The EU-Brazil Partnership and the New Climate Geopolitics

Brazil manoeuvring in the global web of power

Brazil’s combination of economic weight, regional leadership and decisive raw materials for decarbonisation makes it a much sought-after partner in the changing world order. Brazil currently also plays a central role in global climate cooperation: as host of COP30 in 2025 in Belém and holding the G20 Presidency in 2024 and the BRICS Presidency in 2025. The EU and China are both seeking to deepen their rela­tions with Brazil. That has consequences for Brazil’s strategic decisions and political priorities. Brazil is a confident and pro­active player seeking to shape the global order and using its strategic position and trade relationships to secure economic and technological benefits for its own green transformation.

Brazil values the EU as a dependable partner for foreign direct investment, for promoting democracy, human rights and other shared values, and for climate co­opera­tion. The country is looking to looking to closer political cooperation with China for investment in infrastructure and indus­try, where the EU and United States have failed to fulfil expectations. Brazil also hopes that partnering with China will strengthen its own influence on global governance and increase the weight of the Global South in a multipolar world. The extent to which political closeness and eco­nomic dependency on China are strategically beneficial in the long term is a matter of heated debate in Brazil – including within the government. The foreign ministry fears that presi­dent’s pro-Chinese rhetoric could endanger Brazil’s non-alignment while the strong agricultural export lobby in particular sup­ports closer ties with China.

China’s growing influence

China has massively expanded its presence in Brazil since the turn of the millennium and intends to consolidate its diplomatic, economic and military influence through “South-South cooperation”. This effort includes increasingly employing soft power tactics, such as supplying vaccines during the Covid-19 pandemic. After a phase of restraint under presidents Michel Temer (2016–2018) and Jair Bolsonaro (2019–2022), Luiz Inácio Lula da Silva is noticeably more open to cooperation with China.

In the BRICS and other formats China and Brazil argue for reform of international institutions like the World Bank and seek to expand their influence and representa­tion. Brazil and China proposed a six-point plan to end the Ukraine war, which drew sharp criticism from the United States and the EU. Lula has also floated a free trade agree­ment between the Mercosur states and China. Brazil even appeared close to joining the Chinese Belt and Road Initiative (BRI) after rejecting it for years, partly out of concern that such a move would isolate it from partners like EU and United States. Although Lula unexpectedly declared that Brazil would not be joining – shortly before visit by China’s head of state Xi Jin­ping – his most recent statements on the BRI reflect a recognition of China’s growing influence and express support for its global vision. Overall Brazil’s position remains ambivalent, as evidenced by the strong opposition to joining the BRI within the Ministry of Foreign Affairs.

Increasingly close political relations be­tween China and Brazil have been accompanied by an expansion of trade. Although the EU remains the largest source of cumu­lative foreign investment (stock) in many sectors of Brazil’s economy and its second largest trade partner, trade between Brazil and China has grown strongly of late, as has Chinese investment in Brazil (flow). China has also become a relevant lender, and was already Brazil’s most important trading partner by 2009. That development led to a reprimarisation of Brazil’s export sector, in other words an increase in the proportion of agricultural products and minerals. China accounts for 28 percent of Brazil’s trade and 31 percent of its exports (including 73 percent of its soybean exports). Bra­zil’s exports to China are mainly unprocessed raw materials and agricultural prod­ucts such as soybeans and minerals, while it imports above all finished products such as EVs and electronics. Brazil has become China’s most important export market for EVs. In 2023 the value of Chinese EV ex­ports to Brazil grew eighteenfold in the course of a single year, with Chinese prod­ucts accounting for 92 percent of Brazil’s EV imports.

