Equally Ancient Civilizations
Peru's president in Beijing, GAC invests in Brazil, Chinese spy bases in Cuba, and China-CELAC Ag Forum. Plus, what Trump means for China-LAC (again).
Welcome to Chaufa, a China-Western Hemisphere Newsletter by CPSI.
Today’s edition covers June 24 to July 7.
Listen via Spotify or read the full edition below:
The Top 5 Stories:
Peruvian President Dina Boluarte traveled to China in late June to meet with Xi Jinping1 and other senior PRC officials. During the trip, she announced that Peru and China had substantially concluded negotiations on updating the 2009 bilateral FTA and called on BYD to establish an EV manufacturing plant in Peru.
Other agreements included a joint action plan for 2024-2029, an agreement on APEC 2024, a memorandum on a strategic dialogue on economic cooperation, an agreement on Peruvian grape exports to China, a new Peruvian-Chinese Business Council, and an agreement to strengthen cooperation in the digital economy. (President Xi - Xinhua) (Premier Li - Xinhua)
The National Institute of Radio and Television of Peru (IRTP) and the Media Group of China (CMG) also signed an accord on exchanging television content and technology cooperation.
The visit comes about four months before Xi makes his second trip to Peru for the 2024 APEC summit. During the trip, he is expected to inaugurate the controversial Port of Chancay, a mega-port that has become a signature BRI project.
Following the attempted coup in Bolivia, China’s foreign ministry said that it “hopes and believes that the Bolivian government is capable of handling the situation appropriately and maintaining peace, stability and development.”
China was a staunch supporter of former Bolivian president and MAS leader Evo Morales (who is currently in a power struggle with current president and MAS leader Arce), but the PRC has kept very close relations with the Arce administration, including through new infrastructure projects and a currency agreement.
One report suggested that it was Chinese-made armored vehicles that failed in the coup attempt, raising “questions about the reliability of these armored personnel carriers in real combat scenarios”
One of the world’s largest EV and auto manufacturers, the state-owned GAC Group, said that it would invest $1 billion in new factories, R&D facilities, and spare parts warehouses in Brazil over the next five years. The company’s commitments were made in early June when Brazil’s vice president visited China.
Brazil recently imposed tariffs on the import of cheap Chinese EVs. However, given that the most popular cars in Brazil are all foreign brands (and at least in 2022 were largely Japanese, U.S., and European companies), new investments are likely to mollify Brazilian concerns about Chinese EVs since they do not have a domestic champion of their own.
CSIS published a report on potential Chinese signals intelligence activities in Cuba, alleging that there are at least four different sites where Chinese and Cuban intelligence officials have been expanding cooperation. The Chinese government denied the accusations.
Last June, the Wall Street Journal reported that Cuba had been hosting a secret Chinese base since 2019, which was a concern because it could “provide eavesdropping access to U.S. military, commercial and other communications in the Southeast region,” including the U.S. military commands for Latin America, the Middle East, and Special Operations.
The third China-CELAC agriculture forum was held from July 1-3 in Weifang, Shandong Province and focused on food security and green development, agricultural mechanization, agricultural trade and investment, and poverty reduction. The forum was chaired by the PRC agriculture ministry’s deputy minister and was attended by 24 LAC ministers and deputy ministers and 13 CELAC ambassadors. (People’s Daily)
2024 marks the 10th anniversary of the China-CELAC forum, and the organization’s fourth high-level ministerial may happen later this year. Already this year, CELAC has held meetings with China on space and knowledge exchange (including with academics and civil society).
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Core Brief
What a second Trump term could mean for China-Taiwan-LAC ties
The U.S. presidential elections are only four months away, and former President Donald Trump has a strong chance to be the 47th president of the United States. Much like President Biden’s time in an office, Trump’s future agenda on China-LAC ties will likely be dominated the overarching goal of competition in the region. Additionally, three major trends from Trump’s first term will likely return in his second: new institutions, Taiwan, and competing against Latin America for trade with China.
Competition and combating Chinese influence in the region defined much of Trump’s first term, and it is likely to continue in a second. In particular, Project 20252 identified three lines of LAC engagement in the context of China’s role as a regional threat to the United States. These were: disrupting Chinese fentanyl flows through Mexico, near-shoring manufacturing away from the PRC, and combating the regional “external pressure” and “security threats” from the PRC (such as through Beijing’s support for countries like Venezuela and Cuba).
