Chaufa - Promoting Integration
Nicaragua and Ecuador's FTAs, Cuba bans a Taiwanese tourist, Guyana's new CRCC bridge contract, plus Taiwan's candidates on diplomatic allies
Happy New Year! Welcome to Chaufa, a China-Western Hemisphere Newsletter by CPSI.
Today’s Edition covers January 1 to January 7.
This Week’s Top 5 Stories:
China now has four FTAs enforced in Latin America in the Caribbean (the others being Chile, Peru, and Costa Rica).
The Ecuadorian National Assembly’s foreign affairs committee approved the China-Ecuador FTA with six votes in favor in three abstentions, just meaning that the agreement will have to be approved by the whole legislature before it goes into effect. (Xinhua)
Former President Lasso signed the FTA with China last May after a year of negotiations, though the agreement’s ratification was delayed by the country’s recent elections.
Citing the country’s “One China Policy”, Cuban immigration officials denied a Taiwanese family from entering the country for a vacation despite holding valid visas and passports.
Historically, most countries that have PRC-favorable “One China Policies” still have allowed Taiwanese passport holders to visit their country, just usually with a visa. Currently, only Georgia has outright banned Taiwanese passport holders.
Argentina’s president officially declined to join the BRICS group. Though some U.S. outlets described the move as a “setback” for Beijing, the China Daily argued Buenos Aires was simply “adjusting its foreign and economic policies to appease the public.”
Argentina’s economy and finances remain heavily dependent on China, with Ambito reporting that Buenos Aires will have to pay Beijing $5 billion if the currency swap is not renewed in August 2026.
Guyana’s government signed a $35 million contract with China Railway Construction Corporation (CRCC) for the construction of the new Mackenzie-Wismar Bridge.
The controversial CRCC is no stranger to Guyana, having previously won the $260 million tender for the Demerara River bridge in 2022.
Diplomatic allies in Taiwan’s elections
For most Taiwanese, maintaining formal diplomatic allies barely registers as an issue in Saturday’s upcoming elections. Rather, the domestic economy, relations with China, and even building up unofficial ties with Indo-Pacific countries have taken up more oxygen on the campaign trail.
For example, the ruling Democratic Progressive Party’s (DPP) presidential campaign website doesn’t mention Taiwan’s diplomatic allies at all in its policy platform, nor does the KMT1 on its election website. Though the upstart Taiwan People’s Party (TPP), led by former Taipei Mayor Ko Wen-je (柯文哲), does discuss diplomatic allies in one policy paper on foreign affairs, it spends significantly more words on its strategy towards non-diplomatic allies.
Regardless of who wins the upcoming election, no candidate is planning on shelling out enormous sums to maintain (or gain) new allies. The DPP and TPP seem largely resigned to China’s allure, so while a DPP or TPP administration would like to maintain relations with countries like St. Vincent and Belize through foreign aid and intensive diplomacy, they won’t radically alter their foreign policy just to keep diplomatic ties.
The KMT, by contrast, largely seems to view its diplomatic allies through the lens of Chinese relations. The party’s candidates have indicated that a friendlier relationship with Beijing (something many analysts have doubted is possible) will prompt Xi’s foreign ministry to refrain from poaching or permitting new countries to recognize the PRC. But much like the DPP and TPP, the KMT’s candidates seem unwilling to move heaven and earth to maintain its diplomatic partnerships if its plan to cool tensions with Beijing fails.
While the three parties vying for the presidency ultimately will likely follow a roughly similar policy to Taiwan’s diplomatic allies, the way they conceptualize the importance of diplomatic allies and how to maintain them varies:
Democratic Progressive Party (DPP)
Current Vice President William Lai (賴清德) has said that Taiwan’s formal “diplomatic relations are very important, and the number is important.” However, he and his running mate Hsiao Bi-khim (蕭美琴) have also recognized that China’s pressure campaign and economic allure make maintaining these relationships extremely challenging. Because of this, they see engagement with the broader international community as equally, if not more, important.
As the DPP’s outgoing foreign minister Joseph Wu recently put it, “Taiwan cannot rely on the only remaining diplomatic allies, because the number is small, and Taiwan must cultivate friendship and partnership with important democratic countries.” Under another DPP administration, Taiwan would likely continue its current aid efforts and close coordination with diplomatic allies without competing in dollar diplomacy to maintain a few formal relations.
The KMT, by contrast, has used Taiwan’s losing battle for diplomatic allies as a cudgel against the DPP. The KMT’s presidential candidate Hou Yu-ih (侯友宜) has criticized the administration for losing diplomatic allies, suggesting that his administration would value continued cooperation with countries like Paraguay and St. Lucia.
That doesn’t mean that the KMT is going to start outspending China to maintain (or gain new) diplomatic relations. Rather, Hou’s running mate has proposed returning to the previous KMT Ma Ying-jeou administration’s “diplomatic truce” with China to prevent the PRC from poaching allies or allowing them to switch diplomatic recognition.2 Absent a successful truce, the KMT will likely be forced to follow the Tsai administration’s strategy for the last eight years.
