A Vital Business Partner
New China - MERCOSUR momentum; Brazilian, Cuban, and Venezuelan officials in China; and BVI looks to strengthen financial services trade with China
Welcome to Chaufa, a China-Western Hemisphere Newsletter by CPSI.
Today’s edition covers May 28 to June 9.
The Top 5 Stories:
Three senior Latin American officials traveled to Beijing over the last two weeks:
Brazilian Vice President Alckmin sat down with Xi Jinping and led the VII Plenary Session of the Sino-Brazilian High-Level Coordination and Cooperation Commission (COSBAN), which resulted in $4.5 billion in loans for infrastructure projects. (Xinhua)
These loans will come from the Asian Infrastructure Investment Bank (AIIB), China Development Bank (CDB), Export-Import Bank (EXIM), and the BRICS New Development Bank (NDB). The Vice President also got key investment and trade commitments from Chinese companies.
Foreign Minister Gil Pinto met with Foreign Minister Wang Yi and CPPCC Chairman Wang Huning June 5-7. Wang committed to oppose any “foreign interference” against Venezuela, while the two sides discussed trade, technology, agriculture, energy, infrastructure, aerospace and cultural exchanges to mark the 50th anniversary of bilateral ties. (Global Times) (China Daily) (FMPRC)
Cuba’s Foreign Minister, Rodriguez Parrilla, shook hands with Wang and Vice Premier He Lifeng, though the only details about the meetings suggest they discussed vague “bilateral cooperation.” (People’s Daily) (Xinhua)
The meeting comes as the PRC donated 1.5 tons of rice to Mariel, the cities of Camagüey and Anhui strengthened political ties, and a new 4.4MW solar park opened in Villa Clara.
Uruguayan President Lacalle Pou said that expanding trade with China, including by revitalizing the Mercosur-China dialogue, would be a priority once the country takes over the trade bloc’s presidency in July.
China was recently a sticking point in the Uruguayan-Mercosur relationship. Uruguay’s pursuit of a bilateral FTA with China (which would undermine Mercosur’s common market) severely threatened the trade bloc’s existence and forced Chinese trade negotiators to back down.
Chinese Vice Admiral Zhao Xiaozhe, a senior science and technology-focused official, traveled to Chile to discuss military technological cooperation with Santiago’s defense minister. The Vice Admiral also traveled Chile’s Military Polytechnical Academy and sat down with Chilean Army and Navy leaders.
These meetings continue a regular history of Sino-Chilean defense cooperation: the two sides agreed to enhance defense cooperation back in 2015 and the Southern Cone country has been one of a handful of LAC countries to receive multiple high-level PLA visits since 2002.
Honduras and China signed an agreement on shrimp exports, which had been a sensitive issue area for the Central American countries since it broke ties with Taipei.
Demonstrating the two country’s growing political ties, the head of the Honduran legislature also signed an agreement between the National Congress of Honduras and the National People's Assembly of China on legislative exchanges.
During a trade mission to China, British Virgin Islands Minister for Financial Services Lorna Smith announced that BVI will host its first financial services trade show in Shenzhen, China in early 2025.
Though the PRC lacks a consulate on the ground in the BVI, Chinese businesses have long sought to incorporate entities in the British Virgin Islands. That said, revelations about offshore companies owned by Chinese political and military elites that are based in the BVI have also generated scandals and headaches for the Chinese government.
Core Brief
Sheinbaum’s China Challenge
Mexico City’s Mayor Claudia Sheinbaum easily won Mexico’s presidency on June 2 with nearly 60% of the vote. Though she’ll enjoy a strong legislative majority and popular support, when it comes to foreign policy, especially relations with China, Sheinbaum will have her work cut out for her. With a combination of long-standing problems in areas like drugs and manufacturing competition, as well as several newer issues like US trade and investment restrictions and Chinese migration, Sheinbaum will face a number of hurdles in navigating Sino-Mexican ties.