Judging from the first Trump administration, competition will often mean transactionally trying to win over allies. Notably in 2020, Mike Pompeo became the first Secretary of State to visit Guyana and Suriname, in part to combat Chinese influence. Similarly, Trump’s International Development Finance Corporation (DFC) struck a deal with Ecuador to help the Andean country pay back its loans to China on the condition that it excluded Huawei from its telecom network. A future Trump administration would similarly look to use visits, loans, and other assistance to transactionally gain favor in the region against Beijing.
Costs are also likely to fall on countries that choose to get close to the PRC, though for now it appears that Trump is aiming most of his threats against China rather than LAC governments. For example, Trump’s team threatened China with sanctions in 2019 over its ties to Venezuela, and Trump himself made similar threats about China’s possible spy bases in Cuba in 2023. Notably, these threats didn’t lie against the Latin American countries themselves. That said, given the administration’s dislike for leftist governments in Cuba, Venezuela, and Nicaragua, it is certainly possible these governments could face new costs as they cozy up to the CCP.
Judging from the first Trump administration, three more specific lines of effort are likely to be pursued in a second Trump term:
Institutions
Though Trump is no policy wonk, his administration’s focus on China led to the creation of several new institutions that have been used to combat PRC influence. The notable was the Build Act, which created the DFC that has been subsequently used to sponsor infrastructure projects (and the controversial financing proposal for Ecuador) to compete with the PRC.
Trump’s State Department also created the Regional China Officers program, which today are managed by the Biden Administration’s “China House” and reportedly “keep tabs on Chinese government activity in a host country or an entire region.”
New institutions like these that can keep tabs on the PRC in Latin America and the Caribbean, as well prompt new trade and investment that can compete with China (such as those proposed through the Americas Act), are likely to be on the table in a second Trump term.
Taiwan
Though Trump himself has expressed (at best) ambivalence on Taiwan, his administration pursued the closest cooperation with Taiwan in decades. In the LAC region, this included (unsuccessfully) encouraging a new unofficial Taiwanese office in Guyana3 and sponsoring U.S.-Taiwan development cooperation in Taipei’s diplomatic partners (such as the first joint U.S.-Taiwan trade mission to St. Lucia).
Support for Taiwan didn’t just mean carrots for Taipei’s partners – it also meant sticks for those that started recognizing the PRC. When Panama, the Dominican Republic, and El Salvador broke ties with Taipei, his administration recalled its ambassadors from the countries. He later signed the TAIPEI Act, which encouraged the U.S. government to “reduce such engagements with nations taking actions that seriously undermine Taiwan.”
Though questions remain over whether Trump would come to Taiwan’s aid in the case of a cross-Strait crisis, Taiwan is likely to drive a second Trump term’s relations with the few countries that still maintain ties with the ROC in LAC.
Inter-hemisphere trade competition
In recent years, Latin America has frequently been one of the United States’ main competitors when it comes to exporting certain politically sensitive goods to China. Though it did not play as much of a role at the end of the first Trump administration, this has been exemplified by Brazil surpassing the United States as China’s largest provider of soybeans (notably, Trump based much of the Phase 1 U.S.-China trade deal on Chinese promises to purchase more U.S. soy4).
Given that the United States and Latin America compete in other politically sensitive areas such as beef, paper, and petroleum, it’s possible that a Trump administration might try to undercut its Latin American neighbors in a bid to reverse the U.S. trade deficit with China. At the very least, Latin America’s growing success in exporting to the PRC may frustrate Trump and his allies and create unnecessary tensions in the bilateral relationship.
The Roundup
Politics and Security
Brazil opened a new consulate in Chengdu, making it the South American country’s fifth diplomatic mission in the PRC (and its first in the country’s interior).
The United States sanctioned several Chinese and Mexican individuals for laundering "illicit drug proceeds belonging to the Sinaloa cartel."
Cuba welcomed Han Wenxiu, the CCP’s deputy executive director of its Office of Economic and Financial Affairs, to discuss advancing the bilateral economic agenda.
Chinese Special Representative for Latin American Affairs, Qiu Xiaoqi visited Venezuela to celebrate 50 years of bilateral relations, with celebrations at the National Assembly and the Foreign Ministry.
Investment, infrastructure, and finance
Chinese firm Ganfeng International Trading joined Bacanora and Sonora Lithium to lodge a lawsuit against Mexico with the International Center for Settlement of Investment Disputes over the cancellation of its lithium projects.
Nicaragua signed a $292 million agreement to fund the second stage of the Costanera highway, which will be built by CSCEC International Construction, while CCCC started construction on the $90 million, 61MW San Isidro Enesolar AP-AS 1 solar plant.
