest exporter and second largest importer of tourism services in 2017, the fourth largest exporter and importer of commercial services, and the fifth largest exporter and third largest importer of other commercial services. In the same year, Brazil was the tenth largest importer of tourism services, the fourteenth largest importer of commercial services, and the twelfth largest exporter of commercial services. From the perspective of other business services (legal, accounting, consulting, public services, etc.), Brazil ranks tenth and ninth in terms of import and export volume, respectively. At present, China and Pakistan are cooperating in various fields such as business, tourism, and construction services.

The volume of service trade between China and Brazil has been steadily increasing, but there is still a significant gap compared to the commodity trade between the two countries, indicating that there is greater room for development in service trade between the two countries.

In 2018, Brazil became the 15th largest source of service trade imports for China, with a total import and export volume of 7.61 billion US dollars, a year-on-year increase of 22.9%. Among them, the import volume was 810 million US dollars and the export volume was 6.8 billion US dollars.

In the service trade between the two countries, China has long been in a trade deficit, and the structure of bilateral service trade has not changed significantly over time, with a high degree of concentration. In 2016, the structure of China's service exports to Brazil is shown in Figure 6. The service trade between China and Brazil is mainly in the transportation sector, accounting for about one-third of the total export value, followed by telecommunications, computer and information services, accounting for 22%. More than half of China's service exports to Brazil are concentrated in these two service sectors.

Figure 6 Structure of China's Service Exports to Brazil in 2016

On the other hand, Brazil's service exports to China are more concentrated. In 2016, almost 90% of Brazil's exports of services to China were concentrated in the transportation sector. The main reason for this situation is that China and Brazil are important trading partners with extremely close ties in terms of freight demand and goods trade. Therefore, the main services exported by Brazil to China are related to the transportation of goods between the two countries. Tourism, insurance, pensions, and other commercial services also account for a total of 8.7% of Brazil's service exports to China (see Figure 7).

Figure 7 Structure of Brazil's Service Exports to China in 2016

conclusion

This report discusses and analyzes the relationship between industry and services in the Brazilian economy, and draws the following conclusions by comparing it with developing countries in Asia.

Brazil is an urbanized economy, with the added value of its service industry accounting for a large proportion of GDP, about 70% of GDP. The export trade characteristics of Brazil differ greatly from its domestic economic structure, which is more diversified. The service industry and industry in Brazil have an upstream downstream relationship, which is static and stable rather than dynamic, similar to the relationship between industry and service industry in developed countries. The service industry in Brazil exhibits significant heterogeneity. Most service departments have low production efficiency, low technological content, low wages, and often employ low skilled labor; Only a small portion of the service industry is high-tech innovative, employing skilled labor, which is conducive to improving production efficiency. Brazil's industrial and export sectors are closely integrated with traditional global value chains, without involving complex and innovative services. The new global value chain can reshape the economic structure of Asia, but it cannot change Brazil's economic structure in the same way. The new global value chain and "smile curve" may be used to explain the economic changes in Asian countries, but they are not the best theoretical tools to fully explain the Brazilian economy.

Brazil's service industry lacks competitiveness and relies on the domestic market. The proportion of Brazil's service trade exports is small, while the proportion of imports is relatively large. Brazil has a structural trade deficit in both service trade and goods trade. The total volume of service trade between China and Pakistan is steadily increasing, and there is still great potential for the development of service trade between the two countries.