China signals long-term interest in Mercosur trade deal

People familiar with the matter told Valor that Beijing has communicated flexibility and a willingness to keep the issue on the agenda, even though it does not expect progress in the short term. The Chinese government appears to be patiently laying the groundwork for a future agreement.

The current context is one of global trade realignment, with countries increasingly seeking preferential arrangements as a way to diversify exports and shield themselves from the effects of unilateral policies by the United States.

Amid global instability, ideas that once seemed unrealistic are now at least being taken seriously. Mercosur, for its part, is showing signs of frustration with the European Union’s repeated delays in concluding the long-awaited bi-regional agreement.

Uruguay had for years attempted to negotiate a bilateral deal with China. While Chinese officials expressed interest, they eventually made it clear that such a move would be diplomatically unfeasible, as it could offend Brazil and undermine Mercosur cohesion. A deal with Montevideo alone would strike at the heart of the bloc’s unity.

Even before, a preferential agreement between China and Mercosur was seen as complex. Now it may prove even more challenging, as Chinese exports continue to surge. In 2024, Brazil saw the highest percentage increase in Chinese exports among global partners, up 22%.

This year, China’s shipments to Brazil are still growing faster than Brazilian exports to China, eroding Brazil’s trade surplus in the bilateral relationship. Most of Brazil’s active anti-dumping measures target Chinese products.

Political factors within Mercosur also pose challenges, particularly Argentina’s close alignment with the United States. Washington has adopted a new, more assertive version of the Monroe Doctrine and is seeking to curb China’s influence in the region.

Despite ongoing U.S. opposition, China’s export performance continues to unsettle trading partners. In November, the country posted a $1 trillion trade surplus, a sign of its success in diversifying export markets with competitively priced, high-quality products.

At the same time, however, Beijing is beginning to restrict access to its own market. One emerging concern among partners is an ongoing investigation that may result in import quotas on beef. If confirmed, Brazil would be one of the countries hardest hit.

Brazil’s manufacturing sector has long expressed unease about trade flows with China. Still, back in 2023, when China first hinted at its interest in a deal with Mercosur, representatives from the National Confederation of Industry (CNI) said negotiations didn’t need to start with a full-fledged free trade agreement. They suggested exploring alternatives, such as a deal focused on trade facilitation.

China’s strategic position in global trade has been built in part through a network of free trade agreements, which provide mutual tariff preferences for Chinese companies and their partners.

Beijing currently has 23 free trade agreements in effect, covering 30 countries and regional blocs such as ASEAN (Association of Southeast Asian Nations), which includes 11 fast-growing economies. Another 10 deals are under negotiation and eight are in the study phase.

In Latin America, China already has trade agreements with Chile, Peru, Costa Rica, and Ecuador. Talks are underway with Honduras and Panama, and a feasibility study is ongoing with Colombia.