The China Signal - June 16
Honduras/China, spy base in Cuba, $9 billion natural gas investment in Brazil
G’day, and welcome to The China Signal. This edition, Honduras’ President Xiamora Castro visits China, a Chinese spy base in Cuba, Petrobras announces a $9 billion natural gas investment with Sinopec and Equinor, Peru investigates Cosco after landslide near Chancay Port construction site, plus much more. Read on.
Diplomacy 🕊️
Honduras 🇭🇳
On June 12, China and Honduras signed 17 agreements as part of Honduras’ President Xiomara Castro’s inaugural state visit to China from June 9-14. Honduras will also join the Belt and Road Initiative (BRI).
The agreements cover trade, agriculture, telecommunications, infrastructure, science, and technology. The Honduran government also hopes to gain membership to the New Development Bank (NDB).
Since Honduras broke off relations with Taiwan earlier this year (see TCS March 29 for further background), the two countries have notably expressed mutual willingness to begin talks on a Free Trade Agreement (FTA). Honduras is seeking access to the massive Chinese market starting from products such as coffee, shrimp and melon, while China aims to encourage Chinese enterprises to participate in Honduras’ energy, infrastructure and telecommunications projects.
Meanwhile, Honduras’s ENP (Empresa Nacional Portuaria) signed an agreement with China Harbour Engineering Company (CHEC, see TCS April 8, 2022 for further background) to build two bridges, refurbish San Lorenzo port on the Pacific coast and widen a highway. The projects’ estimated accumulated value sits at US$269 million.
Honduras also appointed their first ambassador to China:
~ Global Times is a Chinese state-sponsored media outlet ~
…Honduran President Xiomara Castro announced …Salvador Enrique Moncada as the first ambassador of Honduras to China.
…Salvador Enrique Moncada is a famous pharmacologist and medical researcher in Honduras. Moncada once oversaw work at the Wolfson Institute of Biomedical Research at University College London and researched cancer at the University of Manchester.
On June 5, China inaugurated its embassy in Honduras. (RP; NRM)
Cuba 🇨🇺
China Has Had a Spy Base in Cuba for Years, U.S. Official Says | The New York Times | June 10, 2023
A Chinese spy base or facilities in Cuba that could intercept electronic signals from nearby U.S. military and commercial buildings have been up and running since before 2019, when they were upgraded, according to a Biden administration official.
The official, speaking on the condition of anonymity to discuss sensitive intelligence, said the spy base was an issue that the Biden administration had inherited from former President Donald J. Trump. (...)
The statements come after The Wall Street Journal published a report on June 8th, stating that there is a "secret agreement" between Cuba and China to establish a spy base.In response, Bruno Rodriguez, Minister of Foreign Affairs of Cuba, officially stated that there is no espionage base on Cuban territory and that the accusations are unfounded.The alleged espionage base is located on the outskirts of a Cuban town called Bejucal, approximately 187 kilometers from Key West, Florida.
Reuters visited the site and published a report on June 14: read it here. (NRM)
Suriname 🇸🇷
Possible government visit to China in preparation | Suriname Herald | May 11, 2023
~ This quote has been paraphrased from Dutch ~
A Surinamese government delegation, which will include the local Minister of Foreign Affairs, Albert Ramdin, will visit China later this year.
No further details were released at the time. This news follows a series of meetings between senior officials from the two countries. It is likely that a Surinamese state visit to China will involve debt restructuring talks between Suriname and the Export-Import Bank of China, which is a lender to at least 6 infrastructure projects in Suriname. (RP)
Taiwan Diplomacy 🕊️🇹🇼
Paraguay 🇵🇾
Vice Foreign Minister Yui meets with President-elect Peña in Paraguay | Taiwan News | May 18, 2023
Taiwan's Deputy Foreign Minister Alexander Yui (俞大㵢) visited Paraguay on May 17-19, shortly after Paraguay’s election results were announced. During the visit, Taiwan's ambassador to Paraguay, José Chih-Cheng Han, announced efforts to expand organic product exports from Paraguay. As part of the agreement, Taiwan will provide technical assistance and access to its markets.
