The China Signal - March 26
Colombia courts China, CRCC wins Chilean highway concession, U.S. response to illegal fishing gains momentum
G’day, and welcome to The China Signal! There is a lot going on this week: vaccine diplomacy in Colombia, as the country’s ambassador to the UN in Geneva praises China’s human rights record; Paraguay accuses Chinese vaccine intermediaries of a diplomatic quid pro quo; CRCC wins a highway infrastructure concession in Chile; a U.S. response to Chinese illegal fishing quietly gathers momentum; plus much more. Read on.
Vaccine Diplomacy
Colombia 🇨🇴
On March 20, 2021 local time, the third batch of COVID-19 vaccines provided by China arrived in Bogota, the capital city of Colombia. At the invitation of Colombian President Ivan Duque, President Xi Jinping delivered a video speech to the Colombian people.
Xi Jinping pointed out "even mountains and seas cannot distance people with common aspiration." The vast Pacific Ocean cannot stand in the way of the profound friendship between the Chinese and Colombian people. Over the past 41 years since the establishment of the diplomatic ties between the two countries, the China-Colombia relations have achieved historic development. China has become Colombia's second largest trading partner and China-invested enterprises actively participate in Colombia's development in various fields. Cultural and people-to-people exchanges between the two sides are flourishing, and the China-Colombia friendship is deeply rooted in the hearts of the two peoples.
It’s “interesting” then to see the below statement from Alicia Arango, Colombia’s Ambassador to the United Nations in Geneva on March 15. This occurred after President’s Xi and Duque’s phone call on February 25, and before the arrival of the third Sinovac shipment and video from Xi Jinping on March 20.
~Paraphrased Translation~
“Colombia applauds China’s advances in human rights”
Alicia Arango, Colombian ambassador to the United Nations (UN) in Geneva, Switzerland, applauded China's advances in human rights on March 15.
"Achieving high standards for the promotion, protection and guarantee of all human rights is a challenge that we all face. This is why we find merit in the interventions and the advances in human, economic and social rights in the People's Republic of China" said the former minister during a meeting of the sessions of the UN Human Rights Council.
The ambassador also highlighted that they have improved the living conditions of their population, as well as "maintaining social stability and reducing poverty."
"China has shown an unquestionable spirit of international cooperation and solidarity for timely and safe access to vaccines against covid-19," she said in her speech.
Alicia Arango, embajadora ante la Organización de Naciones Unidas (ONU) de Colombia en Ginebra, Suiza, aplaudió el 15 de marzo los avances en derechos humanos de China.
"Alcanzar los altos estándares de promoción, protección y garantía de todos los derechos humanos es un desafío que enfrentamos todos. Es por esto que encontramos mérito en las intervenciones sobre los avances en materia de derechos humanos, económicos y sociales en la República Popular de China", sentenció la exministra durante una reunión de las sesiones del Consejo de Derechos Humanos de la ONU.
La embajadora además resaltó que han mejorarado los niveles de la condición de vida de su población, así como "mantener la estabilidad social y la reducción de la pobreza"."China ha mostrado un espíritu de cooperación y solidaridad internacional incuestionable para un acceso oportuno y seguro de las vacunas contra el covid-19", puntualizó en su intervención.
This is significant. After thinking further and discussing this with several TCS readers in Colombian political circles, the fact that one of the United States’ strongest partners in the region would say this reflects three things:
Material necessities and political self interests trump preferences. Colombian President Iván Duque was under significant political pressure to procure vaccines earlier this year, as it became apparent that the WHO’s COVAX vaccine program was moving slowly, putting Colombia well behind the region’s vaccine roll-out. China was available to provide vaccines quickly.
While the U.S.-Colombia relationship isn’t in doubt, it is undergoing a frosty patch in the first months of the Biden Administration, following the Duque Administration’s overt political support of Donald Trump for re-election in 2020.
Despite the strong Colombia-U.S. bi-lateral history, even Colombia is following a rational hedging strategy, playing the U.S.-China rivalry to get what the country needs. Most immediately this centres on vaccines, but in the medium term it will increasingly transition to foreign investment to drive economic development.
