Jose Augusto de Castro, vice president of the Brazilian Foreign Trade Association, said businessmen may have issues if they are paid in yuan because they would have to convert them to dollars and pay banks expensive fees.

Lula said any issues that need to be thrashed out are technical ones, not political ones.

"I believe we will have success in this new undertaking," he added.

On Monday, the Brazilian president began his second state-visit to China since taking office in 2003.

China agreed on Tuesday to lend US$10 billion to Brazil's state-owned oil giant in exchange for guaranteed oil supply for the coming decade.

In addition to selling resources and raw materials to Beijing, Lula said both countries "have to be cautious" about the trade balance problem.

Beijing for the first time displaced Washington as Brasilia's top trading partner in April. But some 70 percent of Brazilian exports to China are primary goods such as soy and iron ore while 60 percent of Brazilian exports to the US are manufactured products, according to Reuters.

In an interview, Brazilian Foreign Trade Secretary Welber Barral said: "We have to diversify what we export to China, we have to diversify beyond China and we have to add value to our exports."

While acknowledging the "divergence", Lula said both countries had exploited only 10 percent of their potential in trade because diplomatic ties were established only 35 years ago.

"We still need to build a lot of houses. We still need buy more cars, fridges, TV-sets," Lula said, adding both countries have a lot to sell.

(China Daily May 21, 2009)