Why Brazil cannot afford to choose between China and the US

(This article has been updated by ThinkChina. English version edited and refined by Bai Kelei, with the assistance of AI translation.)

Brazil’s presidential election went to a second-round run-off on Sunday (25 October), with incumbent President Luiz Inácio Lula da Silva winning 51.79% of the valid votes against 48.21% for Flávio Bolsonaro, the right-wing Liberal Party candidate and son of former president Jair Bolsonaro, who has close ties with US President Donald Trump. Brazil’s Liberal Party has acknowledged Lula’s victory, but Bolsonaro has yet to formally concede defeat. After arriving in the US, he updated on X to say that he was the rightful “leader” of Brazil.

As Latin America’s largest country by land area, population and economic size, Brazil carries considerable regional weight. In recent years, right-wing forces have gained ground in several Latin American countries, noticeably reshaping South America’s political landscape. Some Western media outlets had described a Bolsonaro victory as giving US President Donald Trump “the final piece of the South American puzzle” in advancing the Monroe Doctrine in the western hemisphere.

Academics interviewed said that a right-wing victory could accelerate Brazil’s political and security alignment with the US. However, deep trade and investment ties with China would have constrained any sharp shift in Brazil’s China policy. With Lula re-elected, the focus now turns to the direction of his next term and how far Brazil will deepen its engagement with Beijing.

Two competing paths for diplomacy

On foreign policy, Bolsonaro, 45, stands in sharp contrast to the 80-year-old Lula. Lula prioritises multilateralism, BRICS cooperation and coordination among Global South countries, and has actively encouraged Chinese investment in Brazil’s energy, mining, infrastructure and technology sectors. In a telephone call with Chinese President Xi Jinping in July, Lula reiterated his welcome for Chinese companies to invest in Brazil and deepen cooperation in areas such as artificial intelligence.

By contrast, Bolsonaro is more pro-US. After meeting Trump in Washington this May, he said Brazil had the world’s second-largest rare earth reserves and pledged, if elected, to establish a strategic partnership with the US on critical minerals to help reduce American dependence on Chinese rare earths. He has also sought to emphasise economic pragmatism, arguing that Brazil need not take sides between major powers, while criticising Lula’s government for “declaring war on the US while fawning over China”. If he was elected, the most pronounced shifts arising from Brazil’s political changes were expected to involve policy adjustments on multilateral cooperation and sensitive sectors.

As South America’s only BRICS member, Brazil’s position has implications for coordination within the grouping and efforts to advance settlement in local currencies. Bolsonaro has criticised non-dollar settlement and said he would reassess whether Brazil should remain in BRICS, considering withdrawal if necessary. Although this position does not appear in his election manifesto, he continues to advocate a reassessment of how Brazil participates.

Brazil in BRICS

Even before Lula’s re-election, academics had considered a Brazilian withdrawal from BRICS unlikely, including under a Flávio Bolsonaro presidency. Mauricio Santoro of the Brazilian Navy’s Centre for Political and Strategic Studies told Lianhe Zaobao (LHZB) that Brazil had already become less active in BRICS under Jair Bolsonaro (2019-2023) and sought to redirect cooperation towards areas such as public security.

Li Bing, an assistant research fellow at the Chinese Academy of Social Sciences’ Institute of Latin American Studies, similarly expected Bolsonaro to favour selective participation over withdrawal, potentially weakening China-Brazil strategic coordination while preserving existing trade and economic ties. Lula’s victory removes that immediate uncertainty over Brazil’s direction under a right-wing government.

Trade and economic ties are expected to continue anchoring the bilateral relationship. China bought about 85.4 million tonnes of Brazilian soybeans last year, accounting for 79% of Brazil’s total soybean exports. Iron ore, oil and beef are also major Brazilian exports to China, putting the interests of Brazil’s agricultural, mining and energy sectors at stake. The latest figures show that Brazil overtook Saudi Arabia to become China’s second-largest oil supplier in the January-to-September period.

Santoro noted that however radical the Bolsonaro family’s political positions might be, it must take account of pressure from the agricultural, mining and oil sectors, which depend on the Chinese market.

Chinese companies including BYD, Didi, Geely and Huawei have also established a strong presence in Brazil, while Chinese investment has expanded beyond traditional infrastructure into cars, consumer goods and services. Figures released in May by the Brazil-China Business Council (CEBC) showed that Brazil became the world’s top destination for Chinese overseas investment last year, attracting about US$6.1 billion, up 45% from 2024. Investment flowed mainly into sectors such as electricity, mining and cars.

Cui Shoujun, a professor at Renmin University of China’s School of International Studies, believes economic cooperation between China and Brazil could have become more complicated under Bolsonaro.

He told LHZB that trade in commodities such as soybeans, iron ore and oil was expected to continue. Bolsonaro has stressed that he welcomes foreign investment that involves “technology transfer”, so general investment in sectors such as electricity, mining and cars may not face any significant disruption either. However, Brazil’s China policy could shift in areas such as payment systems, critical minerals and investment screening in sensitive sectors. Bolsonaro has criticised Lula’s efforts to promote local-currency settlement and issue renminbi bonds. He has also told the Office of the United States Trade Representative that Brazil’s instant payment system Pix should not be linked to “non-Western” cross-border settlement arrangements, an issue involving cooperation with China’s UnionPay.

A Bolsonaro victory could have bolstered Washington’s regional strategy, potentially prompting other countries to scale back ties with Beijing.

Cui assessed that Chinese companies in Brazil could also face stricter approval requirements for new projects and more rigorous scrutiny of mergers and acquisitions. Screening in sensitive sectors such as telecommunications and data could tighten, while critical mineral projects could face greater competition from US investors. Political risks for Chinese companies operating in Brazil and trade friction between the two countries could also increase.

Not choosing sides

Viewed through the three-way relationship between China, the US and Brazil, the presidential election could alter the climate of political trust between Beijing and Brasília and the pace of cooperation in some emerging sectors, but is unlikely to shake the foundations of bilateral trade and economic ties. In an analysis published in October by the US Council on Foreign Relations, Oliver Stuenkel, a professor at Brazil’s Getulio Vargas Foundation and a fellow at the Carnegie Endowment for International Peace, said Brazil depended on both China and the US, and that “deeper alignment with either Washington or Beijing is hardly an option”.

As for whether a shift in Brazil’s foreign policy would trigger ripple effects regionally, Cui expected the impact to be “limited”. He noted that China was an important trading partner for Brazil, Chile, Peru and Uruguay, among others. This structural dependence would not change with a change of governing party, and right-wing governments in Latin America have generally adopted a pragmatic approach towards China after taking office, as illustrated by Javier Milei’s government in Argentina.

He considered the former Uruguayan Foreign Minister Francisco Bustillo’s remarks representative of the region’s position: China is clearly an alternative partner, but “we are not joining China against the US”. Cui’s assessment was that Latin America’s strategy towards China was one of “hedging, rather than taking sides”. The key issue in Brazil’s election was not the divide between left and right, but whether Brazil could maintain strategic autonomy between China and the US without choosing sides.

This article was first published in Lianhe Zaobao as “巴西总统选举牵动中美巴关系 中巴合作面临变数”.

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