Paraguay 🇵🇾
Paraguay Says Offers of Chinese Vaccine Tied to Dumping Taiwan - Bloomberg - March 24, 2021
The Paraguayan government has been approached with offers of Chinese-made vaccines in exchange for breaking ties with Taiwan, the country’s foreign ministry said in a statement earlier this week. The ministry said that the offers were made by individuals “whose legitimacy and ties to the government of the People’s Republic of China are not proven.”
Foreign Minister Euclides Acevedo vowed in a radio interview Monday to not bow to pressure, according to local news site Hoy. “We are not going to accept them telling us, ‘We sell the vaccines, but they break relations with Taiwan,’” Acevedo said.
I can’t judge the validity of the claims made by Foreign Minister Acevedo, however there are some clear domestic political incentives at play here. Accusing these Chinese actors of a vaccine-diplomatic recognition “quid pro quo” is certainly a convenient deflection from Paraguay’s dire lack of vaccines.
Taiwan to help allies buy vaccines, but not from China | Reuters - March 24, 2021
[Taiwan’s Foreign Minister Joseph] Wu told parliament they will help their allies buy the vaccines they need.
“But one of the conditions is that Chinese vaccines cannot be bought. Or, if you buy Chinese vaccines, then you cannot use our Taiwanese money,” he added.
Chile 🇨🇱
To me, a key determinant of China’s vaccine diplomacy in the region is understanding the efficacy of the vaccines against the most threatening covid-19 variants, and the contractual length of these vaccine arrangements. This is the first I’ve read of multi-year commitments with Sinovac in the region.
~Paraphrased Translation~
“Sinovac vaccines - China’s new ‘soft power’ bet”
To give an example, Chile, who today is the most successful country in the region, of the 13 million doses it has available to inoculate its population, 12 million are Sinovac. The country will receive 20 million doses per year over the next three years, to a total of 60 million doses.
Por poner un ejemplo, en Chile, que es hoy en día el país más exitoso en su campaña de la región, de las 13 millones de dosis que tiene disponibles para inocular, 12 millones son de Sinovac. El país recibirá 20 millones al año en los siguientes tres años, hasta un total de 60 millones.
Infrastructure
Chile 🇨🇱
CRCC wins concession for section of Chile's Route 5 highway | The Asset - March 24, 2021
China Railway Construction Corporation (CRCC) has won the concession for the Talca-Chillan section of Route 5 highway in Chile, the State owned Assets Supervision and Administrative Commission of the State Council (SASAC) announced on March 18.
This is the first time that a Chinese company has successfully bid on a public-private partnership (PPP) project in Chile. The Chilean Ministry of Public Works, through the General Directorate of Concessions, said other bidders included two consortia led by Spanish companies Sacyr Concesiones Chile SPA and the CINTRA-Intervial consortium.
I’ve chatted with several academics (and TCS readers) about Chinese infrastructure firms in the region in recent weeks. This successful bid fits with the evolution of many Chinese companies in the region as their presence deepens and matures, as they adopt PPP models and utilise commercial banks for financing.
The highway section totals 195 kilometres, and is scheduled to be completed within eight years, with total investment amounting to around US$800 million. Talca is located around 250 kilometres south of the capital city Santiago.
Another source says construction is due to begin in 2025.
Chile uses 15 Chinese-made trains to revamp railway service - China.org.cn - March 24, 2021
*China.org.cn is a state sponsored media outlet.
Chile's government on Tuesday unveiled 15 Chinese-made trains as one of the "most important milestones" in an ambitious plan to revamp the country's cargo and passenger railways.
The fleet, tailor-made with an investment of 87 million U.S. dollars for the lines they will serve, will benefit 1.2 million people, Transport and Telecommunications Minister Gloria Hutt said during the presentation of the trains at Central Station, the country's main railway stop located in the capital Santiago.
According to Hutt, the state-of-the-art trains will operate on the Biotren, Corto Laja and Victoria-Temuco lines in southern Chile's Biobio and La Araucania regions, doubling the current speed of train travel and offering "a very high standard for moving people."
