China Signal - February 27
BYD pushes into Uruguay and Brazil, 5G stalls in Costa Rica, China Energy wins contract in Honduras
G’day, and welcome to The China Signal. Here’s what you need to know:
Electric Vehicles - Uruguay and Brazil. BYD has launched its low-cost passenger EV in Uruguay and Brazil.
5G Telecommunications - Costa Rica. A Costa Rican court has suspended the awarding of 5G contracts while it reviews the government’s decision to exclude Huawei and other foreign companies as 5G providers.
Electricity - Honduras. China Energy has won a major electricity contract in northern Honduras.
Infrastructure - Chile. XCMG has launched a financing entity to fund machinery purchases for infrastructure development.
Influence and disinformation - Latin America. Two groups have analysed global Chinese online influence operations, with ties to Latin America. Prevalence is growing, but effectiveness remains muted.
Plus more. Read on.
Electric Vehicles 🚗🔋
Uruguay 🇺🇾 & Brazil 🇧🇷
BYD's launch of the $20,100 Seagull in Uruguay and Brazil signifies the Chinese EV industry’s ambition to grow its market share in Latin America’s passenger vehicle market, potentially reshaping industry standards and consumer preferences.
BYD's Seagull is the cheapest EV offered in South America, setting a new affordability benchmark.
As Latin American countries grapple with environmental challenges and seek sustainable growth pathways, China's expanding footprint in the region's EV market through BYD could drive broader adoption of green technologies.
BYD had the third largest EV market share by sales volume as of late 2022 (10.4%), behind Tesla (13.9%) and market leader Volvo (17.5%). (IB, MH)
Telecommunications 📲📡
Costa Rica 🇨🇷
A Costa Rican court suspended the government's exclusion of Huawei as a 5G provider, halting the award of contracts for 5G infrastructure until further evidence is reviewed. This was in response to a decree issued by President Rodrigo Chaves in August 2023 on concerns over cybersecurity and foreign influence.
The court measure was requested by the Internal Workers’ Front (“FIT”), a group of unions within the state-owned electricity and telecommunications provider, Costa Rican Institute for Electricity (“ICE”). (NRM, MH)
Electricity ⚡️
Honduras 🇭🇳
Honduras’s National Electric Energy Company (“ENEE”) has awarded an electricity generation contract to state-owned “Energy China” - presumably China Energy Engineering Corporation - worth approximately US$125 million to deliver 80 megawatts until 2026.
Two sources quoted in the article by Tiempo obliquely suggest that Energy China may have been the only bidder, and that details of the contract’s award process were not known.
The project will take place in San Pedro Sula and La Ceiba in northern Honduras, according to the article. (NRM, MH)
Infrastructure 🏗️
Chile 🇨🇱
State-owned heavy machinery company XCMG launched their financing leasing company XCMG Finance Chile S.A. in Santiago. This marks a significant step in XCMG’s strategic expansion in the South American financial sector, as a major participant in China’s Belt and Road infrastructure projects. The company aims to offer financing to clients in Chile, Peru, Colombia, and Argentina for equipment acquisitions for mining, infrastructure, and construction projects.
This follows another financing entity Banco SCMG S.A. that was established in Brazil in 2020. (MH)
Colombia 🇨🇴
China’s ambassador to Colombia Zhu Jingyang has forcefully rejected accusations that a Chinese consortium building a metro line in Bogota has been inefficient and veered off contractual guidelines. Tensions broke into public view when project manager Metro de Bogotá criticised the Chinese group, ML1, who is constructing the line, for inefficiencies and requested a management change. The Chinese consortium emphasized its commitment and expertise. (MH)
Healthcare 🏥
Taiwan 🇹🇼- Belize 🇧🇿
On February 16 Belize's Prime Minister and the Taiwan Overseas Engineering and Construction Company (OEC), inked a US$16 million contract to build a hospital in San Pedro Town and Caye Caulker. A Taiwanese government grant is funding the project. No further details on the hospital’s construction timeline were published. (NRM, MH)
Bahamas 🇧🇸
In contrast, the Export-Import Bank of China is financing a $290 million “Nassau Health Campus” hospital, featuring a 250-bed maternal and child hospital. The loan is reportedly at a 2% interest rate. No other terms were disclosed. (MH)
Influence and Disinformation 🎭
Broader Latin America 🏔️🌴
Efforts by Chinese state media to expand its influence in Spanish-speaking countries through YouTube have not had their intended impact. Despite producing and publishing tens of thousands of videos, most have garnered few views and have failed to significantly engage viewers, according to Chilean think tank “Centro de Análisis para la Democracia.
