El Salvador Cane Sugar and Coffee Become Popular in China

El Salvador established diplomatic relationship with China in 2018, opening a new chapter in the history of bilateral relations. Since the establishment of the diplomatic relationship, bilateral relations have been growing steadily, with frequent reciprocal visits of high-ranking officials between the two countries. The cooperation has achieved fruitful results in the realms of politics, trade, the economy and cultural humanities.

Bring more infrastructural programs to El Salvador after joining the Belt and Road Initiative

Ou Jianhong, China’s Ambassador to El Salvador, said that the establishment of diplomatic relations between China and El Salvador means that El Salvador has a new candid friend in the international community. For China, it has a new partner that supports China’s peaceful reunification.

El Salvador President Nayib Bukele said that the new El Salvador government is committed to working with China in all aspects. This bilateral cooperation will have a bright future.

According to El Salvador, on the year of establishing diplomatic relations, the trade volume between China and El Salvador reached USD 1.738 billion, up by 16.3% year on year. El Salvador’s export to China reached USD 85.89 million, up by more than 80%. According to the latest data released by Huajing Industry Research Institute, between January and November of 2022, bilateral trade between China and El Salvador reached USD 1.749 billion, up by 11.8%. China’s export to El Salvador reached USD 1.53 billion, up by 12.5%; China’s import from El Salvador reached USD 219 million, up by 7.2%.

The bilateral cooperation between China and El Salvador is not only limited to the national level, as exchanges and cooperation between provinces and cities of the two countries have also developed rapidly. For example, Beijing and Hangzhou have signed agreements of friendship cities with San Salvador, the capital of El Salvador, setting a precedent for city exchanges between the two countries and also a good example for the bilateral exchange of the two countries.

Salvadorean Foreign Minister Carlos Castaneda pointed out that El Salvador has always maintained an open attitude in its foreign policy, seeking diversified, unbiased and unconditional diplomatic relations in the fields of the economy, culture, trade, science and technology, and investment cooperation. No country in the world today can stand outside the tide of globalization, and El Salvador also hopes to have a place in the multi-polar world. He stressed that since the establishment of diplomatic relations between China and El Salvador, there have been more than 178 countries in the world that have established diplomatic relations with China, which shows that this is the trend of the times.

Regarding the Belt and Road Initiative proposed by China, Carlos Castaneda said that the Belt and Road Initiative is an important program put forward by China for improved globalization. The infrastructure construction projects under the Belt and Road framework will connect land and sea, and will facilitate economic and trade exchanges between countries and regions including Latin America.

^uLatin America is the natural extension of the 21st Century Marine Silk Road. As part of the Belt and Road initiative, El Salvador will see more investment and infrastructure programs,” said Carlos Castaneda.

According to El Salvador, on the year of establishing diplomatic relations, the trade volume between China and El Salvador reached USD 1.738 billion, up by16.3% year on year. El Salvador’s export to China reached USD 85.89 million, up by more than 80%

Trade and economic cooperation between China and El Salvador continues to grow

Roberto Lorenzana, Secretary of communication of the president house of El Salvador, said that although it has just been several years since the establishment of diplomatic relations between China and El Salvador, there has been a long history of bilateral economic and trade exchange. Regarding bilateral trade, El Salvador normally faces a trade deficit, but since 2015, El Salvador’s export to China has been growing fast. Ren Hongbin, Chairman of the CCPIT and the CCOIC, has led a group of Chinese entrepreneurs to visit El Salvador recently. When visiting Nayib Bukele in San Salvador, Ren Hongbin said that since the establishment of diplomatic relations between China and El Salvador, the mutual political trust has been deepened and pragmatic cooperation has yielded fruitful results. The CCPIT is willing to further strengthen cooperation with relevant departments of El Salvador, build more high-quality platforms for deepening cooperation between enterprises of the two countries, and promote economic and trade relations between China and El Salvador to a new level.

