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PRC Engagement with Central America – An Update

R. Evan Ellis
R. Evan Ellis CEEEP

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Central America has become a strategic area for China's activities both because of 
its proximity to the United States and because of the economic, commercial and 
logistical momentum developed in recent years. Likewise, this region is important to 
expand Chinese geopolitical influence on the case of Taiwan, due to the interest of 
President Xi Jinping who wants to politically put this country under his control before 
the end of his third term in 2027. The Asian nation is taking advantage of the leftist 
governments in Central America to accentuate its international political position, 
achieving changes in the diplomatic recognition of Taiwan to the People's Republic 
of China by nations such as Panama, El Salvador and Nicaragua, a situation that is 
increasing tensions with the United States, the same that defends the sovereignty of 

Keywords: China, Central America, Taiwan, governments, influence.

The Chinese spy balloon that overflew Costa Rica2 at the beginning of February 2023, 
among others, was a reminder of engagement by the People’s Republic of China 
(PRC) with Central America, strategically in the proximity of the United States.
From the perspective of trade and investment volume,3 expanding PRC activities in 
the Western Hemisphere over the past 20 years have concentrated in South 
America. Nonetheless, Central America is arguably also important strategic terrain 
for the PRC in the region, both because of the enduring relationships of its member 
states with Taiwan, and because of its geography. Central America is important not 
only because of its proximity to the United States, but also due to features important
to both commercial and wartime logistics, such as the Panama Canal. 
With respect to Taiwan, three of the 14 states in the world that continue to 
diplomatically recognize the Republic of China (ROC) are located in the region, and
all of the rest have changed relations only in recent years. Although Central America 
as a potential market for PRC goods in itself is modest, access by companies 
operating in the region to expedited, largely tariff-free access to the nearby US 
market through the Central America and Dominican Republic (CAFTA-DR) free trade 
agreement. In addition, the Central American nation of Panama plays a key role as