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Honduras - China Relations

The new leader in Honduras had threatened before the election that she would sever diplomatic relations with Taiwan and switch to establishing diplomatic relations with China. However, after the elections in Honduras in November 2021, the team around the new President Xiomara Castro stopped repeating this position in public.

Honduran president-elect Xiomara Castro's team promised that the Central American nation's diplomatic ties with Taiwan will remain unchanged, Foreign Minister Joseph Wu said 08 December 2021, despite Castro's statements during her campaign that she would switch recognition to China if she won. "After the election, our embassy in Honduras established contact with the campaign staff [of Castro] and the vice president-elect," Wu said during a Legislative session. "They gave us their word that the diplomatic ties [between the two countries] will not be affected," Wu told lawmakers.

Castro was set to officially assume office on Jan. 27, 2021, according to Wu, though he did not say if Taiwan would be sending a delegation to attend her inauguration ceremony. Castro's victory in the Nov. 28 presidential election meant she would become the nation's first female president. However, Castro's upcoming presidency could potentially end the 80-year diplomatic relationship between the Republic of China, the official name of Taiwan, and Honduras. The 62-year-old wife of ousted former Honduran President Jose Manuel Zelaya had said during her campaign that she would switch diplomatic relations to China if she won, though one of her close aides later said no final decision had been made.

The PRC does not have diplomatic relations with Honduras, and has no military to military contact. Honduras maintained diplomatic relations with the Republic of Taiwan, and Tegucigalpa maintains a sister city relationship with Taipei. In 2021 Taiwan and Honduras celebrated the 80th anniversary of their diplomatic relations. Honduras, one of the last 15 countries and regions to keep diplomatic ties with the island of Taiwan under US pressure, actually has increasingly shaky relations with the DPP authority. In May 2021, Honduras asked El Salvador for help to get vaccines from the Chinese mainland as it was hit by shortages amid the COVID-19 pandemic.

On 23 June 2021 representatives of the Government of the Republic of China (Taiwan) gave authorities of the Ministry of Foreign Affairs of Honduras a new donation for the execution of the second stage of the institutional strengthening and modernization project of that Secretariat of State. The donation, which amounted to almost 15 million lempiras, was delivered yesterday by the Ambassador of Taiwan in Honduras, Diego Wen and received by Vice Foreign Minister Karen Najarro, representing the Foreign Ministry. The donation will allow the execution of the second stage of the modernization project, which includes the remodeling of offices and the modernization of furniture. The donation project is the result of the cooperation agreements reached at the XVII Meeting of the Joint Cooperation Commission between Taiwan and the countries of the Central American Isthmus.

Honduras had no significant public or private sector ties to the People's Republic of China (PRC). Honduran business community and public opinion reflect great concern regarding the increasing influx of Chinese goods on the Honduran market, which could displace locally made products. In addition, the vitally important maquila sector faces ongoing price competition from the PRC in apparel and textile sales to the United States, and feared that Chinese competition will alter the Honduran industry in the near future.

According to Honduran Secretary for Commerce and Industry (SIC) in 2003, total Honduran exports to China totaled only USD 1.9 million. Silver was Honduras, number one export to China (USD 1.3 million), followed by aluminum (USD 333,677). In that same year, Honduras imported USD 28.8 million in Chinese goods and services. Available data didn't clearly break down which products were imported, with USD 15.9 million in imports classified as &other8 (likely consumer products). Of the remaining imported products, Honduras bought USD 1.2 million in dried fish, USD 1.2 million in mussels and shellfish, and USD 1.1 million in fresh cheese from China.

The PRC Xinhua News Agency reported total 2004 Honduran imports of Chinese goods as USD 123 million. In the first 5 months of 2005, this amount increased by 23 percent over the first 5 months of 2004. Meanwhile, Honduran exports to China in all of 2004 totaled USD 11.7 million, while already in the first five months of 2005 total exports increased by 173 percent to USD 10.8 million.

While total Honduran imports from the PRC are increasing quickly, they represented only 3 percent of total imports in 2004. In comparison, Honduras imported USD 1.358 billion (35 percent) from the United States. This figure excludes inputs for re-export by the maquila sector, which represent another half a billion dollars in U.S. goods exported to Honduras. As technically offshore entities, these businesses do not officially import goods, and the value added from maquila production is booked in the "services" account.

By 2005 tere was significant concern within the business community about the increasing influx of Chinese goods to the Honduran market, which was believed would come to displace locally made products. Honduran businesses were equally concerned about market share in their export markets, particularly the U.S. Industries as varied as tool manufacturers, artisan shop owners, shrimp farmers, and textile manufacturers cite China as the number one obstacle to U.S. market penetration. These fears are exacerbated by U.S. press attention on increased Chinese influence in the U.S. economy.

Industry leaders recognizedg areas in which they can compete with China for U.S. market share. For example, "full package" maquilas expected to compete with China based upon time-to-market advantages and by offering full-service, vertically-integrated production to prospective clients. Most industry representatives expressed doubt, however, about the continued viability of companies that do not find and foster these types of economic advantages. Honduran industry and government officials remained publicly optimistic that Honduras, industry will remain competitive on the world stage.

Greater China organized crime groups may have a limited presence within the country. They have been involved in smuggling of PRC Chinese immigrants into the country since around 1990. Since January 2002, an estimated 50 illegal Chinese immigrants per month have entered the country. From January 2005, those numbers increased to about 75 - 100 per month. Approximately USD 2,500 in corrupt payments are made to Immigration for the documentation in each case. The evidence suggests that the Chinese organized crime groups are tied into Chinese restaurants and small Chinese-owned businesses.

The Peoples Republic of China (PRC) appeared to be attempting to extend its influence into the Central American region at the expense of Taiwan. The left-of-center ideological shift of the Zelaya administration provided the PRC opportunities to gain a foothold in Central America. Personal issues with the current Taiwanese Ambassador and enormous financial development money may succeed in diminishing Taiwan's footprint and influence. President Zelaya did not personally meet with the Taiwanese delegation directly when they were here for his inauguratio and he asked for the replacement of the current Taiwanese Ambassador, due to an apparent concern over his level of influence within the country and closeness to the outgoing Maduro Administration. These actions seemed to show an Administration floating trial balloons about a possible change of recognition from Taiwan to the PRC.

In 2019, China exported $1.19B to Honduras. The main products that China exported to Honduras were Coated Flat-Rolled Iron ($115M), Broadcasting Equipment ($90.1M), and Motorcycles ($43.2M). During the last 24 years the exports of China to Honduras had increased at an annualized rate of 16.1%, from $32.8M in 1995 to $1.19B in 2019. In 2019, China did not export any services to Honduras. In 2019, Honduras exported $31.7M to China. The main products that Honduras exported to China were Knit Sweaters ($8.79M), Knit T-shirts ($7.58M), and Lead Ore ($2.89M). During the past 24 years the exports of Honduras to China increased at an annualized rate of 28.1%, from $82.9k in 1995 to $31.7M in 2019.

In September 2021, Xiomara Castro, presidential candidate of the opposition, said she would sever ties with the island of Taiwan, abide by the one-China principle, and establish diplomatic relations with the Chinese mainland if she won the election. Taiwan authorities in charge of foreign affairs issued a statement to warn Honduras against "flashy and false" promises by the mainland, adding that it is a usual trick to undermine ties between Taiwan and its "allies".





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Page last modified: 12-12-2021 18:53:51 ZULU