Is China’s presence in Central America ‘exploding’?

In a recent analysis, The Diplomat concluded that China’s presence in Central America “has exploded”, with profound consequences for the region. The author points to the shift in diplomatic support from PRC to ROC in recent years, as well as increasing cooperation between regional institutions and organisations and Chinese counterparts.

While Central America’s relationship with China indeed is growing, at the same time, I do not think the growth or importance of these relations should be overstated. There is an ongoing—understandable—tendency to partition the world in regions that are leaning more towards the U.S. or China, or that are more open to diplomatic overtures by either of the two major powers. Such a discussion in the context of Central America, however, can only lead to the conclusion that there is not much evidence for a significant swing towards Beijing.

First, in the The Diplomat article, the author points out that “China promises large amounts of infrastructure projects”. Through large-scale investment, the Chinese would be able to expand their footprint in the region, both physically (in the form of highways and ports) and financially (in the form of loans and indebtness). Yet the word ‘promises’ does a lot of work here: the Chinese government promises many things to many countries, but does not always deliver. Most importantly in the context of Central America, this holds true for the Belt and Road Initiative (BRI). Most of Central America’s states have indeed signed up for the BRI by now, most recently including Honduras, in the hope of attracting much-needed investment for the different forms of infrastructure that are lacking in the region. (Central America, for example, still lacks a railroad system, even in more-developed Costa Rica and Panama; the highways, especially in the poorest nations, can be notorious for their low quality). Ever since the BRI came to Latin America in 2018, however, little evidence points towards the Initiative providing real benefits to local governments. In fact, as is true elsewhere, Chinese investment mostly is confined to brownfield investment and sectors that are of stategic importance to China itself (i.e., energy). In Central America, this problem is aggravated by the general stagnation in investment levels, which means total investment is still an insignificant amount—especially compared to the United States’ investment in the region, as is consistently indicated by CEPAL reports.

Second, the author writes that Beijing “promotes trade agreements, causing large deficits in the long-term”. This is true: as the recent establishment of ties with Honduras shows, the decision to recognize the PRC is followed by the invitation for a formal state visit—widely reported in Chinese domestic media, illustrating another victory over the hostile Taiwanese government—and then trade talks. Concrete steps go along with this: in Honduras’ case it meant, for example, the establishment of a Chinese embassy in Tegucigalpa and a bilateral trade and investment commission. However, both my own research as well as recent news reports highlight skepticism in Central American countries about the degree to which China can deliver on the economic promises it makes when establishing bilateral diplomatic ties. Data show that trade relations still are not beneficial for these states, being excessively unequal, and there is not much evidence that Beijing is working with them to make the trade balance less unequal. Besides preventing China from expanding its relationships with Central America’s countries, these issues also cause serious resentment in politics, business, and society, tainting China’s image in the region.

The third line the The Diplomat analysis highlights is interesting, as they write that “Beijing perpetuates an important coordination of activities and alliances between Chinese state media and Central American media to misinform.” This is undeniably true. A fairly recent report by Central American investigative journalist platform Expediente Público detailed how the Chinese government courted Honduran journalists, inviting them to Beijing for a highly orchestrated demonstration of the benefits of their new relationship. During my own research, I saw how in the case of Costa Rica, the Chinese government through its embassy in San José bought whole special issues of one of the country’s largest newspapers, La República, for which it co-produced numerous positive reports about the benefits of being friends with China and its people. Chinese ambassador Tang Heng has also frequently appeared in left-leaning news media writing op-eds in support of China’s presence in the region (and, simultaneously, against the U.S.’ presence in the region). While this is noteworthy and could be the beginning of a fruitful effort to influence public opinion, so far there is no evidence that this co-optation of local news media actually works, especially because of the lack of subtlety. This is reflected in research on Chinese efforts to expand its television news networks into Latin America, which struggle to find an audience.

Finally, although not mentioned in the news report, one component of Chinese efforts in Central America that is worth taking into account is Beijing’s success in replacing Taipei as an observer state in SICA. It is noteworthy because while there was no broad consensus about this move—Nicaragua and El Salvador supported the move, while Guatemala objected most strongly—it still happened. Costa Rica and Panama, most notably, did not prevent it from happening. Taiwan still is an observer in the region’s financial development institution, the Central American Bank for Economic Integration; undoubtedly China will attempt to replace it there, too. For now, however, it is not possible to draw any conclusions from this move in SICA. It is not strange that ‘one China’ replaces the ‘other’ when almost all members of SICA have stopped having diplomatic ties with the latter and have begun having diplomatic ties with the former. More relevant developments in the domain of regional governance would have to take place through, for example, the China–CELAC Forum, or through Beijing’s new instruments in global governance—the BRI, the Global Development Initiative (GDI), and the Global Security Initiative (GSI).

In short, while Chinese presence in Central America is increasing, this is a logical consequence of China’s presense increasing everywhere in the world. There is little evidence that in Central America, China’s presence is ‘exploding’; to the contrary, its lack of engagement has sowed disappointment and distrust amongst its new allies. When partitioning the world in pro-U.S. and pro-China camps, Central America’s reliance on its northern neighbour has changed very little. To change this to any degree, Beijing would have to significantly increase its effort to expand its activity in the region.