By Robbin Laird and Kenneth Maxwell

In today’s rapidly evolving global order, middle powers find themselves in an increasingly complex position as they balance economic opportunity against strategic independence. Two nations, Australia and Brazil, offer a fascinating case study in how different countries are responding to China’s rise while pursuing their own national interests.

A Tale of Two Middle Powers

Despite being on opposite sides of the Southern Hemisphere, Australia and Brazil share remarkable similarities. Both are resource-rich middle powers with significant economic ties to China. However, their geographic, political, and historical contexts have led to distinct approaches in managing this crucial relationship.

Brazil is actually slightly larger than Australia in terms of landmass (by about 10%), yet their terrains couldn’t be more different. While Australia is dominated by desert and semi-arid land (approximately 70%), Brazil features nearly 60% rainforest cover. These natural endowments shape not only their resource bases but also their climate vulnerabilities and economic structures.

The China Connection: Trade and Dependence

Australia’s China Relationship

The Australia-China economic relationship is truly massive, with two-way trade reaching $325 billion in 2023-24. Australian exports to China exceeded $212 billion, forming the bedrock of Australia’s global trade. This relationship is dominated by resources, with iron ore alone accounting for over 150% of goods exports to China.

The China-Australia Free Trade Agreement (ChAFTA), in effect since 2015, has been progressively eliminating tariffs. By 2029, most resources and energy exports will be duty-free, with tariffs already reduced or eliminated on products like barley, beef, wine, and wool.

Beyond commodities, services trade has grown significantly, with tourism and international education seeing a 40% increase in 2023-24. The trade pattern is clear: resources and food flow from Australia to China, while manufactured goods move in the opposite direction.

Brazil’s China Relationship

Brazil’s trade with China is similarly substantial, exceeding $181 billion in 2023. However, Brazil’s export mix is even more concentrated on raw materials than Australia’s, dominated by what analysts call the “soy and steel connection.”

Soybeans represent Brazil’s top agricultural export to China, worth nearly $32 billion in 2022 – more than two-thirds of Brazil’s total soy exports. China sources approximately 60% of its soybean imports from Brazil. Iron ore forms the second pillar, with Brazil sending about $18 billion worth in 2022, roughly 63% of its total iron ore exports. Oil is the third major export, with nearly 40% of Brazil’s oil exports headed to China.

Chinese investment in Brazil is growing beyond resources, particularly in energy (especially renewables), electricity transmission, and increasingly, electric vehicles. Since 2021, all new Chinese automotive investment in Brazil has focused on electric or hybrid vehicles, with companies like BYD and Great Wall Motors establishing operations.

Manufacturing Decline and Economic Transformation

Both countries have experienced significant drops in manufacturing as a share of GDP over recent decades. Australia’s manufacturing peaked in the 1960s and fell below 10% by 2020, while Brazil’s high point came in the mid-1980s before dropping to around 11% recently.

The timing differs notably: Australia’s decline began earlier (1970s-80s), often linked to domestic trade liberalization policies before China became a major global player. Brazil’s more intense deindustrialization period coincides more directly with China’s economic surge in the 2000s.

Australia reportedly lost between 53,000 and 80,000 manufacturing jobs due to Chinese imports between 1991 and 2006. Brazil may have experienced an even more direct impact, as its manufacturers often produced similar goods to Chinese factories, facing tougher competition both domestically and internationally.

This has led to what economists call “primarization” – an increased focus on commodity exports at the expense of manufacturing – which has reportedly affected wages and formal employment in Brazil’s manufacturing sector.

Public Perception and Political Responses

Australia’s Balancing Act

In Australia, the China relationship represents a constant balancing act between enormous economic benefits and legitimate security concerns, particularly regarding China’s military presence in the region.

This tension played out in Australia’s 2025 election, with the Labor government highlighting improved relations and the lifting of some Chinese trade restrictions after 2022. The opposition Coalition employed tougher security rhetoric while simultaneously softening their tone on trade, recognizing the economic importance of the relationship.