The think tank’s findings were:
CGTN focuses on amplifying Beijing’s policies to international audiences, Xi Jinping’s statements, and competition with the United States.
Xinhua is more regionally focused, emphasizing ties between China and Latin America.
CCTV via Hola China distributes Chinese documentaries and dramas.
These agencies focused on emphasizing China’s infrastructure and economic development, emphasizing “poverty alleviation” in Xinjiang, and Chinese culture. Disinformation, conspiracy theories, and other falsehoods were also perpetuated.
Content from Russian, Cuban, Venezuelan, and Mexican state media was also promoted at times through 2023. (IB, MH)
A Citizen Lab's report has revealed a network of at least 123 websites operated from China disseminating pro-Beijing disinformation. Brazilian and Mexican audiences were most heavily targeted in Latin America, with other websites also aimed at readers in Argentina, Ecuador, Colombia, and Chile. Although the websites have received little traffic, they could gain traction through intentional or inadvertent amplification by local media outlets and readers.
The websites were designed to mimic local news outlets, distributing content that aligns with Beijing's geopolitical interests.
This initiative demonstrates a sophisticated approach to influence operations, leveraging cultural and linguistic nuances to enhance the credibility of pro-Beijing narratives within the region.
Citizen Lab attributes the campaign to Chinese public relations firm Shenzhen Haimaiyunxiang Media Co., Ltd., also known as “Haimai.” (MH)
Trade 🚢💴
Mexico 🇲🇽
Chinese exports ultimately bound for the United States are increasingly routed through Mexico, according to reporting by the Financial Times. This aligns with trends reported in The China Signal through 2023. This could place increased scrutiny on the US-Mexico trade relationship under a potential Trump presidency in 2025.
Per the Financial Times:
Figures from Container Trades Statistics, analysed by Xeneta, show the number of 20ft containers shipped from China to Mexico hit 881,000 in the first three quarters of 2023, the most recent period for which data is available, up from 689,000 in the same period of 2022.
The automotive sector has seen particular growth in China-Mexico trade:
Figures from INA, Mexico’s trade body for auto parts suppliers, show that 33 Chinese-owned companies with Mexican operations sent $1.1bn worth of parts to the US in 2023, up from $711mn in 2021. Mexico imported almost $9bn in vehicle parts from China last year, INA said.
Cars imported to the US from Mexico are subject to a 2.5 per cent US levy, while parts put together in Mexico incur a tariff of 0 per cent to 6 per cent.
By contrast, cars and auto parts imported directly from China pay an additional 25 per cent levy under the regime introduced by Trump and maintained under Biden.
The United States’ Alliance for American Manufacturing, an industry lobby group, is publicly pushing Washington to block China-origin auto imports from Mexico, according to Reuters. Pressure for restrictions like this are likely to grow under a second Biden or Trump administration. (MH)
Chile 🇨🇱
Chilean steel producer Compañía Siderúrgica Huachipato (“CSH”) closed one of its factories last week, equivalent to 10% of its total steel output. Executives said surging imports of Chinese steel were partly to blame for the company’s inability to pay off its growing debts. Chile’s state commission on price distortions (“CNDP”) is investigating CSH’s accusations that Chinese companies are dumping steel in the Chilean market.
According to statements executives made to a Senate committee last year, domestic steel consumption grew 3.4% since 2006, while Chinese steel imports have increased by 800%.
CHS’ products support Chilean copper mining. State-owned miner Codelco was a large client through the pandemic, when Chinese steel was curtailed. (MH)
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