Brazil signals new openness to Mercosur-China talks as Beijing seeks deeper ties

BRASILIA/MONTEVIDEO, Feb 6 - Brazil is considering pushing for a partial trade agreement between the Mercosur bloc and China for the first time, senior Brazilian government officials said, in what would be a major shift for Latin America's largest economy.

Brazil has long vetoed formal negotiations with Beijing to protect domestic manufacturers from a surge in Chinese imports. But as Beijing has sought deeper commercial ties and Washington has imposed waves of tariffs, the government of President Luiz Inacio Lula da Silva is now reconsidering that stance.

A joint statement issued during Uruguayan President Yamandu Orsi's visit to Beijing to meet with President Xi Jinping this week said they hoped free trade negotiations between China and Mercosur could begin "as soon as possible." Mercosur includes Brazil, Argentina, Paraguay and Uruguay, with Bolivia poised to become a full member.

While a formal, comprehensive trade pact remains distant, two Brazilian government officials said a partial Mercosur-China deal is now viewed as a plausible longer-term outcome, spurred by U.S. tariffs on goods from trading partners that have disrupted global commerce and reshaped trade alliances.

China's foreign and commerce ministries did not immediately respond to a request for comment.

Brazil's evolving stance reflects what one of the officials, who asked not to be identified due to the sensitivity of the talks, called a "new global scenario."

"We have to diversify our partners," the official said. "China has the advantage that we can work with a partial agreement, only in some tariff lines," the official added.

Another Brazilian official directly involved in internal Mercosur negotiations said the bloc could advance on non-tariff barriers such as import quotas, customs procedures and health and safety regulations, which alone would create meaningful openings in the Chinese market.

The official said it was too early to specify which business sectors might be discussed, describing the issue as "highly complex."

'NEW DYNAMIC IN THE REGION'

Brazil has previously been wary of a broader pact out of concern that China's vast industrial output could overwhelm domestic manufacturers.

Chinese investment in production in Brazil has, however, grown in recent years - an expansion Brasilia is keen to maintain.

U.S. President Donald Trump's economic policies, which have included pressuring Latin American governments to curb ties with China, are likely pushing Beijing to tie down new trade agreements in the region, said Ignacio Bartesaghi, a foreign policy expert at the Catholic University of Uruguay.

"There is a new dynamic in the region when it comes to commerce that Trump is primarily driving," Bartesaghi said.

"Ideas that before seemed entirely stuck, could now advance," he added.

However, any Mercosur deal would require consensus from all its members, raising a number of significant challenges.

Paraguay is one of just 12 countries worldwide that maintain formal diplomatic relations with Chinese‑claimed Taiwan, a factor that complicates - though does not necessarily rule out - any agreement with Beijing, the Brazilian officials said.

Paraguay imported goods from China worth $6.12 billion in 2025 and has been included in Mercosur-China discussions, signaling that dialogue remains possible. Paraguayan President Santiago Pena has said he does not oppose a Mercosur-China pact, provided Paraguay's right to maintain diplomatic ties with Taiwan is respected.

"If there is one bloc today that can negotiate with any country or bloc, it is Mercosur," Pena said in a July interview with Argentine media.

Argentina, Latin America's third-largest economy, could also make it difficult to reach a consensus. It has moved closer to Washington under President Javier Milei, who took office in 2023. Milei has prioritized strengthening U.S. ties, including a $20 billion currency swap framework with the U.S. Treasury.

China remains a key creditor and major buyer of Argentina's agricultural exports.

But Buenos Aires could be reluctant to support China‑led talks within Mercosur, at least in the near term, experts such as Bartesaghi said, particularly if such talks could undermine Milei's efforts to secure U.S. backing for economic reforms and financing.

Argentina's foreign ministry said it would not comment on "hypotheticals" when asked by Reuters about Mercosur-China talks.

"Argentina maintains cordial relations with China - they're just not very visible," said Florencia Rubiolo, director of Argentine think tank Insight 21.

Elevating ties through a Mercosur-wide agreement would bring that relationship into clearer view, she said.

"If this is about diplomatic gestures, it seems unlikely the government would support such an agreement," she added. REUTERS