On August 21, Parlacen, the parliament of the six-nation Central American Integration System, voted to revoke Taiwan’s permanent observer status and admit China as an observer instead. China praised the decision as proof that “the one-China principle represents the unstoppable trend of the times and has the overwhelming support of the people.”
A Foreign Ministry spokesperson added that “China stands ready to develop friendly cooperation with the Central American Parliament on the basis of the one-China principle.”
The change is the culmination of a long-term trend. In recent years, the presence of China has accelerated remarkably in Central America. Since 2017, five of the six Parlacen members have severed ties with Taiwan in favor of China: Panama, Dominican Republic, El Salvador, Nicaragua, and Honduras. Currently, in the region, only Guatemala and Belize (the latter of which is not a member of Parlacen) still maintain diplomatic relations with Taiwan.
China’s current strategy and pattern of behavior in Central America is marked by three trends. First, China promises large amounts of infrastructure projects; second, it promotes trade agreements, causing large deficits in the long-term. Third, Beijing perpetuates an important coordination of activities and alliances between Chinese state media and Central American media to misinform and gain public trust in their autocratic projects.
When looking at statements made by Central American leaders at the time of establishing relations with China, it becomes clear that there are certain narratives that have been disseminated aggressively across the media. It is common, for example, that local political elites assure the population that a relationship with China will notably intensify beneficial trade relations for their country. For example, in the context of the visit of 30 journalists to China in May 2023, the Honduran media outlet La Tribuna wrote that “China is ready to use its US$137-billion-dollar checkbook ready to buy Honduran products.”
However, the evidence shows us a different commercial reality in Central America. Any growth in exports to China cannot keep pace with the massive tide of imports, resulting in lopsided trade deficits.
In 2007, when Costa Rica made the decision to break diplomatic relations with Taiwan and establish formal ties with China, the Central American country’s trade balance with China enjoyed a surplus of about $100 million. In 2022, Costa Rica suffered from a trade deficit with China of $2.8 billion. For that reason, in 2021, during a visit to Washington, D.C., Christian Guillermet, vice minister of multilateral affairs during the government of Carlos Alvarado, admitted that “contrary to what we had hoped, our relationship with China has not been successful commercially.”
In fact, exports in 2022 from all of Central America to China came to more than $1.7 billion; the trade deficit for the region during the same year was $14 billion. The United States remains a far more important export market. For comparison, El Salvador alone exported $1.6 billion worth of goods to the United States in 2022 – nearly as much as all of Central America exported to China that same year. Meanwhile, El Salvador’s exports to China in 2022 were only worth $49.6 million dollars in 2022.
In addition, in El Salvador, the Chinese narrative had been very consistent, announcing hundreds of millions of U.S. dollars in development aid. In May 2021, former Ambassador Ou Jianhong tweeted that the people of El Salvador were the “largest recipient of China’s non-reimbursable assistance.” In a clear message of support to President Nayib Bukele in his disagreements with the United States and autocratic decisions, Ou added that “China has never in the past nor will in the future use foreign assistance to interfere in the internal affairs of other countries, let alone for its own benefit.”
Nicaragua and Honduras are the most recent countries to have established diplomatic relations with China, doing so in 2021 and 2023, respectively. China has signed dozens of agreements across many sectors with these two countries.
China’s relationships with Nicaragua and Honduras can be seen as the clearest example of Chinese objectives in Central America. China has three goals: a) reinforce the isolation of Taiwan; 2) maintain influence and control over local elites who are willing to replicate China’s anti-Western narrative; and 3) strengthen the capacity of illiberal regimes to crush dissent and control the free press.
In addition, the populist regimes of Daniel Ortega, Xiomara Castro, and Nayib Bukele use their relationship with China to propagate massive social and economic welfare propaganda.
A Clientelist and Opaque Diplomatic Model
Notably, these leaders manage relations with China through their family networks. The bilateral agreements they are reaching with China are handled outside the Ministry of Foreign Affairs and along the way violate the rules of accountability established in their national legislation. The key actors in these diplomatic relations are Laureano Ortega, the son of President Daniel Ortega, in Nicaragua, and Rosario Murillo and Karim Bukele (the president’s brother) in El Salvador. In Honduras, the delegations that have traveled to China included the presence of President Xiomara Castro’s daughter and son. Hortencia Zelaya Castro, also a congresswoman, has been designated by her mother to oversee relations with the Chinese Communist Party.
The heavy involvement of leaders’ family members in shaping relations with China establishes a norm that Central American government make agreements with Beijing for their own personal gain, without the need to make these deals public and accountable.
Between December 2021 and March 2023, Nicaragua and Honduras signed almost 40 agreements on topics such as housing, transportation, trade, and telecommunications. These deals are opaque by design. For example, Expediente Publico detailed agreements between Honduran Telecommunications Company (Hondutel), and the Chinese company Huawei. The deals include a confidentiality clause to force the state-owned company to manage this new relationship in secret.
A similar opacity characterizes the infrastructure projects that China promises in Central America. Of nine projects in progress, five are “donations,” and the terms or conditions of the four loans are unknown. In addition, in at least six of the nine projects, civil society and local communities have alleged corruption and serious infrastructure defects.
China Is Strengthening Autocratic Regimes in Central America
Based on China’s track record in the region, Beijing’s increased presence in Central America should concern us. It will exacerbate abuses of power, corruption, and clientelist networks. We can also expect to see a notable increase in anti-Western rhetoric, as local elites who personally benefit from ties with China and pro-government media exaggerate the benefits of the Chinese model and discredit the values of liberal democracies.
Chinese state media Xinhua News Agency and China Global Television Network play a vital role in disseminating anti-Western narratives. Through a policy of sponsoring travel and scholarships to China for journalists, as well as signing cooperation agreements and providing on-the-ground training, Chinese state media and the Chinese Communist Party are transferring practices and experiences of propaganda, disinformation, and espionage against independent journalists.
The evidence shows that the presence and impact of China depends on the mechanisms and practices of accountability in partner countries. In countries with strong and independent institutions and where accountability, human rights, and an independent press prevail, increased ties with China could be beneficial. However, in countries where the norm is for the regimes to hide information, remain non-accountable, and crush public freedoms, the consequences will be dire: China will increase its predatory presence, strengthen illiberal regimes, and encourage the conflict narrative of these countries against the United States and the West.
With all this in mind, we need to pay attention to the next president in Guatemala and how relations with Taiwan evolve. An adviser very close to new president-elect Bernardo Arevalo told me in a private conversation: “What I know for sure is that he will not be the same type of president as Portillo, who received personal payments from the Taiwanese in exchange for his support. As you know, there is also the need to open markets for the country, and in this sense, I think they are going to be more practical and will analyze what is in the country’s best interest.”