The consortium comprising Chinese company CRRC Sifang and Chilean firm Temoinsa won the tenders to build new trains for Biobio and La Araucania in 2018 and 2019. The trains arrived in the South American country in two separate shipments in February and March.
Diplomacy
Inter-American Development Bank 🏦
Cyber attack tied to China boosts development bank's chief - Associated Press - March 22, 2021
In curtailing China’s influence, Claver-Carone is looking to curry favor with Democrats who question his leadership but share his mistrust of Beijing. If he succeeds, they can help him deliver on what was the main pledge of his unorthodox candidacy: U.S. support for a capital increase so the bank can help the region dig out from a pandemic-induced recession that’s the worst in more than a century.
There are early signs he may be making some headway. This month, a bipartisan group of five lawmakers led by Sen. Bob Menendez, head of the Senate Foreign Relations Committee, proposed legislation authorizing an $80 billion capital increase that would boost lending at the Washington-based bank by 60%.
On paper, China has a minuscule 0.004% of the IDB’s voting shares, the smallest stake of any of the bank’s 48 members. But membership has been a cheap way for China to expand its reach in Latin America. Chinese companies are able to bid on IDB-financed projects, rub shoulders with political leaders and pick up valuable economic intelligence that would be harder to acquire on its own.
China is also the second-largest non-borrowing shareholder in IDB Invest, the bank’s private lending arm, with nearly 6% of shares, thanks to a reorganization in 2015 when the Obama administration refused to pony up additional resources and saw the U.S.’ stake diluted to 13%.
The IDB also manages a $2 billion fund made up entirely of contributions from China. Over the years the IDB also hosted more than a dozen business summits connecting Latin American entrepreneurs with Chinese investors.
Rebecca Ray, a Boston University economist who tracks China’s investment in the region, said the touchy politics around China can be a double-edged sword. While Claver-Carone’s attempts to isolate Beijing may play well in the U.S. Congress and help him secure additional funding it could ultimately end up undermining the IDB’s mission at a time of great need for financing to build infrastructure, improve health care and reduce poverty in the region.
She noted that as the IDB has lagged other multilateral institutions in securing more funding, three Latin American countries — Brazil, Ecuador, and Uruguay — have joined the Asian Infrastructure Investment Bank, China’s answer to the World Bank and one which the U.S. opposes.
Colombia 🇨🇴
“Hurricane Iota: China donates $500,000 for reconstruction”
Huracán Iota: China donó 500 mil dólares para la reconstrucción | RCN Radio - March 18, 2021
~Paraphrased translation~
The Minister of Foreign Affairs Claudia Blum, received a $500,000 donation from the Government of the People's Republic of China to support the response of the National Government to the emergency generated by Hurricane Iota after its passage through the Archipelago of San Andrés, Providencia and Santa Catalina, in November last year.
Foreign Minister Blum reiterated her gratitude for the generosity of the Chinese Government in this emergency, highlighting that the Asian country is a strategic partner and friend of Colombia.
La ministra de Relaciones Exteriores Claudia Blum, recibió por parte del Gobierno de la República Popular China una donación de 500.000 dólares para apoyar la respuesta del Gobierno Nacional, en la atención a la emergencia generada por el huracán Iota tras su paso por el Archipiélago de San Andrés, Providencia y Santa Catalina, en noviembre del año pasado.
La Canciller Blum reiteró su agradecimiento por la generosidad del Gobierno Chino en esta emergencia, resaltando que el país asiático es un socio estratégico y amigo de Colombia.
Illegal, Unreported or Unregulated Fishing
United States 🇺🇸
U.S. considers coalition with South America against China's illegal fishing - Axios - March 23, 2021
The U.S. should consider leading a multilateral coalition with South American nations to push back against China's illegal fishing and trade practices, a U.S. intelligence agency has recommended in a document obtained by Axios.
Why it matters: China's illegal fishing industry is the largest in the world. Beijing has made distant-water fishing a geopolitical priority, viewing private Chinese fishing fleets as a way to extend state power far beyond its coasts.
A senior U.S. administration official confirmed to Axios that several agencies across the government are "taking a look at this in light of the president's priorities," which include "deepening cooperation with allies and partners on the challenges we face to our economy and national security."
