China’s growing influence in Central America

In the historic heart of San Salvador, a modern library inaugurated with fanfare by Salvadoran President Nayib Bukele is the latest symbol of China’s growing presence in Central America, with investments mainly in energy and infrastructure.

Accompanied by the Chinese ambassador, Mr. Bukele toured the six floors of the 24,000 m2 building and its digital spaces built with a $54 million donation from China, according to an official video released on Tuesday. China will also offer a stadium, as it did in Costa Rica, and a dock on the Pacific coast as part of non-reimbursable cooperation.

On Wednesday, the son of Nicaraguan President Daniel Ortega, Laureano Ortega, boarded one of the 250 Chinese buses delivered to the country, and thanked China for this “special relationship” that, according to him, will help Nicaragua get out of poverty. In addition to road, airport and energy infrastructure, Laureano Ortega spoke of a plan to develop 5G mobile technology after recently visiting the headquarters of Chinese telecommunications giant Huawei, accused of espionage by Washington.

“From Ortega’s left-wing authoritarian regime to Bukele’s right-wing authoritarian regime, new policies in the region have accelerated China’s influence to drive distance between the United States and Central America,” said from AFP the American researcher Evan Ellis.

Since Costa Rica severed ties with Taiwan in 2007, China has gained ground in Central America, establishing diplomatic relations with Panama (2017), El Salvador (2018), Nicaragua (2021) and most recently Honduras (2023).

“China’s efforts in Central America have been motivated by its interest in politically isolating Taiwan (…) and will pursue them to have the support of these governments in international organizations,” explains Margaret Myers to AFP, a specialist in Asia and Latin America. in the Inter-American Dialogue.

In Central America, only Guatemala and Belize are among the 13 countries in the world that maintain diplomatic relations with Taiwan, which China considers its territory. “Central America is part of this policy of isolation,” said Salvadoran economist César Villalona.

Free trade agreements

With the opening of the library, Nicaragua ratified a free trade treaty on Thursday, which El Salvador and Honduras are currently negotiating.

But trade is mostly favorable to the Asian giant. In Costa Rica, Chinese imports reach 3.35 billion dollars and exports 400 million; in El Salvador 2.8 billion compared to 48 million, according to official data.

“China is very far away. Our production capacity is low and transport and insurance prices barely cover the costs. In Nicaragua, the deficit will widen” with this treaty, estimates Enrique Sáenz, a Nicaraguan economist exiled in Costa Rica.

While these are micro markets for China, Central America offers easy access to the Pacific and Atlantic oceans.

Panama, geopolitically key thanks to its canal, has involved Chinese companies in building marine terminals on the interoceanic waterway, of which China is the world’s second largest customer after the United States. And the biggest Chinese banks are located in the financial center of Panama, Panama’s former deputy foreign minister Luis Miguel Hincapié told AFP.

In front of the leaders of several Latin American countries, President Joe Biden warned about the Chinese “debt trap”.

But for Rodolfo Pastor, Minister of the Presidency of Honduras, the relationship with the United States during the last 40 years has not helped the region to “get out of poverty or start development”. “We have to bet on something new.”

The elected president of Guatemala, Bernardo Arévalo, who will take office in January, has assured that his government will “continue relations with Taiwan”, without excluding exploring links with China.

“No one can deny the importance of China in world trade. It is therefore only a matter of time before countries that remain tied to Taiwan change their views, warns Mr. Hincapié.