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New confrontation in Panama: China reaches out, US increases pressure

BA (according to Tin Tuc Newspaper) January 17, 2025 21:39

Beijing’s efforts to expand its influence in Panama, which hosts the Atlantic-Pacific canal, have faced some setbacks, partly due to pressure from the United States.

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Ships wait to pass through the Panama Canal on September 10, 2023.

There's talk of a high-speed rail line that China will build in Panama. A new subway line in Panama City. A modern container port.

China has been working to build ties and influence in Panama for years, part of its larger ambition to expand its footprint in Latin America. Its efforts have had some successes, but also many setbacks.

China's Ambitions to Expand Influence

In 2017, China scored a diplomatic victory when Panama severed diplomatic relations with Taiwan/China, and instead recognized Beijing.

Panama was previously one of the few countries in the world to recognize Taiwan as a sovereign state.

The following year, Panama became the first Latin American country to sign on to the Belt and Road Initiative, Chinese leader Xi Jinping's signature global infrastructure program aimed at expanding China's geopolitical power and countering US influence.

A series of ambitious promises followed. China proposed building a 400km high-speed rail line from the Panamanian capital to the western border with Costa Rica. Beijing also offered to help build a new subway line in Panama.

A consortium of Chinese companies, led by Landbridge, has also begun developing a container port that promises to be Panama's most modern.

A Chinese state-owned company also won a $1.4 billion contract to build a fourth bridge across the Panama Canal. Finally, the two countries said they would negotiate a free trade agreement.

Beijing has made it clear that it wants to cement its support in Panama City. In early 2018, while visiting Panama, a Chinese official told then-President Juan Carlos Varela that “the establishment of diplomatic relations with Panama was China’s most important diplomatic achievement in 2017.” Later that year, Xi Jinping became the first Chinese leader to make an official visit to Panama.

China has also stepped up soft power efforts, opening Confucius Institutes to promote Chinese culture and language, and donating health care supplies during the Covid-19 pandemic.

Resistance from the US

But as China’s influence grew, so did U.S. pressure on Panama. After Mr. Varela left office, his successor, Laurentino Cortizo, suspended the proposed railway project. Trade talks stalled.

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Both the US and China have a special interest in Panama, which owns the strategic Panama Canal.

The Panamanian government revoked Landbridge's rights to the container port project in 2021, after an audit found that the company had violated the terms of its contract, invested less money and employed fewer local workers than promised.

However, China has also had some success. Panama's new president, José Raúl Mulino, has revived the railway idea, and Chinese companies have made it clear they want to get involved. Construction of a fourth bridge across the Panama Canal has resumed after a pause.

In 2021, Hong Kong's CK Hutchison won a 25-year extension of control of two ports at the entrance to the canal. CK Hutchison is a publicly listed conglomerate whose largest owner is a Hong Kong billionaire family.

It is not a Chinese state-owned company. But Beijing has tightened its grip on Hong Kong in recent years and has the power to compel private companies to comply with its demands in the name of national security.

Long-term vision in Latin America

Panama is a particular focus of China's attention because of the canal's strategic value, but the country is also trying to expand its influence across Latin America.

Beijing has positioned itself as an alternative to the US in global leadership, seeing itself as a country more “sympathetic” to the needs of developing nations like itself.

China is now the top trading partner of the South American region and the second largest trading partner, after the United States, for Latin America as a whole.

In response to President-elect Donald J. Trump’s accusations, Chinese officials have denied having any interest in violating Panama’s sovereignty or intervening in the country to serve its own interests.

They said China would always respect the canal as a permanently neutral international waterway.

Chinese scholars have denounced US concerns about Beijing's growing presence in Latin America as smear campaigns.

Zhou Bo, a retired colonel of the People's Liberation Army and now a senior fellow at the Center for International Security and Strategy at Tsinghua University in Beijing, said Mr Trump's recent remarks about the Chinese military's presence in Panama were so absurd that it was "not worth Beijing's specific response".

“China has many investments all over the world. They are not limited by region, or whether it is ‘America’s backyard’,” said Zhou Bo.

Cui Shoujun, director of the Latin American Studies Research Center at Renmin University in Beijing, expressed confidence that China's relationship with Panama will continue to develop, despite US efforts to hinder it.

BA (according to Tin Tuc Newspaper)
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New confrontation in Panama: China reaches out, US increases pressure