Diplomatic Brothers
Argentina's debt agreement with China, St. Kitts PM in Taiwan, Ecuador suspends its Visa-waiver agreement, and BYD's new plant in Mexico
Welcome to Chaufa, a China-Western Hemisphere Newsletter by CPSI.
Today’s edition covers June 10 to June 23.
Listen via Spotify or read the full edition below:
The Top 5 Stories:
After months of suspense, China agreed to renew a currency swap with Argentina so that the country would not have to return $5 billion to the PRC in just two months. The IMF also suggested that it expected the PRC to restructure billions in Argentina’s sovereign debt.
Shortly after this news broke, Argentina’s government suggested that Milei may travel to Beijing in the coming months to meet with President Xi.
Sino-Argentine relations have been marked by notable tensions since Milei was inaugurated last year due to the president’s fiery campaign comments about China. However, in recent months Milei has taken a more pragmatic approach to the PRC.
A group of Caribbean countries, led by Antigua and Barbuda, Barbados, Jamaica, and the Bahamas, are campaigning for the UN to adopt a metric on economic fragility that could allow the small island states to better access international aid and “cut dependence on China.”
Historically, states like the Barbados and the Bahamas have been labeled by the World Bank and other International Financial Institutions as “High Income Economies” because they have a GNI per capita over $13,846. This has limited their access to grants and loans that could benefit these countries’ economic development.
Ecuador suspended its visa-waiver agreement with China to prevent PRC nationals from using the South American country as a springboard for irregular migration to the United States.
In response, China’s foreign ministry said that it works to combat human smuggling with countries around the world while also noting that the visa-waiver agreement “plays an important and positive role in promoting cross-border travel and practical co-operation in various fields between the two countries.” The PRC has so far declined to say whether Ecuadorians will lose their 30-day visa-free access to China.
Chinese EV producer BYD announced that it would build a massive new manufacturing facility in Mexico that would create 10,000 new jobs. While the company did not specify where the facility will be, it said that it had narrowed down the location to one of three Mexican states.
The announcement comes just over a month after the Biden Administration imposed a 100% tariff on Chinese electric vehicles. However, if BYD is eventually able to source its component parts from North American suppliers in compliance with USMCA regulations (a heavy, but likely not impossible lift), this facility could provide BYD an avenue to sell cheap EVs to the U.S. and other North American markets.
The Prime Minister of St. Kitts and Nevis, Dr. Terrance Drew, is visiting Taiwan for a state visit from June 22-26. The Prime Minister is expected to meet with several Taiwanese companies, including computer company Acer and the infrastructure-focused CECI Engineering Consultants, as well as sign a sister cities partnership between Kaohsiung and Basseterre City. He also discussed agriculture technology, women’s empowerment, public health, and renewable energy in his meeting with President Lai.
PM Drew was most recently in Taipei just a month ago for President Lai’s inauguration on May 20. However, he’s likely making a return journey so soon since many other global leaders, including St. Vincent PM Gonsalves, were also meeting with Lai over the course of the inauguration, leaving PM Drew with little opportunity to directly advance his priorities in Taiwan.
Core Brief
Did Ecuador’s Visa Decision Insult the Chinese?
After eight years of allowing PRC passport holders to visit the Galapagos and travel around the Andes for 90 days without a visa, Ecuador’s foreign ministry announced on June 19 that it would be temporarily suspending its visa-waiver program for PRC nationals as of July 1. The news prompted U.S. ambassador to Japan Rahm Emanuel to speculate that Ecuador’s new visa rules for Chinese nationals may have encouraged PRC hackers to take down the South American country’s power grid, implying that the PRC was offended by Quito’s recent actions.1
This raises the question: why did Ecuador temporarily suspend the agreement, and does this indicate a blow to Sino-Ecuadorian ties?
As many outlets have reported, Ecuador’s visa-free status has made it easier for tens of thousands of largely middle-class Chinese migrants and refugees seeking a better life in the United States to more easily access the U.S.-Mexico border. The journey has become so well-known and popular that migration influencers took to the Chinese version of TikTok (Douyin) to explain and promote the route.
However, U.S., Ecuadorian, and even Chinese officials seemed somewhat nervous about this route’s implications. This past March, U.S. and Ecuadorian officials extensively discussed migration (though some of this had to do with the large number of Ecuadorians fleeing violence than Chinese passing through) as part of their regular strategic dialogue, while the China recently began quietly cooperating with the United States on repatriating migrants. Even Douyin started cracking down on content related to migrating through Ecuador.
