Don't Go Fighting in My Backyard
Guatemalan President in Taiwan, Antigua & Barbuda ministers in China, and a weird couple weeks in U.S.-China-Panama ties. Plus: The PRC's provincial & local engagement in LAC
Welcome to Chaufa, a China-Western Hemisphere Newsletter by CPSI.
Today’s edition covers June 2 to June 15
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The Top 5 Stories:
It’s been a weird week in China-Panama-U.S. relations, so here’s a quick run-down:
On June 10, the head of the Panama Canal Authority warned that the proposed CK Hutchison-Blackrock port deal could undermine the canal’s neutrality. Consequently, the PRC foreign ministry quickly seized on this in a news conference to implicitly justify its decision to hold up the deal. (Global Times)
At the same time, President José Raúl Mulino denounced his predecessor over the $1.8 billion in cost overruns for the sensitive Chinese-built fourth bridge over the Panama Canal. In turn, he said he would file a complaint with the Prosecutor's Office.
The next day, June 11, the U.S. Embassy in Panama City issued a statement claiming a strategic victory in Panama by helping Panama’s Ministry of Public Security replace seven Huawei-built telecommunications towers at the cost of $8 million in order to “protect the national security of our countries from the threat of the Chinese Communist Party.”
However, shortly thereafter, President Mulino rebuked the Trump Administration’s implicit suggestion that the project was a response to Washington’s competition with Beijing. Additionally, Panamanian officials clarified that the project had been ongoing for nearly 10 years.
Even amidst these U.S.-China tensions playing out in Panama, Bloomberg reported that a key result of the U.S.-China talks in Switzerland was to let a Chinese firm, like State-Owned Enterprise COSCO, join the Western consortium that elected to buy a network of global ports (including two near the Panama Canal) from Hong Kong-based CK Hutchison.
What to make of all this? Panama remains in a sticky position, and the Mulino Administration seems to be trying its best not to lean too hard into one relationship over the other. On the one hand, the United States is an essential partner, but on the other hand, ignoring China could impede Panama’s economic prospects. And with the Trump Administration taking wishy-washy positions, navigating this tight path will be even harder for Mulino.
Looking to reaffirm his country’s ties with the ROC, Guatemalan President Arevalo traveled to Taipei to meet with Taiwanese President Lai and to find ways to deepen economic cooperation. The presidents signed a “Letter of Intent for Semiconductor Cooperation,” while the two sides later confirmed an agreement on mutual investment. When Arevalo later traveled to Japan, international media suggested that Tokyo’s embrace of Latin American countries like Paraguay and Guatemala was due to those countries’ relationships with Taipei. Unsurprisingly, however, the visit prompted Beijing to yet again urge Guatemala to break ties with the ROC.
When President Arevalo was first elected, there was some initial speculation that his government might seek to establish diplomatic relations with Beijing in a bid to attract Chinese trade and investment. This visit and its modest substantive agreements will likely quell those concerns, at least in the short term.
Antigua and Barbuda Senior Minister Sir Molwyn Joseph led a delegation of several ministers to China, including Shanghai and Hangzhou, to deepen collaboration in “health, agriculture, fisheries, the blue economy, education, and innovation.” The officials met with Chinese business leaders, academics, and government leaders to discuss issues like modernizing health infrastructure, “joint ventures that would help protect marine ecosystems,” and new training exchanges and cultural partnerships. Relatedly, China’s Ministry of Commerce hosted a 21-day seminar for students from Antigua and Barbuda on “climate change response and sustainable agricultural development.”
While A&B’s ties with China are quite consistently friendly, the country’s government has been quick to note that it is not picking one side over another. Just recently, Antigua and Barbuda’s foreign minister stated, “To the extent that we have the United States as our major trading partner... and China our number one development partner, I think we are enjoying the best of both worlds.”
In an interview with the Financial Times, the Brazilian Vice Minister of Finance said that his country plans to issue “panda bonds”, which are bonds denominated in Renminbi for foreign creditors. As of this writing, it is unclear how much debt will be issued or when Brazil plans to begin selling the bonds.
Brasilia has long sought to wean itself off its dollar dependency, and its relationship with Beijing (especially through BRICS) has been central to achieving this goal. From a currency swap with the People’s Bank of China to ditching the dollar in bilateral Sino-Brazilian trade, this “panda bonds” news is just another step in Brazil’s long-term plan to be less dependent on just the U.S. Dollar.
