The China Signal - February 16
China Railway lands Chilean highway concession, Honduras wants Beijing's loans, Brazil signs yuan MOU, balloons
G’day, and welcome to The China Signal. This week, China Railway Construction Corporation lands a $600mm highway concession in Chile, China and Brazil sign a yuan MOU, Honduras pursues a credit line from Beijing for a hydroelectric dam - despite being allied with Taiwan, Colombia and Costa Rica’s muted response to the Chinese balloon saga, tactical equipment donated to Panama’s military, plus much more. Read on.
Infrastructure 🏗️
Chile 🇨🇱
China adds US$600mn highway concession to Chile infra portfolio | Bnamericas | February, 13, 2023
China increased its presence in Chile’s infrastructure sector after the government awarded the second concession of the Chillán-Collipulli stretch of route 5 to China Railway Construction Corporation (CRCC) with an investment commitment of around US$600mn over the weekend.
The decision follows the awarding of the Talca-Chillán stretch of the same road to CRCC in 2021 for US$851mn, meaning the firm will operate a continuous 364km stretch of what is Chile’s main north-south highway.
The first concession for the project was awarded on June 30, 1997 and ended on February 14, 2023.The second concession is part of a public-private alliance and included a citizen participation process between 2020 and 2021. This concession is expected to be completed by 2026. (NRM)
Finance 💸
Brazil 🇧🇷
China and Brazil agree to use yuan in cross-border transactions | Prensa Latina | February 8, 2023
The People’s Bank of China (PBOC) announced they have signed a memorandum of understanding with the Central Bank of Brazil (BCB) to expand the cross-border use of the yuan.
As explained in a brief communiqué, the agreement will facilitate the operations of companies and financial institutions of both countries, as well as bilateral trade and investments.
Yuan denominated trade has also been established in Argentina (see TCS November 21 for further background) and Chile. (NRM)
Honduras 🇭🇳
Honduras gestiona crédito con China pero mantiene lazos con Taiwán | El Heraldo | February 2, 2023
Honduras is negotiating with China for a credit line to build the Patuca II hydroelectric dam (Olancho department), but will maintain diplomatic ties with Taiwan, according to foreign minister Eduardo Enrique Reina.
Reina referred to his January 1 meeting with Chinese vice-chancellor Xie Feng (see TCS January 15 for further background), claiming it was “more than anything else, directed to the financing of Patuca II". No further details are currently available on what Chinese bank or government entity Honduras hopes to obtain the financing from.
China previously delivered the Patuca III dam project, which was inaugurated in January 2021 by then President Juan Orlando Hernández with a credit of some US$300 million provided by state-owned Export Import Bank of China.
The project was designed by Guiyang Engineering Corp Ltd., and constructed by Sinohydro Bureau 11 Co Ltd., both subsidiaries of PowerChina. Patuca III was the first time China directly funded a project in a country it doesn’t have diplomatic relations with. (RP)
Security 📡
Colombia 🇨🇴
Colombian military spots balloon-like object in its airspace | Reuters | February 5, 2023
A day before a U.S. military jet shot down a suspected Chinese spy balloon, Colombia's military confirmed a sighting over its territory of an airborne object similar to a balloon.
According to the Colombian statement, an "object" was detected over its territory at an altitude of 55,000 feet that had entered the South American country's airspace to the north moving at an average speed of 25 knots, or roughly 29 miles per hour.
Though the Colombian government did not make mention of China, the U.S. government has since confirmed that this was in fact another Chinese surveillance balloon transiting Central and South America. The Pentagon confirmed similar sightings over Venezuela. The Venezuelan government issued a statement on Sunday condemning the U.S. decision to shoot down the balloon over South Carolina.
Colombian officials stated they had been tracking the object while in transit and determined the balloon carried no significant threat to its national security. (VV).
Costa Rica 🇨🇷
On February 6, China apologized to Costa Rica for a balloon that flew over its territory, the Central American country's government said after a separate suspected Chinese spy balloon traveling over the United States sparked a major political and diplomatic spat.
…China's embassy in San Jose insisted the balloon was focused on scientific research, mainly weather studies. Chinese officials added that the balloon flight path deviated from its original plan and it had a limited ability to correct the error.
…The head of Costa Rica's civil aviation agency told local officials it had received reports of a balloon flying over the country on February 2, after Colombia's military issued a statement saying it had sighted an object similar to a balloon over its territory a day earlier (see news above). (RP)
Military Diplomacy 👮🏻🕊️
Panama 🇵🇦
~ Article above is paraphrased from Spanish ~
On February 10, Beijing's Ambassador to Panama, Wei Qiang, delivered 6,000 ballistic vests and 6,000 tactical helmets to the Panamanian Ministry of Public Security (MINSEG).