The complexity of managing the U.S. alliance alongside the China relationship adds another layer of difficulty, especially with concerns about being caught in potential U.S.-China trade conflicts.

Brazil’s Approach

Brazil’s view of China reflects different dynamics, with clearer divisions based on economic interests. Manufacturing sectors tend to be critical of Chinese competition, while the agricultural sector generally embraces the China connection due to massive purchases of soy and beef.

Political attitudes have varied significantly. Former President Bolsonaro adopted an anti-China stance at times, while current President Lula has prioritized the relationship, visiting China in late 2024 and discussing a “community with a shared future.” Lula views China as a key strategic partner crucial for Brazil’s development and global standing, while still attempting to maintain good relations with the United States – a pragmatic form of non-alignment.

Unlike Australia, Brazil has been more cautious about directly confronting China on sensitive issues, though concerns about economic dependence, deindustrialization, and controversies around Chinese investment persist.

Diversification Strategies

Australia’s Urgent Pivot

Australia’s diversification strategy appears driven by greater urgency, spurred by geopolitical tensions and past trade disputes. Key elements include:

• Focusing on Asia, particularly India (through the ECTA trade deal, roadmap, and investment funds) and ASEAN countries
• Expanding globally through trade pacts like CPTPP and negotiations with the EU and UK
• Developing domestic manufacturing and critical minerals through the Critical Minerals Strategy 2023-2030 and tax incentives
• Reducing vulnerability in supply chains, often partnering with “like-minded” countries
• Growing the service sector with more diverse student sources, specialized tourism, and financial hub ambitions

Brazil’s Regional Focus

Brazil’s diversification efforts appear more regionally oriented:

• Emphasizing Mercosur, the South American trade bloc, especially regarding the potential EU-Mercosur trade deal.
• Exploring a possible Mercosur-China FTA in the longer term.
• Boosting manufacturing and innovation through tech parks and the “New Industry Brazil” initiative.
• Leveraging their clean energy mix for competitive advantage.
• Using e-commerce to sell directly to Chinese consumers.
• Attempting to benefit geopolitically from US-China tensions.
• Focusing on critical materials like lithium and rare earths to build higher-value green tech industries.
• Using Chinese investment strategically for technology transfer.

Comparative Approaches

While both countries share the common challenge of asymmetrical trade dependence on China, their responses differ significantly.

Australia’s strategy appears more explicitly oriented toward the Indo-Pacific region and traditional Western allies, with a clearer goal of reducing China dependency. The focus on critical minerals, advanced manufacturing, and “friend-shoring” supply chains reflects geopolitical calculations.

Brazil’s approach seems more regionally focused and less explicitly concerned with reducing Chinese influence. The emphasis on Mercosur, the potential EU deal, and even exploring a Mercosur-China possibility suggests a strategy of geopolitical balancing rather than decoupling.

Both nations aim to climb the value chain by developing more sophisticated products and capturing more value domestically, though they face different obstacles. Australia contends with the entrenched economic complementarity with China and China’s dominance in mineral processing, while Brazil struggles with innovation coordination, energy costs, political stability, and private R&D investment.

Conclusion: Lessons for a Multipolar World

The contrasting approaches of Australia and Brazil offer valuable insights into how middle powers can navigate the complex challenges of the emerging global order. Their strategies reflect the specific constraints and opportunities they face, suggesting there is no one-size-fits-all solution for balancing economic engagement with China while maintaining strategic independence.

As the global system continues to evolve, other middle powers will likely look to these examples to inform their own approaches. The key question remains: which principles work best for protecting national interests while participating in an increasingly interconnected global economy? The answers may well determine how successfully countries navigate the shifting tides of global power in the coming decades.

Note: in 2026, the authors are publishing their book entitled: The Australian, Brazilian and Chinese Dynamic: An Inquiry into the Evolving Global Order.

By Pierre Tran

Paris – There have been few national orders for French military aircraft and space systems since the start of the year, following a drop of a third in domestic defense aerospace orders last year from 2023, Guillaume Faury, chair of Groupement des Industries Françaises Aéronautiques et Spatiales (GIFAS), a trade association, said May 6.