A judicial delegation led by the Vice President of the Beijing High Court, Ren Xuefeng, traveled to Peru, where they met with leading judges like President of the Judiciary Janet Tello Gilardi and Supreme Judge Ulises Yaya Zumaeta to discuss intellectual property (IP) issues. They later traveled to Argentina, where the two sides discussed the relative structure and function of their systems, as well as IP. At the same time, a couple of Chinese diplomats met with Brazilian federal district judges to present a gift to the courts.
Judicial engagement between the PRC and LAC governments isn’t new, but it’s certainly a bit more of a rarity than foreign ministry-to-foreign ministry or legislative engagement. In the past, judges from countries like Venezuela and Argentina have met with PRC diplomats and judges, though it is unclear if these meetings resulted in any tangible outcomes aside from a pleasant conversation.
Core Brief
Going Local: Chinese Provincial and Municipal LAC Engagement
As I frequently note in this newsletter, China does not engage as a monolith in the region; lots of government ministries and party departments — like the Ministry of Foreign Affairs and the CCP’s International Department — operate in LAC. But this engagement isn’t just dispersed horizontally across government, party, and business institutions; it’s also spread vertically across Chinese provinces and cities.
This week, I wanted to take a quick look at why and how Chinese sub-national authorities engage with the region. Though this is an incredibly complicated (and honestly under-researched) issue, generally speaking, a diverse array of actors from Chinese sub-national entities engage with LAC across all different kinds of issues in all different kinds of settings.
With all this diversity, it’s impossible to craft an overarching narrative about Chinese sub-national engagement in LAC. It seems there’s no one set model for Chinese subnational diplomacy. But in general, it is possible to say Chinese sub-national officials pursue a relationship with LAC both to support their own local economic and social policy goals as well as to support Beijing’s overarching national foreign policy.
A bit of background
It’s obvious that China is a big country, but before diving in, I want to emphasize just how big these cities and provinces are.
Of the more than 600 cities in the PRC, 18 have a population of more than 10 million, which is more than about half the countries in Latin America (such as the Dominican Republic or Honduras). The most populous province in China — Guangdong — has a population of about 127 million people, which is just a few million fewer than Mexico.
These cities and provinces are simply massive at the economic level, too. Of the 33 provincial-level administrative divisions1 in China, all but four have a GDP of more than $100 billion, which is roughly the size of Costa Rica’s or Venezuela’s entire economy. Even Mexico, the second-largest economy in Latin America, has an economy smaller than Guangdong or Jiangsu provinces, and is just about on par with Shandong and Zhejiang.
Why engage?
With populations and economies the size of countries, many of China’s massive cities and provinces naturally have interests abroad. As a result, these sub-national entities pursue sub-national diplomacy to support their economic development back home. Just like anywhere else (but on a larger scale), local and provincial officials look abroad to generate a positive trade and investment environment, learn new local government best practices, and advertise their home’s unique culture.
That said, Chinese sub-national entities don’t just engage with their LAC counterparts to advance their local interests; sub-national engagement also serves the national government’s concerns. When sub-national entities advance economic, social, and cultural ties, they often support economic development back home and a positive image of China abroad.
Recognizing this, the PRC State Council’s second White Paper on Latin America and the Caribbean called out these kinds of sub-national exchanges by name and promised to further encourage them. More specifically, it suggested that “local governments on both sides conduct friendly exchanges and cooperation, [and] share experience in local development and governance.”
Types of engagement
Political engagement, such as establishing sister-city ties or sending high-level delegations, often gets the most attention in the more local-level relationships. And frankly, it’s for good reason – Chinese provinces and cities have signed countless “sister city” and “sister province” agreements in LAC.
These types of agreements range from large and notable localities, like Beijing-Mexico City, to the more obscure, like Entre Ríos (Argentina)-Henan. Even a fairly small city, like the capital of Dominica, Roseau, has been pursued in Chinese sub-national diplomacy with its sister-city arrangements with Yiwu and Jining City.
That said, provincial and municipal engagement extends far beyond the vague lines of sister city arrangements. Provinces and cities often engage in high-level delegations that can lead to tangible new investments, trading relationships, or cultural and social exchanges.
