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Under Lula's Watch: China's Growing Grip on Brazil's Economy

Under Lula's Watch: China's Growing Grip on Brazil's Economy. With rhetoric aimed at "reindustrializing" Brazil and asserting a leading global role, the government has opened doors to a growing flow of Chinese investments, particularly in vital sectors. Facts and Agreements Fueling Distrust.

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Unveiled Brazil

5/28/20254 min read

red white and blue flag on pole during daytime
red white and blue flag on pole during daytime

Under Lula's Watch: China's Growing Grip on Brazil's Economy

São Paulo, Brazil – May 25, 2025 – Brazil's foreign policy under President Luiz Inácio Lula da Silva's government has increasingly solidified China as a central economic and strategic partner. With rhetoric aimed at "reindustrializing" Brazil and asserting a leading global role, the government has opened doors to a growing flow of Chinese investments, particularly in vital sectors. However, this deepening relationship raises questions about the potential ceding of Brazil's wealth, economy, infrastructure, and industry, fueling distrust among some public opinion segments and analysts.

Facts and Agreements Fueling Distrust

The already robust Brazil-China relationship has reached new heights under the current administration. In May 2025, a visit by President Lula to China resulted in the announcement of R$ 27 billion (approx. US$ 5.2 billion) in new investments across various projects, adding to a history of strong trade exchange. These partnerships, while presented as opportunities for development and technology transfer, are viewed by some as a move that could compromise Brazil's sovereignty and economic autonomy.

Investments in Strategic Sectors and Infrastructure:

  • Renewable Energy & Technology: Announced investments by Chinese automakers like GWM for expansion in Brazil, alongside a renewable energy hub in Piauí and a green industrial ecosystem park. There are also US$ 1 billion projects for sustainable aviation fuel (SAF) production and the creation of a Research and Development (R&D) Center for renewable energy. These aim to position Brazil in the global green economy.

  • Critical Minerals: Lula highlighted that China's expertise in refining critical minerals such as rare earths, lithium, niobium, cobalt, copper, graphite, uranium, and thorium will contribute to valuing Brazil's production, including the transfer of technology for electric battery assembly. This is a point of significant concern, given the strategic and security potential these minerals represent globally. Critics warn of potential resource dependency.

  • Logistics Infrastructure: There is strong Chinese interest in road and railway projects, with the potential to boost Brazilian exports. The "South American Integration Routes," seeking to connect the Atlantic and Pacific oceans through five routes, are a pillar of this agenda. The Santos Tunnel project, with Chinese companies showing interest in the auction, is another example of how the country's vital infrastructure could see Chinese participation, raising infrastructure control concerns.

  • Health & Industry: Agreements in the health sector aim for local insulin production and the development of hospitals with artificial intelligence and robotic surgery, in partnership with Chinese companies like Fiocruz and Biomm. In the automotive sector, beyond GWM, BYD has also made significant investments in the country, expanding Chinese industrial footprint.

  • Defense & Security: The Chinese state-owned Norinco, active in the defense industry and infrastructure projects (highways, railways, hydroelectric plants), was received by Lula, signaling possible partnerships in a sensitive sector. There are warnings about Chinese control over niobium and the energy sector in Brazil, raising questions about vulnerability and national security, and the reliance on Chinese technologies and equipment, which could limit Brazilian autonomy.

Trade Balance and Dependency:

China has solidified its position as Brazil's largest trading partner. Between January and March 2025, trade amounted to nearly US$ 40 billion, with Brazilian exports to China surpassing the combined sales to the United States and the European Union. While this generates trade surpluses, Brazil's export agenda primarily consists of commodities (ore, oil, and soybeans), exposing Brazil to an economic dependency on primary products and, consequently, to the oscillations of the Chinese market. This raises commodity dependency concerns.

Statements Fueling Distrust

Lula's statements have been interpreted by some as an unrestricted endorsement of Chinese influence:

  • "China and Brazil are strategic partners and fundamental actors in global issues. We bet on reducing trade barriers and and we want more integration." (Lula).

  • "Our relationship with China is very strategic. We want to learn and also attract more investments to Brazil. We want more railways, more subways, more technology. We want artificial intelligence. We want everything they can share with us." (Lula).

  • "It's no exaggeration to say that, despite the almost 15,000 kilometers that separate us, we have never been so close." (Lula).

  • "The construction of the economic alliance between China and Brazil has no return." (Lula).

These remarks, combined with the growing influx of Chinese capital and companies into critical areas, raise concerns that Brazil is becoming excessively dependent on a single global power, which, for critics, could be detrimental to its economic diversification and geopolitical autonomy.

Conclusion: Between Opportunity and Warning

The intensification of the partnership with China is presented by the Lula government as a natural path for development and attracting investments. However, the volume and nature of these investments, especially in strategic sectors and infrastructure, prompt a deeper reflection on the risks of excessive dependency. The absence of equivalent Brazilian investments in China, and the concentration of exports in commodities, add complexity to the debate.

For many, the question is not about having relations with China, but about the depth and conditions of this engagement, and whether Brazil is securing its own long-term interests or allowing China's "second hand" to assume excessive control over its economic and industrial future.

Fontes:

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