The sale overseas of Airbus airliners and Rafale fighter jets underpin the sales and order books of the French aerospace industry, represented by GIFAS.
Asked about military orders, Faury said there had been a big gain in exports last year, with a rise of 77 pct, but there had been a 33 pct drop for domestic defense orders from 2023. He was speaking at a breakfast news conference on 2024 results for the trade body.

“There have been very few orders since the beginning of 2025 for our (aeronautics and space) sector,” he said, leaving aside orders for equipment for the French army and navy.
“A subject of attention and a cause for concern,” he said.

The Direction Générale de l’Armement (DGA) procurement office said in response to those remarks, “It should be noted that orders placed are in line with the terms set out in the military budget law 2024-2030, and the difference in the volume of orders from one year to the next does not mean a weakening of effort for defense over the time period.”

In combat missions, there were media reports May 7 of Pakistan’s claim of downing five fighters flown by the Indian air force, including Rafale, MiG, and Sukhoi jets. Those French headlines – and a BBC Radio 4 interview with a Pakistani diplomat – pointing up the loss of the Rafale could be seen as the perceived importance of the French-built fighters in the  deadly territorial dispute over the Kashmir region.

On the home front, French Prime Minister François Bayrou is under pressure to cut the public sector deficit to 5.4 pct this year from 5.8 pct, to bring it down to 3 pct of gross domestic product by 2029.

His efforts to slash spending are opposed by opposition political parties, which forced out his predecessor who also sought to reduce state expenditure.

Weak domestic growth and U.S. tariffs imposed by President Donald Trump weigh on  Bayroux’s efforts to rescue a public purse weighed by debt, while seeking to win support from the public and the far-right and far-left parties in a deeply divided parliament.
Bercy, the finance ministry, is seen as clamping down on arms orders, financial website La Tribune reported May 7, with industry talk of “economies” rather than the “war economy.”

GIFAS Recovers

Meanwhile, the French aerospace sector beat in 2024 the level of sales last seen before the Covid crisis, which slashed airline travel, and made it hard for suppliers and subcontractors to secure raw materials, components, and working capital.

The total 2024 orders for aeronautics and space were worth €74.8 billion ($84.4 billion), up 5 pct from the previous year, the association said.
Foreign sales delivered growth for the aerospace industry, for the civil and military sectors.

“Exports are indispensable today,” the association said, as foreign deals made up 82 pct of overall 2024 sales, worth €77.7 billion, up 10 percent.

Reliance on foreign sales left the sector open to uncertainty from geopolitics, and trade conflict over tariffs and technology transfer, GIFAS said. That 2024 recovery was “fragile” on a constant currency basis, with inflation of close to 18 pct over the last five years.

The association called on the French government to place orders to help support the aerospace sector.

“GIFAS calls for a boost from government orders, particularly for space and defense, to support a resilient business model capable of absorbing external shocks,” the trade body said.

The European space sector is under pressure to consolidate, with Airbus, Leonardo, and Thales seeking approval from the European Commission for a prospective merger, in response to U.S. companies such as SpaceX and its Starlink satellite system.

Faury is also chief executive of Airbus, builder of airliners, military aircraft and satellites, based in Toulouse, southwest France.

French Budget

Asked about the French military budget in the light of British and German plans to boost spending, Faury told the news conference the military budget law was welcome, but much depended on plans for future capabilities, with Nato due to unveil a project this summer.

Berlin and London have pledged to increase military spending beyond the two percent of gross domestic product in response to the Russian invasion of Ukraine.

“It is very important to define the targets,” he said. “We have the defense system as it is today. There is a military budget law which is a significant increase.

“Execution of this budget law will bring France to a higher level of capability, unseen for decades,” he said. “But there is a further level of spending which should be defined by military objectives.”

There would be a “time horizon” for specific capabilities, which would need to be built, delivered, operated, and maintained overseas over the long term, he said.

“That calls for an architecture of security and defense different from the one today, and in particular for European partners and Nato,” he said. Nato is due to unveil a plan in the middle of the year, which will inform member states what they will need to do and the budgets they will need to bridge the gap.

