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Chinese beachhead

Tuesday, April 29, 2014


 

China is becoming increasingly active in Central America, no doubt for business reasons, and maybe also to establish a strategic beachhead in the Americas.

The latest initiative involves a special zone in Costa Rica, from which Chinese producers could export products duty-free to the United States, under the terms of a free-trade agreement between the two countries.

Zone companies could bring inputs from China to Costa Rica free of duty, since the two countries have had a free trade agreement since 2011.

Costa Rica is the only Central American country, which has such a deal with China.

The two countries have yet to finalize a deal, which this week was presented in San José.

Meanwhile, Chinese companies are involved in several projects to build an inter ocean canal in the region.

Three projects – in Guatemala, Honduras and Mexico – would build a rail connection between the Atlantic Ocean and the Pacific.

A Nicaraguan project involves a waterway, which would be bigger than the Panama Canal.

Some of these initiatives involve private Chinese states companies.

But it is hard to imagine that the Chinese government is not behind these companies, given their lack of experience in logistics.

Beijing may not like the idea of the United States supporting Japan, Philippines and Vietnam, in claims for resources under the South China Sea, which Beijing says is part of its territorial waters.

China may want to send a message, by establishing a beachhead, in a territory, which Washington has long claimed as part of its area of influence.