Earlier this year, a business delegation from the Shandong Commercial and Investment Association visited Ñuble in Chile to discuss tourism, agriculture, and renewable energy. Just a few months later, the Ñuble city of San Carlos signed an agreement with a Shandong business association (and presumably some Shandong businesses) to build a new agribusiness industrial park. And in the realm of social and cultural exchanges, Hunan Province has been very active in the Dominican Republic. Its recent activities have included hosting a forum in the DR to promote cultural tourism and donating agricultural equipment.
What kinds of Chinese officials are engaging?
Notably, all these types of activities include a diverse array of Chinese actors. Though sub-national government officials often lead these delegations or sign these MOUs, provincial and municipal interactions can also include sub-national party, civil society, or business leaders. These city and provincial governments almost always have a staff just focused on international ties, and sometimes they employ officials to just focus on their city’s or province’s ties with Latin America and the Caribbean.
Yet this diversity belies the fact that sub-national engagement creates opportunities for LAC cities, states, and countries to creatively engage with their counterparts in new ways.
The Roundup
Politics and diplomacy
The PRC’s Special Representative for Latin American Affairs, Qiu Xiaoqi, led a delegation to Cuba to meet with President Díaz-Canel and to engage in “exchanges at different levels and tours of projects of interest in various provinces.” In a meeting with Cuba’s foreign minister, Qiu later emphasized infrastructure, biotechnology, and tourism cooperation.
The Head of the Chinese Communist Party’s Society Work Department, Wu Hansheng, visited Venezuela to discuss “economic cooperation, energy, cultural exchanges, and social programs” with President Maduro. He later stopped through Brazil as well.
Chinese Premier Li Qiang discussed “resetting” bilateral relations and rekindling economic ties during a call with Canadian Prime Minister Mark Carney. The call came days after Carney said that removing Chinese trade barriers on the country’s agriculture exports was a priority, as well as after Canada’s trade minister reviewed economic and trade concerns with the PRC’s Minister of Commerce on the sidelines of a WTO ministerial. (Global Times)
During a reception marking the 53rd anniversary of Chinese-Guyanese relations, President Ali noted that he had repeatedly discussed safeguarding Guyana’s sovereignty (presumably from Venezuelan coercion) with Chinese representatives. Meanwhile, newly-arrived Ambassador Yang Yang said that in addition to traditional fields like mining and agriculture, she looks forward to engaging on topics like “digital economy, green development, and artificial intelligence.”
Investment, finance, and infrastructure
The Brazilian state of Bahia signed an agreement with China Railway 20th Bureau Group (CRCC) and China Communications Construction Company (CCCC) to build a $1.82 billion bridge between Salvador and Itaparica Island.
Barbadian Prime Minister Mottley said that her government was in talks with a Chinese company to build and finance a 40% expansion of the Queen Elizabeth Hospital.
Just as China Railway Number 10 Engineering Group Company completed construction of the 270-kilometer highway to Tacna, Peruvian prosecutors opened an investigation into irregularities in the tender process.
A new $590 million wind farm by Power China opened in Chubut, Argentina.
China Communications Construction Company started construction on the $83 million, 70 MW Enesolar-3 solar plant in Nicaragua.
Bolivia and China signed an Economic and Technical Cooperation Agreement and an MOU on global development. The most tangible deliverable appears to be a 100 million Renminbi donation for jointly decided projects, as well as US$500,000 to fight natural disasters.
Canada’s BC Ferries selected Chinese state-owned China Merchants Industry Weihai Shipyards to build four new large ferries; however, British Columbia's transport minister apparently raised concerns about the economic implications of the decision.
Trade and technology
A new phytosanitary trade deal will facilitate Uruguayan soybean and rapeseed exports to the PRC.
Peru’s massive blueberry industry is rebalancing towards the PRC due to U.S. tariffs, new trade opportunities due to the Port of Chancay, and growing Chinese demand.
China recently hosted Honduran business representatives for a training on white shrimp cultivation to support that politically sensitive industry. Relatedly, the PRC donated 42 modules to expand the country’s System of Technological and Agricultural Innovation Centers (SCITA).