The National Air and Naval Service, and the National Border Service will receive 1,000 helmets and 1,000 bulletproof vests each, while the National Police will receive the other 4,000 helmets and 4,000 vests.
~
Beijing also donated an unspecified amount of logistical equipment to the Nicaraguan National Police last November (see TCS November 21 for reference). (RP)
Agriculture 👩🌾 + Commodities 🌾
Brazil 🇧🇷
China became the main destination of Brazilian corn exports in January by volume, surpassing traditional importers like Japan, Iran and Spain, according to revised trade data released by the government on Wednesday.
Brazil sold 983,684 tonnes to China in the period, the second full month of corn trading action following Beijing’s authorizations for Brazilian sales of the cereal in late November.
China and Brazil signed an agreement to allow corn imports in May 2022 to offset imports from Ukraine. In November 2022, the Chinese Customs Authority authorized more than 130 Brazilian cooperatives to export corn to China as part of an import diversification strategy. (NRM)
Uruguay 🇺🇾
Uruguay busca abrir el ingreso de carne aviar a China | Ámbito | February 3, 2023
Uruguay is promoting its poultry and equine products to the Chinese market. On February 3 Uruguay's Minister for Livestock Fernando Mattos visited various production plants with Chinese ambassador Wang Gang.
Mattos pointed out that the Uruguayan government is working with the Chinese General Administration of Customs (GACC) to obtain sanitary permits to export poultry and equine products to China. The National Meat Institute of Uruguay has been developing a poultry export strategy to China, Hong Kong and Saudi Arabia. (NRM)
Paraguay 🇵🇾
The governments of Paraguay and Taiwan signed an agreement that contemplates the trade promotion of surubí (a type of fish) salmon, boga, and shrimp. The estimated budget is $3.4 million. It is also expected to have the participation of Paraguayan universities and the technical mission of Taiwan to carry out the agreement. (NRM)
Natural Resources 🪨
Peru 🇵🇪
Peru unrest threatens copper supply | Financial Times | February 7, 2023
Widespread anti-government protests are disrupting copper output in Peru, the world’s second-biggest producer, triggering predictions of a further surge in prices for the metal.
Demonstrators demanding early elections and the resignation of President Dina Boluarte have thrown up roadblocks across the country and attacked mines, causing production slowdowns and closures in the Latin American nation’s copper operations, which account for about 10 percent of global supply.
Last week the Las Bambas mine, run by China’s MMG and responsible for nearly 2 percent of global production, halted output because of transport disruption hitting critical supplies.
Peru is the second-largest producer of copper in the world, and a third of Peru’s total mining investment portfolio is owned by Chinese firms. MMG’s Las Bambas copper mine has been hit hardest by regular blockades, impacting their production and power demand. See TCS April 4 (including our background on MMG Ltd.), as well as TCS April 23 & TCS September 28 for further Las Bambas mine coverage. (VV)
Trade 📊
Nicaragua 🇳🇮
~ Chinadaily.com.cn is a Chinese state-sponsored media outlet ~
On February 11, China and Nicaragua renewed the two countries’ will to reach a comprehensive Free Trade Agreement (FTA) in the coming months.
This commitment was made during a meeting between Wang Yi, director of the PRC’s Foreign Affairs Commission office, and Laureano Ortega, Nicaragua's coordinator for cooperation with China, who led a Nicaraguan delegation visit to Beijing.
~
After the two countries had signed a preliminary agreement, the so-called "Early Harvest Agreement" (see TCS September 9, TCS June 12, and TCS May 27 for further background), official talks for an FTA were due to begin last September. However, progress had stalled, for undisclosed reasons. Nicaragua joined the Belt and Road Initiative (BRI) in January 2022. (RP)
Taiwan Diplomacy 🇹🇼 🕊️
Guatemala 🇬🇹
Guatemala continues trying to build momentum for a “pro Taiwan” front with Taiwan’s 13 other diplomatic allies. In December 2022 Guatemala had announced plans to hold a summit for senior officials from these countries this March (see TCS December 30 for further background).
On February 8, Guatemala’s economic ministry met with Taiwanese ambassador Miguel Li-Jey Tsao, and a Taiwanese investment mission is expected to visit Guatemala in March. The mission is expected to be led by four representatives of large Taiwanese companies in the textile, shipping and electronics sectors. (RP)