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China continues to face economic headwinds, marked by reports this week of a protracted property slump. To address its mounting economic and financial challenges, Beijing is implementing new industrial policies to boost growth-promoting industries and ensure widespread exports of electronic vehicles (EVs), solar equipment, batteries and other high-tech equipment and services. The effects of China’s attempted economic recalibration has already reverberated across the Latin American and Caribbean region, as many countries see new interest from Chinese companies in emerging industries. Countries like Brazil, Chile and Mexico are well-positioned to receive high-tech investment and trade and have so far been top destinations for Chinese companies. However, Central America’s role in this new equation is increasingly uncertain.
The region has been a focus of targeted Chinese engagement for many decades, particularly related to China’s decades-long diplomatic competition with Taiwan. In recent weeks, talk of new Chinese engagement with Nicaragua has surfaced. But most Central American nations are ill-prepared to attract and carry out the sorts of investments that Chinese companies are now promoting across the region. Central America’s relative importance to a changing China should be of particular interest to Guatemala and Belize, Taiwan’s remaining allies in Central America, as both weigh the benefits and risks of future diplomatic alignment with Beijing.
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