However, Paraguay's president Santiago Peña indicated that he would not look to diminish Paraguay’s trade relationship with Beijing, who, despite not being official diplomatic partners, remain Paraguay’s largest supplier of goods and raw materials. (NRM)
Oil & Gas⛽🛢️
Brazil 🇧🇷
~ Xinhua is a Chinese state-sponsored media outlet. This article has been paraphrased from Spanish ~
On May 8 Brazilian state oil company Petrobras announced a US$9 billion investment alongside Spanish-Chinese Repsol Sinopec and Norwegian Equinor to produce natural gas off the coast of Rio de Janeiro.
Production is expected to begin in 2028, and it is slated to produce 126,000 barrels of oil and 16 million cubic meters of natural gas per day. A new gas pipeline will connect the producing platform with Macaé on the country’s north coast.
Background: Repsol Sinopec 🔍
Repsol Sinopec was founded in 2010 to jointly develop exploration and production projects in Brazil. Natural gas accounts for two-thirds of Repsol Group's reserves and production. For further background on Sinopec, see TCS April 23, 2022. (NRM)
Venezuela 🇻🇪
Venezuela and China reviewed their bilateral cooperation in hydrocarbons, according to Rafael Tellechea, president of state-owned company Petróleos de Venezuela (PDVSA). The announcement was made on May 25 following a meeting with Lan Hu, China’s ambassador to the country.
The meeting follows similar announcements with Vietnam and Russia, as Venezuela seeks to build cooperation in the energy sector. Venezuela also signed a Memorandum of Understanding (MoU) with Iran on June 12 “to increase bilateral trade to $20 billion, up from $3 billion” by expanding cooperation in petrochemicals. This MoU was one of 26 agreements in sectors such as “economy and trade, technology, and science”. (RP)
Trade 📊 + Finance 💸
Ecuador 🇪🇨
Ecuador and China have signed a free trade agreement, deepening ties between the Andean nation and the world’s second-biggest economy. The deal would boost Ecuador’s non-oil exports over the next 10 years by $3bn-$4bn, or as much as a third, according to the trade ministry.
The deal allows preferential access for 99 percent of exports to China, the government said, in particular agricultural and agro-industrial products including shrimp, bananas, cut flowers, cocoa and coffee.
The deal still needs to be ratified by Ecuador’s national assembly and is currently on hold due to the muerte cruzada decree promulgated by President Lasso on May 17. The trade agreement can only be ratified by the legislature, and will continue to be delayed until there is a new Assembly.
For more information on the Free Trade Agreement, see TCS May 5 & TCS January 15. (VV)
Peru 🇵🇪
~ This article has been paraphrased from Spanish ~
On the 13th anniversary of the China-Peru Free Trade Agreement, the two countries will resume negotiations for an optimization of the deal, the head of Peru’s Ministry of Foreign Trade and Tourism (MINCETUR) announced on May 23.
Between May 30 and June 2, “a delegation of 10 Peruvian officials will arrive in Beijing …to focus on trade facilitation and customs aspects, and trying to strongly incorporate e-commerce and all digital issues”, said Mathews during the event "Thirteen Years Peru-China FTA: analysis and trade and investment results".
…This will be the fifth round of negotiations for the optimization of the trade agreement between Peru and China, with the last being in September 2019 …[Mathews expressed confidence] "to close the process this year”. (RP)
Bolivia 🇧🇴
Bolivian leader open to using yuan for trade, touting 'trend' | Reuters | May 10, 2023
Bolivia's President Luis Arce expressed openness to utilizing the Yuan for Chinese imports during a press conference on May 10.
If President Arce makes this move, Bolivia will become the third country in Latin America to use the Yuan as an alternative currency to the US dollar in international trade and as a reserve currency. In March the Yuan surpassed the dollar for the first time in history as the most widely used currency for cross-border transactions in China.