Policy moves by the Chinese foreign ministry suggest that, at least for now, the PRC does not see Ecuador’s actions as a reason to downgrade ties with Quito (or attack the nation’s electricity grid). As of this writing, China has not indicated that it will similarly pause the 30-day visa-free access for Ecuadorians. Though China’s foreign ministry may still yet change its mind by July 1, given that Ecuador has a fairly strong reason to pause its visa access and is claiming it is only doing so temporarily, Beijing might think that it’s better to simply not ruffle feathers for the next few months.
The foreign ministry’s statements also do not indicate that the PRC is greatly insulted by Ecuador’s policy moves. China’s foreign ministry spokesman specifically said that China looks to work with other countries to prevent human smuggling, possibly suggesting that they had some awareness (or at least understanding) for Ecuador’s decision. Additionally, the Chinese foreign ministry spokesman said that the visa-free agreement “lays an important and positive role in promoting cross-border travel,” further underscoring that the PRC sees mutual benefits in such an agreement moving forward.
As a U.S. ambassador, perhaps Emanuel has seen intelligence on Chinese cyber operations that the rest of us have not. But given China’s interest in stemming migration to the United States, it seems more likely that the former Chicago mayor is just blowing a lot of hot air.
Ecuador’s Visa Decision Might Affect the Caribbean
With Ecuador no longer providing visa-free access to Chinese passport holders, the path for PRC citizens to reach the U.S.-Mexico border may start running through the Caribbean rather than the Andes.
Eight Caribbean countries currently offer visa-free access for Chinese citizens:2 Antigua & Barbuda, the Bahamas, Barbados, Cuba, Dominica, Grenada, Jamaica, and Suriname. None of these provide a good option for Chinese passport holders looking to move to the United States, but a few are less bad than others.
Suriname is physically located on the South American continent, and some South Asian migrants and refugees have reportedly used the country as a landing point to then go on to the United States and other neighboring countries. This may be the best option for Chinese citizens traveling to the U.S.-Mexico border. However, Paramaribo’s main international airport only receives 2-7 international flights a day; by contrast, Quito often has more than 4 times that amount on a given day, providing more opportunities for migrants to transit through the country.
Cuba is famously just 90 miles from Key West, there is a long history of Cuban refugees making the trek to South Florida, and the country now has a direct flight from the PRC. However, the boat ride is notoriously treacherous. Similarly, the Bahamas is near South Florida, and Jamaica has had a few citizens attempt to cross the U.S.-Mexico border, but neither seem likely either to receive a massive influx of thousands of Chinese migrants without a more settled infrastructure for migrants traveling to the United States.
Taken together, Chinese citizens looking for a better life in the United States have options to start their journey in the Caribbean (and possibly Bolivia), but none of them are particularly good. That said, Caribbean countries with visa-free agreements with the PRC should be alert to the possibility of Chinese citizens using their country as a launching point for immigration to the United States.
The Roundup
Politics and Security
Legislators from Guatemala, El Salvador, Honduras, Costa Rica, Panama, Dominican Republic and Nicaragua traveled to Beijing for the International Seminar for Parliamentarians of Latin America and the Caribbean. Led by Zhang Qingwei, the Vice President of the National People's Assembly, the seminar covered Chinese modernization, China’s political model of “popular democracy,” and the PRC’s diplomacy.
The head of the Mexican Senate met with the Chinese ambassador and the Deputy Head of the CCP in Hunan to discuss trade and investment, as well as other political and cultural ties.
The Dominican Republic city of Santo Domingo signed a sister city agreement with Hunan’s capital, Changsha.
Senior Cuban and Chinese CCP Politburo members met in Beijing to “deepen the exchange of experience on party and state governance, promote practical cooperation in agriculture and other fields, and push for greater development of China-Cuba relations.”
The United States announced new charges against Mexican organized crime and Chinese nationals over a conspiracy between the Sinaloa Cartel and the Chinese groups to cover up more than $50 million in drug profits.
Several countries celebrated diplomatic anniversaries with China:
The Chinese embassy in San Jose hosting a gala attended by the Costa Rican Foreign Minister on June 17. (Xinhua)
The Panamanians hosted a celebration in one of the halls of the Latin American and Caribbean Parliament (Parlatino).
Trinidad and Tobago and the PRC also celebrated 50 years of diplomatic ties on June 20, with President Xi sending a message of congratulations. (CGTN)
Beijing’s Concert Hall featured Venezuelan musicians to commemorate 50 years of diplomatic ties. (China Daily)
Investment, infrastructure, and finance
After the Wall Street Journal ran a major story on how China’s long-standing investment in the Port of Chancay was “rattling” the United States, Peru’s prime minister said that he did not expect growing Chinese investments to prompt “resentment” from Washington.
At the same time, Bloomberg reported that Peru is pitching U.S. investors on a the Corio port project as “a potential balance to growing Chinese influence.”