Brazil is currently the biggest Latin Ameri­can recipient of Chinese foreign direct in­vest­ment. The figure for 2023 was US$1.73 billion, an increase of 33 percent over 2022. This makes Brazil the ninth biggest recipi­ent of Chinese FDI globally. In recent years China has pursued an extensive investment strategy to expand and consolidate its posi­tion as the leading technology supplier. In 2023 39 percent of Chinese investment in Brazil went into the electricity sector. Chi­na is increasingly investing in ventures in Brazil and other Latin American countries whose purpose is to meet rising demand for energy, diversify the energy supply and reduce dependency on fossil fuels. As the world’s largest investor in renewable energy generation China has been participating in Brazil’s energy transformation since 2010. After a fall in 2020 the share of renewable energy projects has increased from year to year, accounting for a record 72 percent of Chinese investment in 2023. In that year Lula and Xi signed a joint declaration on expanding, deepening and diversifying bilateral cooperation on green technologies such as renewable energy and electromobility. In early 2024 China’s State Grid Cor­po­ration won a thirty-year concession to build and operate 1,500 kilometres of power lines in north-eastern Brazil. The US$3.6 billion project will integrate renewable sources like wind and solar into Brazilian grid.

These investments are integral to China’s geoeconomic strategy. Its objective is to forge economic networks and political alli­ances that support China’s vision of a mul­tipolar world order aligned with its own interests.

Implications of an increasingly close Sino-Brazilian relationship

The economic imbalance between China and Brazil – with what has become a very large trade dependency – is a problem for Brazil. The Brazilian government has responded to the enormous increase in imports from China in recent months with targeted measures to persuade Chinese businesses to produce in Brazil and increase local value creation. These have included investigations of Chinese manufactured goods and higher tariffs on EVs.

China’s growing engagement is a balanc­ing act for Brazil, which traditionally seeks foreign policy autonomy and equidistance to China and so-called Western countries. The deepening of Sino-Brazilian relations has far-reaching implications above and beyond the bilateral relationship. It reflects geopolitical shifts and increasingly calls into question the post-colonial world order, whose multilateral institutions have histo­rically been dominated by the Western nations.

Waning EU influence

While China has steadily expanded its en­gagement in Brazil the EU has struggled to adapt to an increasingly multipolar world or to respond meaningfully to the growing assertiveness of Brazil and other countries in the Global South. For a long time Bra­zil­ian diplomats sought to build closer rela­tions with the EU in order to counterbalance the US hegemony that lasted into the early 1990s. But despite strong cultural and historic ties and shared norms and values such as democracy and human rights, Brus­sels failed to grant relations with Brazil the requisite priority. Under the strategic part­nership agreement of 2007 the EU says it regards Brazil as one of its most important partners in international forums. But any diplomatic efforts have been restricted to short-term and sporadic bursts around the summit meetings, and the EU’s frequently Euro-centric stance has made it difficult to establish a sustainable and mutually ben­eficial partnership.

While China’s trade with Brazil has flour­ished the EU has failed to fulfil Brazil’s expec­tations. Neither did it contribute ad­equately to concluding the negotiations for a free trade agreement with Mercosur, nor has it succeeded in meaningfully deepening the political relationship. The lack of sus­tained progress on the interregional trade agenda has been one reason for Brazil to turn increasingly to China. The EU’s persis­tent economic stagnation also plays a role here, as does the loss of its leading position in key technologies like renewable energy.

At the latest since the Russian invasion of Ukraine, the EU Commission under von der Leyen has recognised the vital necessity of strong partnerships with countries in Global South. It is now actively seeking pos­sibilities to deepen political and economic relations with Brazil in order to reduce its one-sided dependencies, increase its resili­ence and forge global alliances to tackle global crises like climate change. In 2023 von der Leyen was the first EU Commission President in ten years to visit Brazil. She announced that the EU would invest €2 billion under the Global Gateway initiative, which is presented as the EU's geoeconomic and geopolitical response to China’s BRI, to support Brazilian green hydrogen production and to promote industrial energy effi­ciency. Von der Leyen also promised to pro­vide the Brazilian government with €430 million to help it to end illegal deforestation by 2030.