On June 10th, reports emerged that Bolivia and China are exploring opening branches of Chinese financial institutions in the country. China’s ambassador to Bolivia, Huang Yazhong, explained the consideration is driven by the lack of US dollars in Bolivia, which makes foreign trade difficult between both nations.
In February Brazil began settling trade and investments in yuan, and in April Argentina announced it would start paying for Chinese imports in yuan. Argentina’s renminbi currency swap line was doubled to $10 billion in May, according to a statement from Argentina's Central Bank on June 2nd. (VV)
Natural Resources 🪨
Bolivia 🇧🇴
Bolivia and China near ending multi-million credit contract | Prensa Latina | May 12, 2023
~Prensa Latina is a Cuban state-sponsored media outlet~
The Bolivian Minister of Mining and Metallurgy, Ramiro Villavicencio, and a delegation from China's Eximbank are finishing details of the signing of a loan for the construction of a zinc refinery in Oruro.
The delegation arrived in Bolivia early May and visited the properties where the Zinc Refinery will be located. The delegation met with representatives of the Vinto Metallurgical Company (EMV) and representatives of the Vice Ministry of Public Investment and External Financing (VIPFE).
According to Villavicencio, the Bolivian government needed to "guarantee [a stable supply of] water, energy and natural gas.”
For more background on the $350 million Oruro zinc refinery project, see TCS March 8. (VV)
Potential bidders surface in US$1.3bn Bolivia petchem project call | BNamericas | May 31, 2023
Four groups have submitted inquiries to Bolivia’s state hydrocarbons company YPFB in the engineering tender for the proposed US$1.29bn second ammonia and urea plant [in Bulo Bulo, Cochabamba department].
The potential bidders for the 180-day pre-FEED (front end engineering and design) work include China National Petroleum Corporation (CNPC), Kempetro Engenharia, Procentek and Tecnimont México, procurement information shows.
Initially established for June 7, the deadline to present proposals for the contract was then extended to June 14. No further details about the bid’s outcome have been made public yet. YPFB estimates that the new plant’s capacity will be double that of the existing one, and enable Bolivia to increase supply to export markets such as Brazil, Peru, Paraguay and Argentina, and support new offtake abroad. (RP)
Peru 🇵🇪
The Peruvian unit of Chinese firm Chinalco should start construction on its delayed US$1.3 billion expansion project at the Toromocho copper mine in southern Peru by the end of June, the division’s executive said on May 23.
The president of Chinalco Peru, Xudong Zhang, said that he expects the Peruvian government to approve the necessary paperwork in the next 30 days for the project in the Andean region of Junin, which began operations a decade ago.
…The Toromocho expansion project was announced in 2018, but delays in official permits and the coronavirus pandemic put the brakes on its development.
Toromocho, among the five largest producers of the red metal in the country, produced some 244,712 tons of copper in 2022 …the Toromocho expansion would allow Aluminum Corp’s Chinalco to increase current production by 20% …“40,000 tons of copper contained in concentrates per year, in addition to current capacity”.
Infrastructure 🏗️
Peru 🇵🇪
Peru probes China's COSCO Shipping Ports after construction site landslide| Reuters | May 17, 2023
Residents of Peralvillo, Chancay, where Cosco Shipping Company is carrying out megaport works reported that houses in the area were damaged due to the collapse of a piece of land which are part of the project on May 17. Peru's Prosecutor's Office announced preliminary investigations into the Cosco’s role in the event.
Citizens of Chancay have demanded government presence after the incident, pointing out that damage has happened before.
The Chancay megaport project plays a crucial role in trade between South America and Asia. In the near future, it will become a major regional hub for cargo redistribution. The port is expected to be operational by 2024. The Chancay megaport is expected to serve as a key gateway to the Pacific Ocean, and will be heavily used by Peruvian, Chilean, Ecuadorian, and Colombian traders.
For further details about some of China’s infrastructure projects “falling apart,” read this report from The Wall Street Journal. (NRM)