The Great Balancing Act: Lula in China and the Future of U.S.-Brazil Relations


President Luiz Inácio Lula da Silva’s (Lula) much anticipated state visit to China ended last weekend, following a two-week hiatus due to the president’s pneumonia diagnosis in mid-March. Lula’s visit to China was billed in the Brazilian press as a symbol of the South American giant’s return to the world stage, following his predecessor Jair Bolsonaro’s lower-profile foreign policy. The bilateral relationship with China under Bolsonaro was marked, initially, by several verbal attacks against the Chinese Communist Party. With this high-profile visit, President Lula signals that China will be a top priority in the country’s new foreign policy, which will draw closer scrutiny from Washington due to the strategic nature of the Brazil-China relationship.

A little over 100 days into his latest presidential term, President Lula has already made high-profile visits to Argentina, Uruguay, the United States, and China, and will soon head to Europe and Africa. Lula’s frenetic schedule seeks to rekindle, in the words of longtime adviser and former foreign minister Celso Amorim, Brazil’s política externa ativa e altiva—an active and self-assertive foreign policy that aims to engage harmoniously with a multitude of international actors, and ultimately guarantee Brazil’s strategic autonomy.

China’s Role in Lula’s “Active Nonalignment” Strategy

This visit to China is seen by some, such as former Chilean diplomat Jorge Heine, as a signal that Lula’s government is committed to the idea of “active nonalignment.” This describes an increasingly multipolar world, where Brazil (and other Latin American countries) must prioritize its own interests, with the level and type of engagement varying from actor to actor. Likewise, Brazil would seek to maintain a position of neutrality on great geopolitical contests such as the U.S.-China strategic competition. And, although Brazil did condemn the Russian invasion of Ukraine, the Lula government has expressed its neutrality in the conflict, denying overtures from Western actors such as Germany to sell ammunition to the Ukrainians.

There seems to be a concerted effort by Brazil’s foreign policy establishment not to view the growing systemic competition between China and the United States in terms of a zero-sum game. Hence, Brazil will tend to compartmentalize its relationship with partners based on specific affinities. In theory, this allows its foreign policy to engage with a wider range of actors.

In broad strokes, the United States is seen as a reliable and valued partner for foreign direct investments (FDI), the advancement of shared values such as democracy and human rights, climate change, and security cooperation. Conversely, the relationship with China centers on trade, investment complementarity, and diplomatic concertation to highlight the importance of the Global South in the international system.

Symbolism is also of great importance for Brazilian foreign policy. Often, diplomatic and political gestures are equally important as concrete deals. The agenda, timing, and size of the entourage of diplomatic trips are no coincidence and they directly reflect deeper foreign policy strategies. Lula’s visit to the United States and China in early 2023, and the way his administration has juxtaposed the two trips, says a great deal about where Brazil sees each relationship in a world of greater systemic competition.

The Brazil-China Relationship

China has been Brazil’s top trading partner since 2009. In 2022 alone, Brazil exported $91.26 billion to China, mainly soybean and mineral products, while it imported $61.5 billion in mostly manufactured good from China. The total bilateral trade volume in 2022 totaled $152.8 billion, a 37-fold increase since President Lula’s first term began in 2003

Besides the significant levels of bilateral trade, Brazil and China have increased their diplomatic engagement in the last few decades, with China designating Brazil as its first official “strategic partner” in 1993. In 2012, China elevated the relationship to a “global strategic partner” signaling that China views Brazil as an important partner for its broader international strategy.

Although President Lula met with President Joe Biden before meeting with President Xi, the relatively small retinue that followed the Brazilian president’s one day trip to Washington stood in stark contrast to his trip to China. President Lula was accompanied to Beijing and Shanghai by a large entourage of business leaders, several state governors, and over 40 congressmembers, including the president of the Senate, Rodrigo Pacheco. The visit was an attempt to “normalize” the bilateral relationship after a contentious four years under Bolsonaro.

