How China Is Using Brazil to Reshape Power in the Americas

China’s increasing economic footprint in Brazil, Latin America's largest economy, is redefining the region’s balance of power. Once primarily a trading partner, China is now entrenching itself in the Brazilian industrial base and consumer economy, turning the South American colossus into a gateway for Chinese influence across the continent. This shift not only represents an ongoing trend in the Americas but also challenges Washington’s traditional sphere of influence while carrying indirect consequences for Taiwan, whose diplomatic survival relies on a shrinking circle of allies in Latin America that have been progressively drawn into Beijing’s orbit.

Within the past decade, Brazil’s political and economic situation has undergone drastic change. Since 2009, China has been Brazil's largest trading partner, but its economic presence was primarily confined to commodity trade. Now, that boundary has disintegrated. Today, China’s economic presence is readily visible in everyday life, from BYD’s electric vehicles (EV) dominating Brazilian roads and holding more than 80% of sales in the domestic EV market, to Chinese-backed apps such as Didi’s “99” and Meituan’s “Keeta” competing for dominance in the urban mobility and food delivery industries. Chinese companies have shifted away from their past role as exporters to now be responsible for job creation and market shaping within Brazil’s economy.

Although China is not yet Brazil’s largest foreign investor, with the U.S. still holding that position with its 17.05% contributions, Beijing’s foreign direct investment (FDI) is escalating significantly. From 2023 to 2024, Beijing increased FDI to Brazil by 113%, while U.S. investment increased by only 0.057 %. Though the gap in total investment volume remains wide, the pace of China’s FDI increase should prompt attention from Washington and Brasília. If consistent, this acceleration could progressively erode Brazil’s reliance on Western capital and lead to overreliance on Chinese capital, consequently increasing China's economic leverage over Brazil and pushing it closer to China's foreign policy stances. While the Trump 2.0 administration has placed Latin America at the core of its foreign policy, prioritizing crisis management in Venezuela, Brazil, Cuba, and Central America, Washington’s economic engagement remains limited, leaving space for Beijing to expand unchallenged.

As China’s investment grows, Brazil’s domestic market has become a platform for regional expansion by Chinese companies like GWM and BYD. In BYD’s case, the company plans to develop their first and largest complete-vehicle manufacturing base overseas in Camaçari, Bahia state as a regional strategic hub integrating manufacturing, innovation, and exports to the entire South American market. While the first vehicles have rolled off the production line, distribution to neighboring markets such as Argentina, Uruguay is planned. In 2024, BYD registered a 327.7% increase in sales compared with 2023, indicating growing Brazilian consumer interest in its products. Companies like BYD are capturing significant market shares due to their marketing strategies, localized production, affordability, and improvements in quality and reliability. While in the past, Chinese products were considered low-cost and low-quality, strong sales have gradually repositioned them as reliable, competitive, and aspirational in the eyes of Brazilian and Latin American consumers.

China’s rising economic presence in Brazil has also granted it access to trade benefits in the region through Mercosur. According to Mercosur rules, a product manufactured in Brazil can contain up to 45% of non-Mercosur inputs to still qualify as a Brazilian-origin good. For example, BYD opened its first overseas factory outside Asia in Bahia state, producing its first electric cars entirely in Brazil. Through local manufacturing, Chinese firms are allowed to label their products as “Made in Brazil,” which qualifies them as Mercosur-origin goods. As Brazil and Paraguay are members of Mercosur, intra-bloc trade privileges, such as simplified customs procedures and tariff exemptions, allow Chinese-made-in-Brazil products to enter not only Paraguay but other regional markets with minimal barriers. This trade workaround allows Chinese brands to enter markets that otherwise engage with Taipei at a lower cost, thus undermining Taiwanese products competitiveness and eroding Taiwan’s economic leverage with its diplomatic allies. In doing so, Beijing can project economic influence on countries that remain diplomatic allies with Taipei without direct trade or formal recognition.

Building on China’s increasing economic presence in the region, Brazil has identified Beijing as a reliable and strategic partner to achieve its foreign and domestic policy goals. Under President Luiz Inácio Lula da Silva and the Worker's Party (PT), Brazil has reembraced an “active non-alignment" foreign policy, emphasizing sovereignty, multilateralism, and South-South cooperation. This approach strengthened Brazil’s partnership with China, creating new opportunities in favor of Beijing. During President Lula’s 2023 visit to Beijing, he advocated for settling trade in local currencies instead of the U.S. dollar, demonstrating Brazil’s eagerness to strengthen financial coordination with China and push for de-dollarization. Lula’s administration is expanding ties with China to increase Brazil’s international and domestic influence, while China is leveraging Brazil as a diplomatic and logistical gateway into Latin America’s institutions and markets, particularly the Mercosur bloc, which influences regional trade norms.

While economic cooperation promises advantages for both sides, this growing partnership risks subordinating Brazil’s strategic autonomy to Chinese capital and supply chains and may even compromise the sovereignty of neighboring countries such as Paraguay. China’s involvement in Brazil’s energy and industrial sectors poses particularly significant regional implications. According to a study by the Brazil-China Business Council (CEBC), of the US$4.8 billion in Chinese investment in Brazil in 2024, 34% was directed to the electricity sector, 25% to the oil industry, and 14% to automobile making manufacturing. Recent technical cooperation and equipment supply between Brazil’s State Grid and China Three Gorges has integrated Chinese technology, capital and supply chains within Brazil’s energy infrastructure. But with Brazil and Paraguay holding joint ownership over the Itaipu Hydroelectric Power Station, which supplies 90% of Paraguay’s electric needs, these infrastructural changes have far-reaching consequences. Although China does not own stakes in Itaipu and does not have direct influence over Paraguay’s energy sector, Brazil’s growing partnership with Chinese companies opens it to Chinese influence and indirectly undermines Paraguay’s energy sovereignty.

Beijing’s economic consolidation in Brazil is a long-term plan that could grant it leverage over key industries including energy, rare earth minerals, and agriculture, integrating Beijing into Latin America’s economic ecosystem.  This economic expansion in Latin America also carries indirect but critical consequences for Taiwan. As Chinese companies scale their footprint in Brazil and gain access to Mercosur, they expand their capacity to influence regional trade and political networks, such as those in Paraguay, Taiwan’s last diplomatic ally in South America. If China strengthens its hold on Brazil’s domestic economy, Taiwan’s position in Latin America could weaken, narrowing its already limited international space.

To counter this trend, Washington and Taipei must cooperate more closely with Latin America. The recently introduced bilateral bill, “United States-Taiwan Partnership in the Americas Act,” represents a step toward that direction, but its implementation should extend beyond Taiwan’s current diplomatic allies. Engaging with major economies like Brazil, albeit informally through technological cooperation, market diversification, and investment would improve regional autonomy and reduce dependency on Chinese capital.

China's growing presence in Brazil is not the typical economic story but represents a structural shift in hemispheric power. As Beijing leverages Brazil's industrial and market capacity to expand its clout across Latin America, Washington risks losing influence in its own neighborhood, while Taipei risks losing diplomatic standing in one of its remaining supportive spheres of influence.

If Washington and its partners fail to act, Beijing's involvement in Brazil may evolve into a strong foothold for reshaping economic and political alignments across the Americas. The matter is not just about whether Taiwan could retain its diplomatic allies, but whether the hemisphere will remain pluralistic or fall under China's sphere of influence.

This article was previously published on The Diplomats on November 20 2025.