Taiwan People’s Party (TPP)
As a third-way party, the TPP has both sought a middle ground and swerved wildly from the KMT and DPP’s positions. The TPP official policy platform calls for deepening and consolidating Taiwan’s relationship with diplomatic allies through transparent and effective aid programs. Yet Ko has also controversially suggested that “diplomatic allies are a myth, and even if Taiwan lost all of them, it would not be as important as the substance of relationships with other countries.”3
A Ko administration might4 reform Taiwanese foreign aid to better target the needs of diplomatic allies in the Caribbean and Latin America, but Ko would also likely not try to pursue a diplomatic truce with China nor would it pursue a more intensive dollar diplomacy to maintain the few remaining allies.
Politics and Society
The Honduran Vice Foreign Minister suggested in a response to Xi’s New Year speech that the country might host a China-CELAC summit in 2024 as part of the country’s CELAC presidency. (CGTN)
Bolivia’s new ambassador to Beijing sat down with Bolivian news outlet Eju! to discuss bilateral relations, noting his country’s loyalty to viewing Taiwan as a renegade province, as well as agriculture and minerals trade, investment, cultural and defense exchanges, and foreign currency transactions as priorities.
Investment, infrastructure, and trade
A new ocean shipping route from the northeastern Dalian port to Colombia and Ecuador was launched this week by a Taiwanese company, which will cut down shipping time by more than 20%. (Global Times) (China Daily)
Representatives from Chinese firm Tianqi Lithium and LG Energy Solution sat down with Chilean authorities last month to discuss possible new lithium public-private partnerships.
A CRRC-built light rail train went into service this week in Mexico City, marking the first Chinese-built light rail in Mexico’s public transit system. (Confirmado)
At the end of 2023, Jamaican firm Innovative Energy Company (IEC) started executing the cooperation agreement it signed with Huawei last May to expand its renewable energy projects.
Taiwan’s representative to Argentina gave an interview to DEF to discuss Taipei’s relations with Beijing and Washington. She also noted that she had “hope and confidence” that Taiwan could work with Milei’s administration, noting that “If there is the will of the Argentine authorities, then there will also be interest from Taiwanese investors to invest in the country.”
Belize’s Prime Minister announced in his New Year’s address that Taiwan would support the construction of fifty new starter homes this year.
Taiwan supported the first ever youth investment forum in St. Lucia, which provided more than 100 young entrepreneurs with business advice and opportunities to practice pitching projects.
Paraguayan pork exports grew more than 170% last year, with roughly two-thirds of the exports going to diplomatic ally Taiwan.
Analysis and Opinion
Writing for the Diplomat, Juan Pablo Villasmíl and Joseph Bouchard note that Mexico imposed tariffs on 90% of Chinese goods last year, and they suggest that they could either be a response to Washington’s pressure, an attempt to increase state revenue, or an effort at inducing FTA negotiations with Beijing.
Former Florida governor Jeb Bush and ambassador Mark Wallace write for the National Review that a lack of leadership from Washington has allowed U.S. adversaries, such as Iran and China, to gain a foothold in Panama that is undermining U.S. national security.
FIU professor Jerry Haar finds that nearshoring from China to Latin American countries like Mexicoand Costa Rica “provides multinational companies in both nations with a sourcing and investment option that can serve as a buffer against negative economic performance”, such as due to worsening U.S.-China ties or future pandemcis. (The Hill)
Oscar Espinosa García, a local engineer, wrote in El Diario that the turnkey contract Sinohydro won to build the Bolivian El Sillar highway was unnecessary and resulted both in an overly expensive project and in design flaws that ended up making parts of the road unusable .
CSIS published a report by Ryan Berg and Henry Ziemer on U.S.-China competition in Latin America and the Caribbean.
Economist Alicia García-Herrero spoke to the Wire China about the status of China’s varied relationships across the Western Hemisphere.
That’s it for now! See you next week.
Make sure you don’t miss the next issue of Chaufa 👇
When the KMT’s presidential candidate Hou Yu-ih (侯友宜) wrote an article for Foreign Affairs laying out his foreign relations strategy, he refrained from mentioning any Latin American or Caribbean country, as well as the term “diplomatic ally.” Instead, he mentioned cooperating with countries closer to Taiwan, like “Australia, India, Japan, South Korea, and friends in Southeast Asia,” that have not recognized the ROC for decades.
Switching recognition is a two-way street: during the Ma Administration, Panama reportedly attempted to flip ties to Beijing, but because China and Taiwan had agreed to a diplomatic truce, Beijing declined to set up an embassy in Panama City.
Ko’s campaign later retracted those remarks after they caused a political controversy on the island, but his running mate has similarly argued that the TPP would “focus instead on more practical diplomacy” with non-official contacts.
Though Ko often tries to portray himself as a more technocratic politician, it remains unclear if he could actually undertake the wide-reaching reforms he has proposed (including for foreign aid).