China’s Influence Rises Across Central America

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By Marco Echevarria

This week in San Salvador, the opening of a grand, modern library epitomized China’s increasing sway in Central America. The library, a $54 million project fully funded by China, was inaugurated by El Salvador’s President Nayib Bukele, accompanied by the Chinese ambassador. This seven-story structure, covering 24,000 square meters, is equipped with advanced facilities including gaming and robotics areas, digital screens, and a vast collection of books.

Simultaneously, Nicaragua’s Laureano Ortega, son of President Daniel Ortega, was seen welcoming 250 buses from China, acknowledging the strengthening bond between Nicaragua and China, which he credits for aiding his country’s fight against poverty.

This growing influence of China in the region marks a strategic shift, distancing these nations from the United States. Evan Ellis of the US Army War College Strategic Studies Institute observes this trend across various political regimes in Central America, from Nicaragua’s leftist government to El Salvador’s right-wing administration.

China’s foothold in the region has been expanding since Costa Rica shifted its diplomatic allegiance from Taipei to Beijing in 2007. This pattern continued with Panama in 2017, El Salvador in 2018, Nicaragua in 2021, and recently Honduras. According to Margaret Myers of the Inter-American Dialogue, China’s primary motivation is to isolate Taiwan, with only a few countries like Guatemala and Belize still maintaining ties with Taipei.

Economic interactions with China, however, reveal a significant trade imbalance. For instance, Costa Rica’s imports from China amount to $3.35 billion, but its exports are a mere $400 million. Similarly, El Salvador imports $2.8 billion worth of goods from China but exports only $48 million. Nicaraguan economist Enrique Saenz, now living in exile in Costa Rica, warns that such trade deficits could worsen with new free-trade agreements.

Despite the relatively small economies of these Central American countries, their strategic location along key trade routes makes them valuable to China. The nation’s involvement in Panama, crucial for its canal, is significant, with Chinese companies engaged in various infrastructure projects. Luis Miguel Hincapie, Panama’s former vice foreign minister, notes the presence of China’s largest banks and numerous Chinese companies in the country.

China’s influence extends beyond infrastructure to technology. Laureano Ortega recently discussed a 5G technology plan following his visit to Huawei’s headquarters in Shenzhen. In El Salvador, China plans to construct a 50,000-seat soccer stadium and a shipping wharf on the Pacific coast, continuing its pattern of generous infrastructure support.

In contrast, U.S. President Joe Biden recently cautioned Latin American leaders against falling into a “debt trap”, a veiled reference to China’s expanding influence. Honduras’ Minister of the Presidency, Rodolfo Pastor, acknowledges his country’s significant debt but criticizes the United States’ long-standing influence in the region, suggesting a need for new partnerships and strategies.