China's free-trade talks with El Salvador reflect Beijing's inroads into US' 'backyard'
China and El Salvador have announced the commencement of free-trade talks, a snub to the Central American country's former ally Taiwan and a potentially new foothold for Beijing in a part of the world with strong historical ties to the United States.
Salvadoran President Nayib Bukele tweeted on Wednesday his country "will sign a free-trade agreement with China" after meeting with Beijing's ambassador to the country Ou Jianhong.
China's commerce ministry said on Thursday both sides hope to begin negotiations as soon as possible.
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"Since the establishment of bilateral ties, the two sides have reached important consensus at the head-of-state level to promote deepening all areas of trade and the economy and obtain rich results," the Thursday statement says.
"On this basis, to delve further into the potential of two-way cooperation ... China and El Salvador wish to start processes related to free-trade talks as soon as possible and make our utmost effort to finish those processes as soon as possible."
El Salvador firmara un Tratado de Libre Comercio con China :flag-sv::cn: https://t.co/dE44ClBqQy
- Nayib Bukele (@nayibbukele) November 10, 2022
El Salvador established diplomatic relations with mainland China in 2018 after breaking ties with Taiwan.
Beijing sees self-ruled Taiwan as a breakaway territory to be united with the mainland. Taiwanese officials say the mainland has used its economic clout to make Taipei's diplomatic allies switch recognition in Beijing's favour. Today just 14 countries recognise Taiwan diplomatically.
El Salvador had previously moved to scrap a free-trade deal signed with Taiwan in 2007, but a court suspended the effort in 2019 after a protest from the Central American country's all-important sugar industry.
"This is just part of a grand scheme to isolate Taiwan more and more," said Alex Chiang, a retired professor of international politics with National Chengchi University in Taipei. "The mainland has economic benefits to offer some of Taiwan's allies, and [Taiwan is] not in a position as strong as China."
The US has historically been Central America's chief trading partner due to geographic proximity, plus political and business interests that date back to the Cold War.
China's engagement with El Salvador "is definitely a warning to the Biden administration," said Wang Wei-chieh, a Taiwan-based foreign affairs writer.
In 2004, Washington signed a trade pact with five Central American countries - including El Salvador - and the Dominican Republic, agreeing to lower tariffs. Those nations together became the US' 18th largest goods trading partner, with US$57.4 billion worth of shipments going in both directions by 2018.
Chile, Peru and Costa Rica have free-trade deals with China and Beijing is talking to five other Latin American countries about future agreements.
US officials have been entrenched in a trade dispute with China since 2018 and curtailed hi-tech business between the two sides. Washington at the same time is avoiding new bilateral trade agreements with other countries, Wang said.
"The US should be more concerned, because Central America and South America are the backyard of the US, and China has made inroads in recent years," Chiang said.
Trade with El Salvador makes little economic impact on Taiwan or mainland China, Chiang said. The largely impoverished country with 6.5 million people and an annual gross domestic product of just US$32 billion exports sugar, coffee and seafood along with low-value manufactured goods.
But El Salvador can benefit from mainland China's capital and infrastructure expertise, Chiang said.
The presidential office in El Salvador tweeted on Thursday that China had donated 900 tons of wheat flour to small and medium-sized bakeries, saying it would "minimise the impact of the economic crisis for Salvadorans".
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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