The news in Panama these days is largely focused on two main topics: the 2019 Panamanian presidential election, and China. It’s not a coincidence, either. The two topics have a lot to do with each other, and for good reason. This past year, Panama made a bold move by agreeing to a series of economic and diplomatic partnerships with China, effectively ending their long-standing relationship with Taiwan (China’s historic enemy). While the move has caused a lot of controversy and debate, it is a clear step towards economic strength for the future of Panama. Here are four reasons why this is the case.
1. Increased Trade:
Trade between Panama and China isn’t new, but it has always been tempered by Panama’s trade relationships with other countries, and diplomatic restraints due to the Taiwan connection. With a new diplomatic relationship comes new trade deals, and that means lots of business for the logistics, import, and export markets in Panama. Panama can now import with better prices from China, and increase exports to the Chinese market, which will give them better leverage for future export deals with other nations.
The Chinese market for exterior tourism is the fastest growing in the world. Chinese tourists have lots of liquid capital to invest in travel, and many are choosing western countries as their prime destination. Panama intends on capitalizing on this by marketing tourism campaigns directly at the Chinese, and facilitating travel with new airline routes, Chinese guides, Chinese language tour options, and many types of tourism options for them while in Panama. This will bring in major revenues for the Panamanian tourism companies and ancillary businesses all over the country, who have suffered in recent years from a slump in visitors and visitor spending.
3. Infrastructure Investment:
Aside from trade, the largest economic impact of the Chinese increasing their presence in Panama will be their investment in the country’s infrastructure. Chinese companies are vying for major proposals to modernize Panama’s bridges, highways, and city infrastructure, which will help modernize Panama for the future, and facilitate more efficient business and quality of life options for Panama’s residents. This will also provide many jobs for Panamanians, as the majority of project labor must be done be locals, by law.
4. Betting on the Future:
No matter how you feel about it, it’s impossible to ignore the presence of China as an economic power of the future. China’s growth has been staggering, and done so fast, that for many not following closely, may even come as a shock. China is set to take the #1 global spot as an economic world power; a place they may not lose for a long time. This is why countries around the world are scrambling to see how they fit into this new economic picture (and model). There’s risk involved, however, which Panama is aware of. By betting on China, Panama may hurt diplomatic relations with the US, which could echo itself in trade as well. Panama is confident that it can weather through this, and that ultimately it can have a positive relationship with both countries. For now, though, Panama is betting big on China, and they seem to be pleased with it.