This is a theme that could gain traction in the Biden Administration, according to a TCS reader with knowledge on the matter. They wrote to me saying:
"Over the past 10 years, China's IUU fishing has been slowly but steadily receiving more attention as an issue within the U.S. government bureaucracy. So far, it is specialists in various U.S. agencies, not political appointees, who are driving the momentum. This means that U.S. concerns about China's IUU fishing have not been politicised domestically and thus could potentially be fertile ground for the Biden administration to pick up as a positive area for global leadership and multilateral cooperation."
This was echoed in an exchange I had with Dr. Tabitha Mallory, Founder and CEO of China Ocean Institute, and Affiliate Professor at the Henry M. Jackson School of International Studies at the University of Washington. Dr. Mallory also provided comment in the original Axios article. She stated that:
The effort on the part of the U.S. government to address IUU fishing is not just rhetorical. The Maritime SAFE Act received funding in the last iteration of the National Defense Authorization Act, and an interagency working group of 21 U.S. government entities has been set up to further address this issue. Latin America is a priority area, and countering IUU fishing is a promising area of engagement because most people can agree that it poses threats to the environment, food security and people's livelihoods. In that regard, it beats the drug war for bringing people together!
Addressing IUU fishing even has wide bipartisan support domestically in the United States at a time when we seem to disagree on everything else here. My hope is that the issue may also contribute to improving U.S.-China relations. Despite the real challenges, China is nonetheless taking some steps to rein in IUU fishing, and merely attacking them is not a constructive approach -- they do need to be a part of the conversation if we're going to solve the problem.
To go much deeper (pun intended) on China’s IUU fishing off the coast of South America, Dr. Mallory and Dr. Ian Ralby’s October 2020 article on the Galapagos is terrific.
Military
Argentina 🇦🇷
TCS reader Ralph Espach of CNA gives an excellent overview of the broader, long-term strategic dynamic between Argentina and China.
A New Great Game Finds the South Atlantic - War on the Rocks - March 22, 2021
In March, the South Atlantic witnessed an unusual scene: a U.S. ship turning around and sailing for home, having been refused docking rights and services by the Argentine Ministry of Foreign Affairs. From January to March, the U.S. Coast Guard deployed one of its newest cutters, the USCGC Stone, to the South Atlantic, with the mission to strengthen maritime security relations and help curb illegal fishing — predominately Chinese — off the South American coast. This was the Coast Guard’s first such regional deployment in over a decade, and its first three-quarters were a success, training and cooperating with the maritime forces of Guyana, Brazil, and Uruguay. In Argentina, however, the mission hit a snag when the government refused to provide the dock services that are routine for such a visit.
There is a clear economic rationale for China’s investments in Argentina, a nation rich in agriculture, beef production, minerals, and maritime resources. But Beijing may also have long-term strategic calculations in mind: the securing of access to two continents and two seas.
When the Antarctic Treaty comes up for renegotiation in the 2040s, those claims, as well as resource rights, will all be on the table. Buenos Aires may well bet that by 2040, Beijing could be just the superpower partner it needs to back its case against Britain. China, after all, sympathizes with grievances against territorial claims that are vestiges of a long-dead British Empire. For years, China has backed Argentina’s case against the United Kingdom at the G-77 summits of the United Nations.
But as is the case across Latin America, Argentina’s partnership with China is not without problems. Critics blame China for undermining Argentine manufacturing, promoting corruption, spreading COVID-19, and devastating Argentine squid stocks. All of South America was shocked by the summer 2020 spectacle of a mostly Chinese, 270-ship distant-water fishing fleet hoovering up millions of tons of fish just outside — and sometimes within —the Galapagos Marine Reserve, and then down the Peruvian and Chilean coastlines. In January, the bulk of that fleet, which uses transshipments and oceangoing suppliers to evade regulation, slipped through the Strait of Magellan into the South Atlantic, where Argentina has struggled for years to curb illegal fishing. Over the past decade, Argentina has had at least three dangerous altercations with Chinese trawlers. In one, a Chinese fishing vessel sank after it tried to ram an Argentine coast guard ship. Yet each year brings more Chinese fishers.
