Brazil's Lula backs Mercosur-China trade talks despite expert doubts

President Luiz Inácio Lula da Silva told the Mercosur summit in Asunción that the bloc seeks a trade agreement with China, arguing the partnership could diversify markets and reduce reliance on the United States. Trade experts, however, warned that a deal is unlikely in the short to medium term because of Brazil’s high production costs, the need for structural reforms, and the competitive pressure of Chinese industry.

At the same summit, Brazil announced an annual contribution of US$100 million to the Fund for Structural Convergence of Mercosur (FOCEM). The fund finances infrastructure projects such as roads, railways, energy and sanitation, primarily benefiting Paraguay and Uruguay, and aims to narrow economic disparities among member states. The Brazilian government framed the contribution as a step to strengthen economic and social integration within Mercosur.

Together, the statements signal Brazil’s push to expand the bloc’s external trade ties while bolstering internal cohesion through increased investment in regional development.