The EU’s strategic interests are at risk

The EU’s loss of reputation and influence in a multipolar word increasingly limits its options in emerging economies like Brazil. In the longer term this threatens to under­mine the EU’s claim to shape global norms and standards. This is already a question in Brazil today, where the EU is increasingly seen as waning and crisis-prone. Without a strong presence and robust partnerships with key states like Brazil, the EU will find it increasingly hard to improve its geoeconomic resilience, to fast-track decarbonisation and to keep up in the race for market share and technological leadership.

Recommendations for the EU’s 2024–2029 term

The EU needs to step up its diplomatic efforts towards Brazil. That means attentive and continuous diplomacy and a clear defi­nition and prioritisation of its strategic in­ter­ests in Brazil and other countries in the Global South. Rather than simply reacting to China’s growing presence, the EU should pursue a coherent and proactive partnership strategy built around the relationship with Brazil and based on mutual trust and equal cooperation. That will demand a com­prehensive understanding and greater con­sideration of the partner country’s specific political, economic and social priorities and interests. In the case of Brazil that means above all orientating climate and energy cooperation primarily on socioeconomic aspects such as eliminating hunger, poverty and social inequality, and promoting local value creation.

While the EU continues to claim norma­tive leadership, partners like Brazil often have their own interpretations of similar norms. Openness for mutual learning and heightened awareness of differences are therefore key to successful dialogue. The horizontal approach is crucial: developing the principles of cooperation jointly in order to create mutually beneficial partner­ships. That includes acknowledging the partner countries’ strengths and successes, for example Brazil’s leading position in biofuels.

If the new Commission’s political agenda is to be successfully implemented it will be essential to provide foreign policy backing for the EGD. The external dimension of the EGD should be expanded systematically and strategically to ensure implementation and avoid further diplomatic trouble with im­portant partners like Brazil. The challenge for the new Commission will be to align all the existing international climate instru­ments more strongly with the goals of the EGD.

Given the Commission’s increased focus on competition policy, Global Gateway could be employed more strategically to reduce resistance to the CBAM and the EUDR. That would mean integrating Global Gateway more meaningfully into the EU’s emerging industrial and economic security strategy and ensuring that it serves an agenda that is beneficial for both Brazil and the EU. A Global Gateway initiative that better con­nects the EU’s development, climate, trade and investment agendas to Brazil’s interests and priorities could restore confidence in the EU as climate leader and honest broker.

The EU should also coordinate its financing channels and structures more effectively and reduce their complexity. It would be helpful to create a country platform that brings together the Brazilian government with relevant EU actors. Such a platform could provide a comprehensive overview of the various financing channels, identify gaps and synergies, and facilitate access to funding. For Brazil this could be trialled in the field of energy cooperation.

To accompany these measures, the over­all impact of European financing should be communicated more strategically. A pub­licly accessible database of investments by the EU and its member states in relevant sectors in Brazil and other partner countries would provide a suitable means to make positive European contributions visible and comparable with the overall impact of other investments through initiatives like the Chinese BRI. This is especially impor­tant in the context of emerging trade and diplomatic conflicts over measures like the CBAM, in order to enhance the EU’s cred­ibility and attractivity as a partner in Brazil and to underline the EU’s desired climate leadership role. China’s growing efforts to claim the narrative of global climate leader­ship since Trump’s election represent an­other factor accentuating the importance of strategic communication. The future struggle over that narrative was already visible at COP29 in Baku.

A new political cycle is beginning in Europe, with new terms for the European Parliament and the European Commission. That creates an opportunity to formulate an integrated agenda that connects climate tar­gets with geoeconomic resilience and trade interests, without losing sight of national objectives and development implications in partner countries like Brazil. The needs are: clearly communicated priorities and offers, continuous political engagement on equal terms, additional financial resources and stronger foreign policy backing for the EGD. Otherwise the EU’s influence in an increas­ingly multipolar world will continue to slip away.