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El Salvador Infrastructure and trade could benefit from Chinese tie

Monday, September 3, 2018

Support for infrastructure financing, investment attraction in agribusiness and light manufacturing, and technical assistance are some of the areas in which El Salvador could benefit, as a result of the eatablishment last week of diplomatic relations with the People’s Republic of China.

Infrastructure financing could increase as a result of China’s interest in expanding its Belt and Road initiative in Latin America.

The concept involves Chinese enterprises gaining access to markets in various parts of the world, following strategic investment by Beijing in key transport and logistics projects.

In El Salvador, China may be interested in developing the Port of La Union, which could compete with facilities in nearby San Lorenzo, Honduras.

Port construction in La Unión, located some 180 kilometers southeast of San Salvador, ended soon after the project was inaugurated in 2010.

Chinese investment in infrastructure and in Special Economic Zones could stimulate development in El Salvador, whose poor public finances have limited the participation of multilateral development banks.

The establishment of diplomatic relations between El Salvador and China could create an opportunity to expand exports and to obtain technical cooperation, especially in the area of agribusiness.

El Salvador’s main exports to China are coffee and sugar.

China last year established diplomatic relations with Panama.

Costa Rica in 2007 became the the first Central American country to transfer diplomatic relations to China from Taiwan.