In his meeting with Xi, Lula signed 15 memorandums of understanding and 20 agreements on a wide range of issues such as agribusiness, an alliance against hunger and poverty, cooperation on social issues, industrial and technological innovation, investments on energy distribution, climate change, and even space cooperation. To be sure, some of these areas cause great discomfort in Washington, despite the constant reassurances by Brazil’s Foreign Ministry that the relationship with Beijing will not negatively impact the longstanding partnership with the United States. In one speech, Lula boldly stated that no one would keep Brazil from improving its relationship with China—in a not-so-veiled reference to the United States.

During the inauguration of former president Dilma Rousseff to become the head of the BRICS’s New Development Bank, Lula opined on the role of the U.S. dollar as the global reserve currency. Lula urged a frontal challenge to U.S. dollar dominance. In this sense, the recently signed real-yuan currency swap agreement is set to streamline and reduce the costs of bilateral trade and will allow it to bypass the U.S. dollar entirely. Some fear that Lula’s rhetoric might jeopardize Brazil’s nonalignment strategy for navigating a world of increasing systemic competition between the United States and China, as the president seems more comfortable expressing Chinese views on trade. On the other hand, some would argue Brazil’s currency swap deal with China does not necessarily signify acquiescing to Beijing’s trade policies, as similar currency clearing houses have been established in 27 other countries including Australia, Canada, Germany, and the United States.

Another highly watched stop for Washington analysts was President Lula’s visit to the Chinese technology giant Huawei’s innovation center in Shanghai. Lula was received with great pomp and circumstance and toured Huawei’s research and development facilities, seeking investment in Brazil’s 5G and the upcoming 6G telecommunications infrastructure, as well as cooperation on artificial intelligence development. This is understandable since Huawei has been in Brazil for over 25 years and developed a significant part of the telecommunications infrastructure throughout the country. However, the visit could raise red flags in the U.S. Congress, which might make new investment concessions to Brazil a more arduous endeavor.

Further on the technology front, Brazil and China also agreed to set up a working group setting the stage for greater Chinese investment in the Brazilian semiconductor industry. China is expected to invest in the Brazilian state-owned semiconductor research and development (R&D) center, Ceitec (Centro de Excelência em Eletrônica Avançada), and cooperate with the country’s 11 operating semiconductor production centers. The development of Brazil’s semiconductor industry is vital for the country to reverse its rapid deindustrialization process. Nonetheless, these investments may put Brazil in the middle of the so-called chip war between the United States and China, especially if it helps the latter circumvent restrictions imposed by the United States in October 2022 on semiconductor exports to China.

In a broader sense, Brazil sees its relationship with China to increase desperately needed investment in the country’s economy and place it on a sustainable economic footing—investments of a kind that the United States has not been able to furnish. Lula’s other mission in this visit was to increase productive Chinese investment and innovation in Brazil, too. While China has increased its level of foreign direct investment (FDI) in Brazil, the United States is still the top provider, investing almost $200 billion in 2022—four times as much as China. And unlike trade with China, 55 percent of Brazilian exports to the United States in 2022 were high value-added manufactured goods, which add more jobs to the economy and contribute to stable revenue streams.

On the other hand, Brazil uses China’s champion of the Global South narrative to seek a more active position in shaping global governance in an emerging multipolar world. However, there is a fine line between using the relationship with China to counter historical diplomatic and economic dependency on the United States, and outright bandwagoning on Beijing’s vision for a new international order. There is also concern growing among some Brazilian foreign policy analysts and officials that, if left unchecked, the growing relationship with China might lead not to strategic autonomy, but dependency. The unbalanced nature of bilateral trade raises important questions in this sense.

Points of Tension

Despite the developing relationship, there are important bilateral points of tension. Brazil’s main grievance is the unbalanced nature of bilateral trade. Brazil’s exports to China are concentrated in mineral and agricultural commodities, mainly soybean and iron ore. Meanwhile, Brazil imports mainly high value-added manufactured goods from China.