Several long-running problems will occupy Sheinbaum’s desk from the get go. For at least the past several years, Mexico has been in the middle of the organized crime and drug (namely fentanyl) trade between China and the United States. A similarly long-running problem has been competition with China’s cheaper and larger industrial base, which has hurt the Mexican manufacturing-centric economy over the last quarter century. With the entire world increasingly worried about Chinese overcapacity, Sheinbaum will have to find a way to keep the Mexican economy competitive with the PRC’s.
However, Sheinbaum will also have to tackle several new issues that AMLO only had to address in his last couple years in office. In part to address PRC overcapacity, Mexico recently imposed more than 500 new tariff increases on Chinese products, which will likely to continue ruffling feathers in the relationship.1 And with Washington placing new strategic tariffs, export controls, and investment restrictions on PRC firms, Mexico will likely be pressured to do the same.2 Lastly, though U.S. and Mexican concerns over regional migration largely center on Central American refugees and migrants, the number of PRC citizens fleeing China and crossing the Darian Gap is rapidly increasing.
Unfortunately for those of us seeking to figure out how the new Presidenta will handle these issues, Sheinbaum and her political party MORENA have been fairly circumspect about China relations and foreign policy more broadly. This, it seems, suggests at least some continuity with outgoing President Lopez Obrador’s mantra that “the best foreign policy is a good domestic policy.”
The MORENA political platform only spends 200 of 12,000 words discussing Mexico’s place in the world, and it does so without mentioning China by name. Rather, the platform focuses on how the United States will continue to be Mexico’s principal foreign policy priority. Though a longer platform-like document from before the election does briefly mention China, the party lumps China in with India and the European Union when it suggests that Mexico would seek to expand political and economic ties with countries and blocs that will be important in the 21st century.
That said, Sheinbaum has made a few statements on China that slightly clarify her position. For one, she suggested that she plans to continue current president Lopez Obrador’s embrace of nearshoring, which likely indicates that Mexico would continue to embrace Chinese FDI for the foreseeable future. This tracks with Sheinbaum’s tenure as mayor, where she emphasized commerce, investment, and tourism in a meeting with the PRC’s ambassador.
However, the former climate scientist has also had some sharp words for the PRC and cautioned the about the limits to the relationship. In a notable interview on Mexico’s climate policy, Sheinbaum laid much of the blame for the current climate crisis on China and its inaction. She has also said that the United States will remain Mexico’s main partner under her administration. So while she hopes to maintain existing relations with the PRC, Washington (and likely its concerns) would take precedence over Beijing.
Questions about Sheinbaum’s foreign policy ultimately come down to whether she will continue and expand on AMLO’s policies, or if she will head in a new direction when she believes it’s necessary. A key indicator will be whether she reverses AMLO’s preference to avoid traveling internationally – a state visit to Beijing would mark a notable shift from AMLO’s foreign policy practices and preferences.3 Nevertheless, relations between Mexico City and Beijing will face more limits than opportunities under the incoming Sheinbaum administration.
The Roundup
Politics and Security
A delegation from China’s Ministry of Public Security traveled to Nicaragua to meet with the local national police for unspecified meetings. This is the second such public meeting since the two sides established diplomatic ties.
The Peruvian congress approved President Boluarte’s upcoming trip to China (scheduled for June 23) where Boluarte is expected to meet with mining, technology and transportation business executives as well as President Xi.
As a report by the Canadian National Security and Intelligence Committee of Parliamentarians found that some MPs were “witting or semi-witting” participants in China’s political meddling, Canada’s defense minister raised the issue of foreign meddling in a meeting with his PRC counterpart (the first such meeting in 11 years).
Following Claudia Sheinbaum’s resounding victory in Mexico, both China’s foreign ministry and President Xi congratulated the president-elect and sought better bilateral relations.
China’s fifth ambassador to Costa Rica, Wang Xiaoyao, landed in Central America last week. She appears to most recently have worked as the Deputy Director of MOFA’s Department of European Affairs.
Investment, infrastructure, and finance
China and Brazil signed a letter of intent to jointly develop a geostationary meteorological satellite (called CBERS-5) that would be used to monitor and forecast extreme weather events.
