China Signal - Sept 22
China/Venezuela restored, 3/4 bidders for Bogota metro are Chinese consortiums
G’day, and welcome to China Signal. Here’s what you need to know.
Diplomacy - Venezuela: Venezuela and China’s relationship has been restored, and may signal that Beijing wants to deepen their economic interests ahead of any loosening of US sanctions.
Diplomacy - Central America: China is now an observer to Central America’s parliament, after the body expelled Taiwan in August.
Infrastructure - Colombia: Three out of four bidders for Bogota’s second metro line are Chinese state owned consortiums.
Critical Minerals - Chile: Chinese firms will need to negotiate new copper contracts with state-owned Codelco from 2025.
Trade - Peru: Peru and China could have an updated FTA by mid-2024.
Plus more. Read on.
This is a new format. What do you think?
Diplomacy 🕊️
Venezuela 🇻🇪
Maduro and Xi met for the first time in five years, signing a range of cooperation agreements. This revives the bilateral relationship after Beijing’s frustration at Venezuela’s failure to repay debt.
This matters: There is speculation that Washington may ease Venezuela sanctions. Beijing may be trying to move first to reinforce their diplomatic relationship and seek commercial opportunities.
China upgraded its diplomatic relationship to an “all weather partnership,” a label shared only with select countries including Pakistan and Belarus. See Venezuela’s joint declaration here.
Details over the agreements signed aren’t known. State media outlet The Global Times described agreements spanning the economy and trade, education (more Confucius institutes), tourism, science and technology, and healthcare.
Avocado on toast. China’s customs authorities are expected to authorize Venezuelan avocado imports, commencing September 25, 2023. This would be a major break for Venezuela’s avocado industry.
According to The Global Times, Maduro “reiterated” Venezuela’s interest in joining the BRICS group. (Side note: Argentina recently joined - see TCS September 8)
China will help train Venezuelan astronauts to send to the moon aboard Chinese spacecraft, according to Maduro. Read more about China’s Lunar Research Station in TCS July 28. (RP, NRM)
Central America 🌎
Parlacen, a Central American representative body, has moved closer to Beijing after revoking Taiwan’s permanent observer status and granting status to Beijing.
The National People’s Congress, China’s legislature, will be an observer to Parlacen, a six nation representative body. Read the announcement by state-backed outlet Xinhua here.
The agreement was signed by Parlacen’s president Amado Cerrud, who was invited to Beijing by the National People’s Congress Standing Committee.
Nicaragua instigated Taiwan’s expulsion in August, arguing that "Taiwan lacks recognition as a sovereign state at the United Nations,” making its observer status “illegitimate.”
Guatemala is the only Parlacen member that recognizes Taiwan. (VV, MH)
Panama 🇵🇦
The PRC’s Deputy Minister of Foreign Affairs met with Panama’s acting foreign affairs minister, marking Beijing’s highest level visit to Panama since the covid pandemic.
Discussed: trade, technical exchanges, and migration. Read more in La Estrella.
Separately, representatives from China’s development agency were in country to assess development projects, believed to match proposals presented by Panama’s foreign ministry to Beijing in December 2021. (VV)
Infrastructure 🏗
Colombia 🇨🇴
Three Chinese and one Spanish consortium are cleared to bid in Bogota’s $6 billion metro line No. 2 tender. Bidding will open on September 29, and the tender awarded March 2024.
Per BNamericas:
Bidding for construction, operation and maintenance will advance in line with Inter-American Development Bank (IDB) rules…
…Financing will come from the European Investment Bank (EIB), the World Bank, the IDB and Latin American development bank CAF. The national government will contribute 70% of the funds.
The consortiums are:
Metro Línea 2 Bogotá: Mota Engil Colombia and state-owned CRRC subsidiary CRRC (Hong Kong) Co. Ltd.
Apca Metro Línea 2: China Harbour Engineering Company, Ltd. (“CHEC”) and Xi'An Rail Transportation Group. A consortium with these two companies is currently constructing the first metro line. Read TCS October 30, 2020 for more.
Apca Bogotá Metro 2: China Railway Construction Electrification and China Railway Construction Corporation International Investment, both China Railway Construction Corporation entities.
Unión L2 Bogotá Metro Rail: Sacyr Concesiones Colombia, Acciona Concesiones and CAF Investment Projects. (RP)
Critical Minerals 🪨🔋
Chile 🇨🇱
Chinese customers of Chile’s state-owned Codelco will need to renegotiate copper concentrate contracts beyond 2025, with Codelco expected to cease long term contracts.
China is the world’s largest copper ore and concentrate importer, accounting for 60% of global imports.
Chile and Peru are crucial copper suppliers: Almost 40% of Chinese copper ore and concentrate imports were from Chile and 20% from Peru in 2021.
Codelco produces 29% of Chile’s copper.
Codelco wants to expand its offering to more value-added intermediate products.
Chile was the world’s leading copper producer in 2021, producing 5.6 million metric tons. Chile’s copper output fell to 25 year lows in 2022 because of operational problems. Production is expected to decline further this year.
More via Reuters. (RP, MH)
Trade 🚢🚛
Peru 🇵🇪
Peru and China are working to “modernise” their Free Trade Agreement with a focus on the green economy, digital economy, and customs matters.
Peru’s trade minister hinted an updated agreement could be finalised by mid-2024. More here.
Separately, Peru’s president Dina Boluarte formally invited China to the 2024 APEC forum in Peru.
Boluarte met with China’s Vice President Han Zheng on the sidelines of the UN General Assembly in New York. (NRM)
Paraguay 🇵🇾
Paraguay, South America’s last Taiwan ally, wants to develop its green hydrogen industry to be a fertilizer supplier to the region, and they want Chinese investment.
Per the Taipei Times:
The Pena administration wants to diversify Paraguay’s US$43 billion economy that is heavily dependent on soy and meat exports by developing green hydrogen and expanding a manufacture-for-export industry that shipped goods worth more than US$1 billion last year.
Finance Minister Carlos Fernandez phrased his openness to Chinese entrepreneurial investment, and not from the state:
“I’m open to talking to any entrepreneur from China who wants to invest and create jobs in Paraguay,” Fernandez said in an interview with Bloomberg TV. “It’s not a question of China versus Taiwan. We are open to everyone.”
At the UN: President Santiago Peña expressed support for Taiwan to be re-integrated at the United Nations. That won’t happen. Read TCS July 14 and TCS May 5 for further Paraguay coverage. (RP, MH)
Military 🥁
Mexico 🇲🇽
A small, 15-person delegation from China’s People’s Liberation Army marched in Mexico’s Independence Day parade on September 16. The delegation visited the country for five days.
Military units from Russia, Venezuela, Nicaragua, El Salvador, Cuba, Ecuador, Colombia, Chile, Panamá, Nepal, Guatemala, Honduras, Korea, Brazil, Belize, Uruguay, and Sri Lanka also marched.
See state-run CGTN’s rosy coverage here. (VV, MH)