In the diplomatic and political arena, there are also some important strains in the bilateral relationship. China has not explicitly endorsed Brazil’s historical fight to become a permanent member of the UN Security Council (stemming from its post-World War II days, where it emerged on the side of the victors). Despite all the bilateral rhetoric that the architecture of the international system should be reformed to reflect shifts in world power and the rise of the Global South, China is reticent to support Brazil’s demand, as the joint declaration after last week’s visit indicates.

Another point of tension is that Brazil, unlike other countries in Latin America, is hesitant to join Chinese-led initiatives like the Belt and Road Initiative (BRI). Joining the BRI likely presents important political costs for Brazil’s relationship with the United States that are not offset by the potential increase in investments. After all, Brazil was China’s top destination for FDI in the world in 2021; joining the BRI is unlikely to provide additional benefits and might actually distract from reducing the growing dependency China has created with Brazil.

Geopolitical Risks: Ukraine-Russia “Peace Club”

Perhaps one of the most visible demonstrations of Lula’s foreign policy of active nonalignment was his attempt to use this visit to China to galvanize support for a “Peace Club” composed of “neutral” nations capable of negotiating an end to Russia’s invasion of Ukraine, although no specific plan or list of countries was proposed in Lula’s meeting with President Xi. Lula is banking on the political capital he acquired in his first two stints as president (2003–2010), when Brazil experienced significant economic growth and was a leading voice in the Global South, to burnish his credentials as a peacemaker. Lula’s “Peace Club” also taps a deep-seated belief among Brazilian diplomats that Brazil’s vocation is to be a leading consensus-builder in the international system.

However, Lula’s peace ambitions occur in a more challenging geopolitical environment than in the 2000s, when U.S.-China competition was less intense and Putin had not fully embraced revanchism and military action in Russia’s near-abroad, with the obvious exception of Georgia in 2008. Lula’s special foreign policy adviser, Celso Amorim, met discreetly with Vladimir Putin days before Lula embarked for Beijing. While he admitted later in an interview for CNN Brazil that there seemed to be no impetus for peace at the moment, he also said the door was not fully closed. Lula’s recent comments supporting the idea that Russia give back only the Ukrainian territories it occupied following the 2022 invasion, but not Crimea, annexed in 2014, was met with sharp reactions from Kyiv and the European Union. Additionally, there is an inherent contradiction between Brazil’s longstanding foreign policy of upholding national sovereignty and territorial integrity and acquiescing to Russia’s illegal annexation of Crimea in the name of peace.

Brazil is a founding member of BRICS, and Lula has been enthusiastic about the grouping since its inception, touting it as an effective mechanism to reduce power imbalances in the post-Cold War world. Lula’s desire to closely coordinate with China in this organization could dent the country’s credentials as “neutral” in the eyes of both the Ukrainians and their backers. By working closely with China to end the war in Ukraine, Brazil might risk its own “active nonalignment” policy, pushing it away from the United States and other Western allies, jeopardizing its position with the Global South, and gravitating toward Beijing. If the idea of the Peace Club fails and it results in an emboldened Russia, the whole strategy of active nonalignment might be imprudent and thrust Brazil into uncharted territory.


Lula’s visit was a litmus test to see how he would try to balance Brazil’s interests in a world increasingly marked by geopolitical tensions. Will President Lula be able to revive his política externa ativa e altiva in a world that is more complex than two decades ago? The world in 2023 certainly seems to be far less forgiving to middle powers that assume great geopolitical risks.

Lula’s trip to China kicked off a grand geopolitical balancing act for Brazil, in which everything from the symbolism and scheduling to rhetoric and agreements will be scrutinized by both the United States and China for any hint about which country is up and which is down in long-term, strategic competition.

Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Carlos Baena is an intern with the CSIS Americas Program.

Carlos Baena

Intern, Americas Program