Although China’s grand entrance in Central America dates back to 2007, when it established formal relations with Costa Rica, the Chinese Communist Party (CCP) really began to insert itself more forcefully into the region in the late 2010s. Intensifying its diplomatic efforts with promises of investments and stronger trade ties, supported by its propaganda machine, China eroded Taiwan’s footprint, luring Central American countries to bolster their relationship with Beijing, first with Panama in 2017, El Salvador and the Dominican Republic in 2018, Nicaragua in 2021, and finally Honduras in 2023.
Of the Central American Integration System (SICA) bloc, only Guatemala and Belize have kept and reaffirmed ties with Taiwan.
Despite alluding to grand opportunities and benefits, and the symbolic infrastructure gifts, the expected economic growth born from this newer alignment with the CPP has remained unfulfilled, instead resulting in failed projects, trade deficit, and China’s characteristic lack of transparency in its business transactions.
For Lourdes Balconi, a Chinese studies expert and dean of the Political and Social Sciences Faculty at Rafael Landívar University in Guatemala, China’s strategy in Central America follows a clear pattern: “entry through seemingly non-repayable cooperation, presented as a donation,” she told Diálogo about the CCP’s practice of “gift diplomacy.”
“In Costa Rica, it was a stadium; in El Salvador, a library; in Nicaragua, an airport on the drawing board; and in Honduras, there is also talk of a stadium,” Landívar said. “These projects, valued at around $130 million, have a visible impact in a region with significant infrastructure needs.”
In reality, China in Central America has underdelivered.
“In countries like El Salvador, expectations were high, but they have not materialized,” Federico Rabino, an expert in international relations and geopolitics and director of the Fernando de la Mora Institute in Paraguay, told Diálogo. “Seven years later, those projects have not materialized. There is a persistent difference between what was promised and what has actually been delivered.”
Strategic objectives
According to non-profit organization Center for the Opening and Development of Latin America (CADAL), China’s aggressive push in Latin America is part of a political strategy focused on five lines of action to support the CCP, CADAL indicates in a late 2024 report.
- First, to create networks of influence that legitimize the CCP at the international level.
- Second to obtain political and diplomatic backing for its foreign policy.
- Third to seduce the local elites to facilitate China’s long-term interests.
- Fourth to isolate Taiwan diplomatically.
- Fifth, to prevent any progress toward formal independence for Taipei, consolidating the “one China” policy in multilateral forums.
“Once Central American countries officially recognize the one-China policy, the Communist Party gets what it really wants: diplomatic support,” Rabino said. “This policy is part of a broader rational aimed at international geopolitical positioning and dominance.”
Investment and trade
According to Asia-Pacific current affairs magazine The Diplomat, despite the CCP’s promises, the trade gap between China and Central America continues to grow year after year, with questionable benefits for the region.
Between 2022 and 2023, the trade deficit between Central America and Beijing grew 32.68 times, Central American think tank Expediente Abierto reported. Meanwhile, China’s foreign direct investment in Central America, which represented 0.34 percent of the total received in the region between 2000 and 2016, fell to 0.3 percent between 2010 and 2021, despite the new ties with Beijing.
“China offered itself as a golden dream, as a way out of the region’s structural deficits, promoting the possibility of exporting Central American products on a large scale,” Balconi said. “However, over time, what we have seen are many promises, agreements with little compliance, and numerous complaints of opacity and flawed projects.”
While Central American exports have remained limited and mostly grouped under two commodities, minerals and agricultural products, imports from China have exploded. Furthermore, while many of the projects never materialized, weren’t completed, or have been plagued by irregularities, these have required the use of Chinese companies, labor, and suppliers, thus depriving the local economy, Expediente Abierto indicated.
Expansion with global initiatives
The CCP uses platforms such as the Belt and Road Initiative (BRI) and the trio of initiatives branded as the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative to expand its presence in Latin America and the Caribbean. CADAL reports that these initiatives have allowed China to establish close ties through symposiums, such as the China-Community of Latin American and Caribbean States (CELAC) Forum.
“In practice, China’s win-win rhetoric is diluted,” said Balconi, citing the case of Panama, where a recent audit revealed millions of dollars in breaches by the Chinese company that operates ports at both ends of the Panama Canal.
Deception and a way out
China’s promised investments did not come through for in the countries of Central America. In February, China faced a major setback as Panama announced its withdrawal from the BRI.
In making the announcement, Panama’s President Raul Mulino questioned the advantages of the BRI. “I do not know what was the intention of those who signed this [agreement] with China,” President Mulino said. “What has it brought to Panama all these years? What are the great things that this Belt and Road Initiative has brought to the country?”
Far from being a path to global prosperity, the initiative has led to unsustainable debt, environmental damage, and has provided China with the potential to exert undue influence, raising questions about its benefits for participating countries. Experts warm, however, that China can still retain some of its coercive influence with or without the BRI.
According to Argentine news site Infobae, accepting that China acts with well-defined strategic objectives and will not hesitate to use all the resources at its disposal to achieve them, is essential. “Recognizing this reality is key to understanding the current geopolitical landscape and its long-term implications,” Infobae reported.
For Balconi, Central America must rethink its economic relationship model. “It’s important to begin diversifying markets and not depend on a single partner. If there are already signs of pressure from the CCP without a deep relationship, what will happen if dependence becomes total?” he asked. “This is a key moment for the region, as Panama did, to reevaluate its priorities.”