The French company Eramet jointly opened an $870 million lithium extraction plant in Salta, Argentina with Chinese company Tsingshan. The plant is “expected to produce up to 24,000 tons of battery-grade lithium carbonate per year... enough for 600,000 electric vehicle batteries.”
Trade and Technology
A new flight from Venezuela to Guangzhou launched on June 30. The flight stops in Havana and Moscow between the two cities, while the Deputy Governor of Shandong province met with Venezuela’s agriculture minister to sign an MOU on agriculture exchanges.
Uruguay’s agriculture minister sat down with the Chinese deputy minister for water resources to discuss drought mitigation and sustainably managing water resources.
A delegation from Dongguan City, Guangdong Province traveled to Panama to discuss trade, innovation, investment cooperation.
China is reportedly slowing its purchases of Ecuadorian shrimp, the Andean country’s top export to the PRC, all while Ecuador hit a new record for global shrimp exports.
The Dominican Republic organized an agriculture mission to both China and Vietnam to explore agriculture technology cooperation.
A U.S. State Department report noted that Guyana does not vet labor agreements with the People’s Republic of China (PRC)... for trafficking vulnerabilities.”
Taiwan
Taiwan donated $300,000 to St. Vincent and the Grenadines and St. Lucia to help with recovery from Hurricane Beryl. Taiwan also donated whistles to soccer officials in St. Vincent.
The Taiwanese Ambassador to Haiti met with the Haitian defense minister to discuss “the training of the Haitian military and the strengthening of Haitian-Taiwanese cooperation in the areas of defense.”
The Chinese delegation to the OAS claimed that most countries in the region have established relations with China based on a One China Principle that asserts that “Taiwan is an inseparable part of China,” prompting the Taiwanese foreign ministry to push back against the comments.
Minister of Foreign Affairs Lin Chia-lung called for Taiwanese businesses to purchase more Guatemalan coffee to combat the Chinese ban on the Central American country’s coffee. The remarks came as the Guatemalan ambassador visited the processed food manufacturer I-Mei’s factory in Taoyuan.
Society and Culture
The Communication and Citizenship Council of Nicaragua signed an agreement with the National Radio and Television Administration of China on exchanging programming and delegations, while Beijing and Managua signed an agreement on building a new hospital.
Argentina returned 14 Chinese cultural relics that had been smuggled to the South American country in 2017 back to the PRC embassy on June 27.
The Brazilian states of Goiás and Bahia signed an agreement with Jinan city in Shandong on cultural and tourism cooperation.
China donated $100,000 to El Salvador to help the country rebuild after the recent heavy rains.
A delegation from the Beijing Anzhen Hospital and the Capital Medical University of China traveled to Trinidad and Tobago for a cardiovascular medicine seminar at the Chinese Embassy.
Analysis and Opinion
The Economist had several articles on China-Latin America ties the last two weeks, including: how Chinese companies circumvent U.S. tariffs by transshipping through Mexico and taking advantage of de minimus rules, the state of Paraguay-Taiwan relations, and China’s growing influence in Latin America and the Caribbean (using the Peruvian Port of Chancay project as a key example).
Writing for the U.S. Institute of Peace, Margaret Myers found that “China’s foreign investment is moving away from large-scale infrastructure to innovation-related sectors” in Central America, though “most Central American nations are unprepared to attract or carry out these projects.
Also writing for the U.S. Institute of Peace, Juan Pablo Cardenal writes that China’s political and economic influence in Peru “has increased dramatically since the turn of the century.” He in turn argues that “US agencies, corporations, and nongovernmental organizations have expertise and resources that could be shared with Peruvians seeking to create a more equitable relationship with China.”
David Olive argues for the Toronto Star that Canada should allow Chinese EV firms to invest in the North American country to sell cheap EVs to the Canadian market.
That’s it for now, see you again in two weeks!
Make sure you don’t miss the next issue of Chaufa 👇
Interestingly, it does not appear that Peru followed the trend of its neighbors (like Colombia, Bolivia, and Ecuador) in affirming an aggressive One China Policy that advocated for the reunification of Taiwan with the Chinese mainland. Rather, per the FMPRC readout, Boluarte only agreed to continue following Peru’s existing One China Policy.
Project 2025 is a Republican-aligned initiative to pre-draft policy and identify personnel for a future Trump administration. Though Trump recently distanced himself from the project, the initiative is staffed by a number of former Trump officials who are highly likely to return in a second Trump term, meaning that this is one of the best indicators for a second-Trump term foreign policy might look like.
More specifically, the office was established in the last week of Trump’s term, but it closed at the beginning of the Biden administration.
Notably, these promises never came to fruition.