In a world increasingly shaped by strategic rivalry between the United States and China, Brazil and other medium-sized emerging markets are finding themselves in an unexpectedly advantageous position: caught in the middle, but with room to manoeuvre too. Far from being a liability, this geopolitical balancing act is emerging as a long-term asset for these countries.
For investors looking at Latin America, especially Brazil, this moment represents a structural shift worth understanding and a compelling reason for long-term optimism as investors.
Brazil’s recent diplomatic engagements illustrate the region’s unique position. On one side of the globe, President Luiz Inácio Lula da Silva stood shoulder-to-shoulder with Xi Jinping, signing nearly R$27bn (about $4.8bn) in cooperation agreements with China. On the other side of the Atlantic, Brazilian CEOs, state governors and key financial figures were simultaneously attending “Brazil Week” in New York, courting American investors and reaffirming Brazil’s cultural and commercial alignment with the United States.
Far from being a contradiction, this dual engagement is a deliberate strategy. Brazil, like many in Latin America, isn’t picking sides. It doesn’t need to. As Dario Durigan, Brazil’s deputy finance minister, noted, “Brazil is positioning itself as a safe harbour” in a world characterised by geopolitical volatility. In that safe harbour status lies real, tangible economic upside.
This middle-ground positioning reflects a broader truth about many medium-sized emerging markets: their strategic ambiguity is a strength. Brazil, for example, maintains a significant trade surplus with China, one of the few countries to do so. It dominates global exports of soybeans and meat, both products for which China is heavily reliant on Brazilian supply. Meanwhile, Brazilian agribusiness, industrial players, and infrastructure developers continue to seek out and receive major investments from the US and its allies.
For Chinese officials, Brazil is a gateway to Latin America and a supplier of vital raw materials. For the United States, Brazil is a cultural and commercial partner with deep historic ties and a shared interest in democratic governance, even if political frictions occasionally flare. For Brazil, these relationships are not mutually exclusive… they are symbiotic.
This is a position that countries like India, Indonesia, Vietnam, and Turkey are also navigating, but Brazil is especially well-placed due to its natural resources, geographic distance from major conflict zones, and relatively diversified trade structure.
Brazil’s economic clout comes not just from diplomacy but from its dominance in global commodities. It supplies nearly 60% of global soybean exports, a crop vital to Chinese food security. It is also a leading exporter of beef, poultry, iron ore, and oil, all of which are becoming more strategically valuable as supply chains fragment and countries seek to reduce dependency on politically risky sources.
China, despite its ambitions to diversify supply chains, has limited alternatives. The United States is the second-largest soybean exporter, but political tension makes dependence risky. Paraguay, a distant third, recognises Taiwan, a red line for Beijing. That makes Brazil indispensable.
We are long-term bullish on Latin America and especially Brazil, not in spite of global power rivalry, but because of it. As the world drifts toward a multipolar reality, countries that can engage flexibly with all sides while offering indispensable goods and services will be the ones that thrive.
Brazil is not aligning with Washington or Beijing; it is aligning with itself, its own interests, its own future. And that makes it one of the most interesting places in the world to watch, and to invest in, over the coming decades.