The two countries have previously collaborated on five other satellites, but this would be their first geostationary satellite collaboration.
Senior executives from CNGR Advanced Material, a Chinese battery-component company, visited Jujuy and Salta provinces as they look to buy major stakes in Argentina’s brine deposits.
Going by the number of announced new investments (rather than the FDI size), the Financial Times found that Chinese companies announced 41 manufacturing and logistics projects in Mexico, a record high that underscores how Chinese firms are increasingly looking to circumvent US tariffs through investment in its southern neighbor.
The World Bank found that China State Construction Engineering Corporation violated environmental and labor regulations in Bolivia while building a major road project.
The bank threatened that unless the irregularities were addressed, Bolivia would not be able to make withdrawals from the account earmarked for the unfinished $230 million project.
Trade and Technology
China’s trade ministry lifted a ban on nine Ecuadorian shrimp processors that had been in place since February. Shrimp have historically been the Andean country’s largest export to the PRC.
The Peruvian Minister of Economy said that double taxation treaty negotiations with China would restart in November (around when President Xi is scheduled to pass through the country).
Argentina’s grain-focused chamber of commerce said that China had approved GMO corn imports, with the first shipments expected to start in July.
The PRC Ambassador in Chile doubled-down on criticizing new Chilean tariffs on Chinese steel, arguing that the trade barriers would “damage” the commercial and economic relations.
Taiwan
St. Vincent received a $45 million “soft loan” from Taiwan for roadworks across the country. Additionally, Taipei City and Kingstown signed a sister-city agreement.
Taiwan donated $800,000 to the St. Lucian Distress Support Fund (DSF) that aids low-income families that lose their homes following natural disasters.
In a show of support for Taipei, Belize’s government issued a statement condemning the recent “escalation of actions undertaken by the People’s Republic of China in the Taiwan Strait.”
Paraguay also published a similar statement.
Society and Culture
China’s embassy and Guyana’s Ministry of Education signed an MOU to “to initiate the 2024 Guyana-China Friendship Youth Leadership Development Competition,” which will provide $1,000 scholarships to local 8th, 9th, and 10th graders.
The PRC ambassador to Dominica promised to expand bilateral cultural cooperation under the framework of the Global Civilization Initiative.
China’s ambassador to Jamaica gave a press briefing to mark his second year in the country, where he announced new sports cooperation projects and urged Jamaica to join the GDI to better access $4 billion in Chinese funds.
Analysis and Opinion
In an article for the St. Vincent Times, Ernesto Cooke urged Caribbean governments to “exercise caution and reconsider their involvement in China’s BRI” because of “economic implications, geopolitical ramifications, social and environmental concerns.”
Writing at Brookings, Joshua Meltzer argues that “more coordination between the US, Canada, and Mexico on their trade and investment policy setting with respect to China is needed.”
Evan Ellis wrote a report for CSIS on Milei’s evolving stance on Sino-Argentine relations.
The Wall Street Journal published an article by Ian Talley and Rosie Ettenheim on how Western sanctions and export controls have bound together China and Venezuela, as well as other countries like Russia, Iran, and, North Korea as a new “Axis of Evasion.”
Tobias Käufer writes in DW that the PRC is increasingly facing pushback from Latin American countries concerned about the PRC’s economic clout.
That’s it for now, see you again in two weeks!
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Many of these tariffs had been previously imposed in August of 2023, but they will be in place until 2026. Sheinbaum and her advisors will have to choose how to handle this situation just two years into her term.
As PRC companies increasingly invest in the country, these measures could stunt Mexico’s ability to seize the “nearshoring” opportunity.
Another key issue where Sheinbaum could diverge with AMLO is trade, especially in green-technology related goods. An FTA is out of the question – rather, the issue will be if Mexico continues to revoke investment preferences for Chinese firms, create new investment monitoring measures on PRC firms, or imposes new tariffs on Chinese products. Given Washington’s concerns about Chinese overcapacity in products essential for the green transition (namely solar panels and EVs), these trade measures could have consequences beyond just trade flows as the former climate scientist looks to transition away from fossil fuels.