CELAC held an energy ministerial in Honduras with European Union and Chinese officials to discuss energy generation, connectivity, and affordability. (Telesur)
Latin American and Caribbean diplomats attended the China-LAC Business Symposium in Beijing on June 14 to discuss possible trade and investment cooperation. (CGTN)
PowerChina delivered a new microgrid powered by solar energy to remote Surinamese villages. Four additional microgrids are expected to be finished in the near future.
Trade and Technology
Venezuela and China signed three new economic, innovation, and technology-sharing agreements with the China Development Institute, China’s National Institute of Economic Research, and the Open Innovation Laboratory of Shenzhen respectively.
Caracas also apparently signed an agreement with China on the construction of solar parks in Mérida.
Brazil and China recently concluded phytosanitary negotiations over Brazilian grape exports.
The Chilean government officially submitted an application to join RCEP, an ASEAN-led trade bloc that includes China. (Global Times)
Following recent U.S. and EU tariffs on Chinese EVs, Canada is reportedly considering imposing similar tariffs given Chinese manufacturing overcapacity.
European shipping company MSC is planning a new shuttle service between the South China and the Mexican ports of Lazaro Cardenas and Manzanillo given rising trade flows between the two Pacific countries.
Meanwhile, Nicaragua and China launched their first direct maritime route, with ships expected to travel monthly from Tianjin to Corinto.
As part of its FTA negotiations, a senior Honduran economic official said his country is hoping to gain access to about 20 key markets in China, including: aguardiente (liquor), shrimp, coffee, cocoa, melon, sugar, and lobster.
Taiwan
Taiwan’s Ministry of Foreign Affairs said that it had established “friendly and solid relations” with Haiti’s new transitional government, including with interim Prime Minister Garry Conille.
Guatemalan President Arévalo visited the Taiwan-supported Bamboo Treatment and Development Center to learn about bilateral bamboo cooperation projects.
Taiwan donated $50,000 to Belize to aid in the reconstruction from wildfires that impacted the western and southern portions of the country in May and June.
In a bid to encourage the country to embrace the PRC, a left-wing former Paraguayan senator and vice-presidential candidate, Jorge Querey, wrote an op-ed that alleged corruption and irregularities regarding funds from Taiwan. Chinese state media outlet Xinhua later picked up on these allegations.
Society and Culture
CNOOC Petroleum Guyana, the Chinese company drilling in the country’s newly-discovered oil reserves, donated table tennis equipment to students “in remote areas” in advance of the National Schools’ Table Tennis Championship.
The Chinese GX Foundation is working with the Honduran health ministry to eradicate Dengue from the country.
After visiting Mexico, the Deputy Head of the CCP in Hunan Province visited the Dominican Republic to discuss rice cultivation cooperation, as well as education, science and technology, and tourism.
A playground made from Chinese-donated playsets was opened in Dominica last week.
The Chinese Embassy in Quito donated radio and streaming equipment to the Public Communication Company of Ecuador.
Analysis and Opinion
The Inter-American Dialogue released its annual report on Chinese Development Finance to Latin America and the Caribbean by Margaret Myers and Rebecca Ray. The report found that only Brazilreceived loans from the traditional Chinese development banks.
New analysis from Camille Boullenois and Charles Austin Jordan at the Rhodium Group finds that Chinese manufacturing overcapacity is holding back emerging economies, including Argentina, Brazil, Chile, Colombia, and Mexico.
Considering the Maduro regime’s recent aggression against Guyana, Henry Ziemer writes for the Diplomat that “Venezuela’s threats are restructuring China-Guyana relations.”
Evan Ellis is in the Diplomat arguing that Guatemala might be poised to flip relations from Taipei to Beijing in the coming years, and he suggests that this switch could be particularly impactful for Taiwan. Ellis also published a piece on the strategic value of Taiwan for Latin America with Indrastra.
In the Diplomat, Joseph Bouchard argues that Bolivia is increasingly “leaning... on Beijing for trade, investment, and economic support” due to strained ties with the United States.
That’s it for now, see you again in two weeks!
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Of course, it’s possible that the U.S. Ambassador to Japan has access to intelligence on China that implicates PRC hackers in Ecuador’s national blackout. The PRC is well-known to be targeting foreign infrastructure through cyberattacks, but an attack on all of Ecuador’s power grid would be a serious escalation.
Additionally, it’s important to note that Chinese passport holders only need a visa-on-arrival to travel to Bolivia. Though Bolivia is further from the U.S.-Mexican border than Ecuador, and there are likely fewer established trafficking routes from the country to the Darien Gap, a few Chinese citizens may dare to try the route to seek a better life in the United States.