Bukele said that there is still great potential for economic and trade cooperation between China and El Salvador. He welcomed Chinese enterprises from agriculture, transportation, finance, tourism and other industries to invest in El Salvador. The CCPIT will play an important role in promoting the economic and trade cooperation between the two countries. The Salvadorean side will organize enterprises to participate in important economic and trade activities such as the China-LAC Business Summit, and support the CCPIT to hold trade exhibitions in El Salvador, so as to further improve the economic and trade cooperation between the two countries and achieve winwin results.

Gomes Gôchez, President of PROESA, said that he welcomed Chinese enterprises to carry out trade and investment in El Salvador, and hoped to work more closely with the CCPIT, to jointly promote the negotiation of free trade agreements and achieve more practical results of cooperation between China and El Salvador.

Maria Luisa Hayem, the Economic Minister of El Salvador, said that El Salvador^ exports to China in the agriculture, technology and food industries has great potential. She hoped to make full use of the platforms like the China-LAC Business Summit to improve cooperation between enterprises of the two countries.

In recent years, the economic and trade exchanges between El Salvador and China have increased rapidly, and people of both countries have benefited from the flow of goods and investment. At the economic level, the economic projects, technical exchanges and experience sharing have been greatly promoted. According to a relevant survey, there are more than 20 kinds of complementary trade products between China and El Salvador, including the main export of El Salvador, cane sugar. Nearly 30% of El Salvador’s sugar exports go to China, and on top of that, El Salvador is able to provide China with food, drinks and primary products, which will also promote the development of El Salvador.

“In terms of agricultural trade cooperation, El Salvador needs more innovative achievements and technical support. As a large modern agricultural country, China has rich experiences in agricultural production and can help us increase the added value of agricultural products through technology transfer, thus promoting the development of our country,” said David Martinez, Minister of Agriculture of El Salvador.

The Minister of Tourism of El Salvador Valdez said that El Salvador is seeking to build a competitive tourism destination, and is willing to work with the CCPIT to promote tourism resources and projects of El Salvador. He welcomes more Chinese tourists to visit El Salvador.

El Salvador has rich tourism resources, including natural scenery, vibrant towns and Mayan cultural relics. Tourists can choose coffee tours, ancient town tours, and even medical and beauty tours. The diversity of tourism resources makes El Salvador a popular tourist destination for Chinese people. In October 2022, China and El Salvador agreed on the mutual exemption of visas.

Be alert to investment risks

In order to further tap the potential of bilateral economic and trade cooperation, China and El Salvador announced the launch of the negotiation of the China-El Salvador Free Trade Agreement in November 2022. The signing of a free trade agreement is another important result of bilateral economic and trade cooperation, which will lay a solid foundation for the sustainable development of bilateral relations.

“China is the world’s second largest economy and a country with a huge market of 1.4 billion people. It is a rare opportunity to carry out free trade cooperation with China. El Salvador is very happy to jump on the express train of China’s deveiopment,” Bukele said.

When talking about policies to attract Chinese investment, Maria Luisa Hayem said that the existing laws of El Salvador can protect the interests of Chinese investors and provide them with favorable conditions regarding tariffs, municipal service and regional rules and regulations etc.

“At present, we are still promoting the formulation of new laws, which will give more preferences to Chinese enterprises. The purpose is to let Chinese enterprises play a positive role in regional investment and trade development in the Pacific region. This makes El Salvador a window of the Central American countries, through which Chinese investment enters Central America Hayem said.

Lorenzana said that China has been growing rapidly in the past few decades, and El Salvador hopes to learn from China’s experiences. Such learning is not limited to the economic field, but also includes science, technology, trade and education.

At present, China is encouraging more enterprises to invest in El Salvador, connecting China’s capital, technology and capacity advantages with the market resources of El Salvador. However, there are still risks in such investments.

Most importantly, the economic situation in El Salvador is not good. Having been affected by the COVID-19 pandemic since 2020, the economy of El Salvador has suffered the most severe contraction in 40 years, with a GDP decline of 9%. The national poverty rate climbed to 30%, and public debt surged to 90% of GDP. Fitch Ratings pointed out that “El Salvador’s growing dependence on short-term debt has increased financing risks”.

China is the world’s second largest economy and a country with a huge market of 1.4 billion people.