Trade
El Salvador 🇸🇻
TCS reader Evan Ellis’ latest overview of China in the region focuses on El Salvador.
China and El Salvador: An Update | Center for Strategic and International Studies - March 22, 2021
The PRC’s most significant advances in El Salvador occurred under the media-savvy, Washington-friendly centrist government of Sánchez Cerén’s successor, Nayib Bukele. After a very positive visit with U.S. president Donald Trump in August 2019, Bukele proclaimed El Salvador’s friendship and alliance with the United States—but traveled to the PRC just four months later for a state visit with President Xi Jinping. During this visit, Bukele signed a series of MOUs in which China promised El Salvador $500 million in development projects, including a sports stadium and a new $40 million national library in San Salvador, a new tourist pier in La Libertad, $85 million to improve water treatment facilities in La Libertad and Ilopango, and $200 million to support Bukele’s “Surf City” project, which seeks to transform El Salvador’s Pacific coast into a beach vacation destination. During this meeting, the Chinese government also invited El Salvador to participate in its Belt and Road Initiative, to which the Salvadoran government has made no formal commitment. Nor has the PRC recognized El Salvador as a “strategic partner,” as it has done with 10 other states in the region.
In addition to putting out the red carpet for President Bukele, insiders familiar with the matter note that the PRC also reportedly considers the president’s brother Karim an important figure in the relationship. The PRC and individual Chinese investors have also been active in courting Salvadoran mayors and local officials, who have become particularly vulnerable to such influence due to Covid-19’s detrimental effect on Salvadoran municipalities.
The Sánchez Cerén government in El Salvador may have hoped that recognition of the PRC would facilitate more Salvadoran exports to China, but the opposite occurred. In 2018, the year El Salvador switched relations from Taiwan to the PRC, its exports to the country experienced a temporary jump to $85.5 million but then fell back to $51.9 million in 2019. On the other hand, El Salvador’s imports from the PRC almost doubled after forging diplomatic ties, from $920 million to $1.640 billion—but unlike its exports to the PRC, its imports continued to rise, reaching $1.723 billion in 2019. In other words, rather than create new opportunities for El Salvador, the principal effect of recognition on trade was to subject its market and producers to greater competition from China. By 2019, El Salvador was importing from the PRC more than 33 times the value of what it was exporting.
Venezuela 🇻🇪
China Buys More Iranian and Venezuelan Oil, in a Test for Biden - WSJ - March 19, 2021
China’s oil purchases from Venezuela, where the U.S. has been trying to use sanctions to pressure the Maduro regime into holding credible democratic elections, also are growing, according to London financial data provider Refinitiv.
Rising oil shipments to China, Iranian and Venezuelan officials said, followed Mr. Biden’s offer of relief to Iran in return for the country’s compliance with an international nuclear agreement and to Venezuela if it organized free elections.
Meanwhile, Iran has helped Venezuela by supplying petroleum products, selling diesel and other critical energy needs in exchange for Venezuelan oil and gold. That oil is then sold off in global markets, yielding revenue for Iran and reinforcing Mr. Maduro politically.
5G
Chile 🇨🇱
With the United States and China at odds over cybersecurity and data protection, Chile, which counts both countries as top trade partners, will keep doors open to any company that adheres to its strict rules, Telecommunications Undersecretary Pamela Gidi told Reuters.
“As long as (the regulations) are respected, we neither have nor are we going to influence the supply chain nor the nationality of the companies,” she said.
The blistering two-year timetable would put Chile well ahead of regional neighbors, and Gidi said she hoped it would attract Amazon Web Services. The Amazon.com Inc unit has long toyed with the idea of installing a southern cone data center in Chile or Argentina.
WOM, a mobile telephone brand launched by London-based investment firm Novator Partners, won a government tender in February to establish a 5G spectrum in Chile, in addition to Spain-based Movistar and the Chilean telecoms firm Entel.
Chilean market analysts have speculated that WOM will hire Huawei, a leader in the sector, to provide the necessary technology.