BRI expands in Panama
In a series of moves that will undoubtedly worry the United States, Beijing is expanding its influence in Panama. China is the second-largest user of the Panama Canal and plans for alternatives like the Nicaraguan Canal are going nowhere yet, so Beijing wants a bigger say in this vital Central American country.
In June 2017 Panama switched diplomatic recognition from Taiwan to China, opening the way to more Chinese investments, trade, and local and regional meddling. In December 2018 China rewarded Panama with a 24-hour state visit by President Xi Jinping.
This started off a string of increasingly frequent visits and conferences, culminating in Panama hosting the ‘13th China-Latin America and the Caribbean Business Summit’ (China-LAC), from December 9 to 11. Over 600 Latin American and 400 Chinese companies were attending. Main topics: BRI, trade, and investments.
Like many of its neighbours, Panama wants in on China’s massive global scheme, advertising itself as a regional BRI hub for Chinese companies [China Panama ideal partners to spur BRI development]. Most of these companies are based in the Colon Free Trade Zone, the largest FTZ in the Americas located near the Atlantic entrance of the canal. Chinese companies started to arrive in 2010, with 50 businesses established today. Best known of the lot is Huawei, which has its regional distribution hub in the zone.
China Railways Corporation (CRC) has proposed a $4.1 billion plan for a 391-kilometer railway line running from Panama City to David, the capital of the province of Chiriquí, just 50 kilometres from the border with Costa Rica. The line includes 22 stations and five freight depots. CRC says it will take six years to build the railway. Panama hasn’t approved the project yet, but all signs point to a green light. The proposal is strongly backed by Beijing, with China offering full financing.
Shanghai Gorgeous, a seemingly private Shanghai-based investment company, has started work on two large projects in Colon. The first is the $900 million Colon Container Port on Isla Margarita, with 12 cranes and a capacity of 2.5 million TEU. The second is a $900 million LNG power generation plant, located near the container port. The plant will be completed next year with a capacity of 441 megawatts. Shell has been selected as the sole supplier of the plant and most of the LNG will be shipped from the United States.
Resources are in the picture as well. On December 9, China’s largest copper producer Jiangxi Copper spend $1.1 billion for an 18% stake in First Quantum Minerals, a large Canadian miner [First Quantum shares jump after China's Jiangxi Copper takes 18% stake]. First Quantum Minerals owns 90% of Cobre Panama, a 136 square kilometre open-pit copper mine located in Colon province. Production at the mine started in 2017 and will reach a full capacity of 375.000 tonnes per year in 2021.
Finally, in trade news, Panama recently started exporting pineapples to China. The pineapples hail from fields around the city of La Chorrera. Exports mount to 12.5 containers per week now and will go up to 100 weekly containers of pineapples in 2024. In China, the Panamanian pineapple will mainly compete with imports from the Philippines.
Ports, copper, railways and pineapples. All ingredients are there for ever-increasing Chinese influence in Panama.
By Tycho de Feijter
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