Nato is pitching Force Model as a deployment of a larger, faster, and more capable military, the alliance says on its website. That force model will replace the NATO Response Force.

The force model will more than triple the number of high-readiness forces, increasing its ability to respond to crisis or conflict at greater scale and at higher readiness, the alliance said. There will be a “three-tiered readiness system,” with Tier 1 comprising forces of 0-10 days of readiness; tier 2 forces 10-30 days of readiness; and tier 3 forces at 30-180 days of readiness.

The Nato summit is due to meet June 24-25 at The Hague.

Rafale Hits Headlines

The Rafale fighter has been much in the news lately.

France and India signed April 28 an agreement which allowed Dassault Aviation to sign a contract for New Delhi’s order for 26 Rafale in the naval version, the company said.

“The Inter-Governmental Agreement between India and France has been signed today allowing the signature, in the presence of the Chairman and CEO of Dassault Aviation, Éric Trappier, of the contract for

India’s acquisition of 26 Rafale Marine to equip the Indian Navy,” the company said in an April 28 statement. The deal with India was the first export order for the naval version.

That Indian procurement of the naval Rafale was worth 630 billion rupees ($7.4 billion), Reuters reported.

The Indian navy is reported to be seeking to order a further 50 or so Rafale for its fleet of two aircraft carriers, the Vikrant and Vikramaditya. The latter is a refurbished Russian vessel.

“This new acquisition testifies to the importance of the strategic relationship between India and France and the recognition of the Rafale as an essential vector of national sovereignty,” the company said.

That strategic relationship between New Delhi and Paris could be seen in the French statement in support of the Indian strikes against Pakistan.

“France condemned the Pahalgam terrorist attack on 22 April and expressed its wholehearted solidarity with India. France supports India in its fight against terrorist groups,” the French Ministry for Europe and Foreign Affairs said in a May 7 statement.

“France is deeply concerned about the latest developments between India and Pakistan. It calls for de-escalation and for civilians to be protected.”

The Rafale for the Indian navy will replace an aging fleet of MiG-29 fighters, and follows New Delhi’s 2016 order for 36 Rafale for the air force. That deal for the air force was worth some €7.89 billion, of which €3.42 billion was for cost of the aircraft, and €1.7 billion for changes specific to the Indian air force.

Rafale and Disinformation

A wide media coverage of Pakistan downing the Rafale follows India’s May 7 missile strike against targets in Pakistan and the part of Kashmir under Pakistani control.

“New Delhi has begun to acknowledge the loss of several fighter jets in the Sindoor operation,” daily Le Monde reported. “At least one Rafale could have been among the aircraft destroyed.

“It would be the first time that one of these Dassault aircraft would have been lost in a combat situation.”

A Pakistan military spokesman, Ahmed Sharif Chaudhry, said the Pakistan forces downed five fighters, namely three Rafale, a MiG 29 and a Sukhoi, and a combat drone, financial daily Les Echos reported. It was not possible to verify this information, the media report said,
which went out on social platforms with pictures of crashed aircraft claimed to be the Rafale.

Pictures of aircraft claimed to be downed Rafale on social platforms were fake, in what was a “real information war,” Radio France Internationale, a radio station, reported.

“In the continuous flow of disinformation which currently circulates on social networks in India and Pakistan, one word often crops up: Rafale,” the RFI report said May 6.

The RFI report on its website showed pictures from a video of the Rafale and a blazing crash site, claimed to be where the downed French-built fighter came down.

The pictures can be traced back to a video appearing on the internet from June 2024, RFI reported, and relate to the crash of an Indian air force Sukhoi 30, which crashed into a farm in the Nashik district, western India. The Indian pilot and co-pilot ejected safely, the report said.

Those supporting New Delhi showed that same video of a plane crash, claiming the Indian air force had shot down an F-16 flown by the Pakistani air force, RFI reported.

Featured image: ID 11409365 | French Defense © Derek Gordon | Dreamstime.com