Even as U.S. sanctions are looking to put a squeeze on Caracas, Venezuelan oil exports to China are stabilizing, and possibly growing, with “Chinese companies like China Concord Petroleum and Anhui Guangda Mining are signing secretive production-sharing deals to operate oil fields and pursue greenfield projects.”
Taiwan
Even without formal diplomatic relations, the Costa Rican government dispatched five intelligence officials to Taiwan for national security training.
Taiwan donated $2.59 million to St. Lucia to support “various social and developmental needs in communities throughout the island.” The bulk of the money will be used for the Small Infrastructure Initiative to rehabilitate infrastructure like roads and bridges.
A Taiwanese EV trade mission will visit Mexico, Guatemala, Paraguay, and Brazil later this year. Relatedly, Taiwanese diplomats will also hold trade talks in Brazil later this year.
Belize’s Minister of Foreign Affairs and Foreign Trade, Francis Fonseca, signed a “bilateral cooperation agreement” on unspecified matters with Taiwan’s ambassador.
Paraguay will now export pork to Taiwan duty-free, according to the South American country’s trade minister.
Society and culture
The general secretariat of the Andean Community and the Chinese Academy of Social Sciences (CASS) co-hosted a forum on mutual learning and high-level cooperation. Also at the forum, Beijing’s Ambassador to Peru almost word-for-word mimicked Xi’s recent pronouncements on security cooperation to suggest increased police cooperation.
Later, CASS signed an agreement with the University of Chile to strengthen academic and student exchanges.
The Cuban ambassador to Beijing and the Shanghai consul general opened a Cultural Center in Zhejiang province.
Deepening cultural ties, the Chinese embassy in Costa Rica hosted its first dragon boat race (in cooperation with the local Zhongshan Association). (CGTN) At the same time, the PRC’s ambassador visited a local university to mark the anniversary of the first Chinese arrival in the Central American country.
Beijing’s Ambassador to the Bahamas, Yan Jiarong, met with the managing editor of the local paper, The Tribune, to discuss China-Bahamas media cooperation. (FMPRC)
The University of Huaqiao agreed to launch a digital platform to teach Chinese in Argentina with the local Chinese Cultural and Education Foundation.
In a bid to combat migration to the United States, Ecuador will require Chinese citizens to apply for a transit visa when transiting through the country.
o This marks a big departure for Ecuador, which at one point was one of the only Latin American and Caribbean countries to not require a visa for PRC citizens.
Analysis and Opinion
Nathan Attrill argued in the ASPI Strategist that Haiti and St. Lucia were the Taiwanese diplomatic partners most likely to flip recognition to the PRC.
A new article from Hugh Harsono in the Small Wars Journal looks at how “China leverages open-source technologies and digital infrastructure as instruments of statecraft in Peru, advancing strategic influence through gray zone operations without conventional force projection.”
In Americas Quarterly, Leland Lazarus wrote about the five pillars of future China-LAC ties that Xi Jinping highlighted in his speech to the China-CELAC ministerial, while Gregory Ross explained how “Chinese demand for South American commodities, expanding export markets in Asia and the Middle East... [are] raising the Paraguay-Paraná’s geopolitical profile.”
Ryan Berg and Juan Carlos Pinzón Bueno argue in Foreign Policy that “the reprioritization of Latin America in the United States’ foreign policy, coupled with the high-level visits by cabinet officials, has placed China on the back foot in the region.”
The pseudonymous A. Bermúdez wrote about Nicaraguan mining concessions to Chinese companies for The Diplomat, arguing that “the Nicaragua model may serve as a blueprint for Chinese engagement with authoritarian states.” Also in The Diplomat, Martin Brown questions whether Brazil’s burgeoning commercial ties with the PRC have given China too much “economic control.”
Han Zhen explained how Chinese scholar Tang Yongyan has been documenting the Chinese-Cuban experience, which was “shaped by indenture, revolution, Cold War politics, and the painful erosion of transnational family bonds,” for the China Global South Project.
Based on observations from a recent trip to Bogotá, Evan Ellis wrote about China-Colombian relations for CSIS. The Atlantic Council will host an event on the topic on June 20.
That’s it for now, see you again in two weeks!
Make sure you don’t miss the next issue of Chaufa 👇
I’m going to shorthand this as “provinces” for the purpose of this analysis, but that technically is not correct.