China sends US expert to Panama
Is China changing its diplomatic approach in Central America?
Summary:
Xu Xueyuan has been appointed China’s Ambassador to Panama
Previously, Xu was the Deputy Chief of Mission at the Chinese Embassy in the US
China and Panama established bilateral relations in 2017 and ties initially developed rapidly
After Panama’s 2019 election, China struggled to make any further progress
2024 will see another election in Panama, however it is unlikely that the current status quo will change
Xu’s appointment indicates that China wants an ambassador in Panama that has more experience dealing with the United States
On 11 March, Xu Xueyuan arrived in Panama to assume her new post as ambassador. Previously, Xu had been serving as Deputy Chief of Mission at the Chinese Embassy in the United States.
Xu’s predecessor, Wei Qiang, had been serving as ambassador since 2017. He was China’s first Ambassador to Panama and had been appointed not long after bilateral relations were first established.
Evan Ellis, who is a research professor of Latin American studies at the US Army War College, once described Wei Qiang as one of China’s ‘most talented ambassadors’, and for the first 18 months of Wei’s term, China and Panama’s relations developed at an incredible pace.
In November 2017, President Juan Carlos Varela travelled to China to meet Xi Jinping and attend the official opening of Panama’s embassy in Beijing. A whole host of new agreements were signed during Varela’s visit, including an MoU on the Belt and Road Initiative, making Panama the first Latin American country to sign on.
Panama’s Vice President and Foreign Minister Isabel Saint Malo told local Panamanian newspaper La Prensa that “[c]ommissions and teams have been formed on all [China-related] issues [so they could] move forward as quickly as possible”.
Momentum continued throughout 2018, with Free Trade Agreement (FTA) negotiations progressing rapidly. Xi Jinping also made a short 24-hour state visit to Panama in November that year. More agreements were signed during the visit.
Alvaro Mendez, a Senior Research Fellow at the London School of Economics once wrote that ‘the pace of the negotiations towards this [FTA] could well have set a world record’.
China had plans to even build an embassy near the entrance of the canal, however local and US opposition led to the offer of land being withdrawn.
It was clear that the US was alarmed at Panama’s flourishing relationship with China.
The value of Panama to US international trade and security cannot be understated, and any perceived threat to Panama’s neutrality is taken very seriously. The fact that China has never signed the ‘Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal’ — which has been open to accession since 1979 — will not have been forgotten by the US.
In Oct 2018, Secretary of State Mike Pompeo travelled to meet with Panama’s President and Vice President. The New York Times reported that Pompeo wanted to convey the message that ‘when China comes calling, it’s not always to the good of your citizens’.
China’s progress in Panama began to stall in 2019, with the turning point being the election of President Laurentino Cortizo. Because Panamanian Presidents are not permitted to run for consecutive re-election, Varela’s time in office had come to an end.
Whilst Cortizo denied that he was ‘cooling’ relations with China, his government wasted no time putting the brakes on several of Varela’s projects, including the proposed $4 billion BRI-linked Panama City-David Railway, as well as the China-Panema FTA negotiations.
Whilst by no means openly anti-China, observers suggested that Cortizo’s government was placing more emphasis on Panama’s ties with the US, and that it was distancing itself from China.
In 2021, a joint venture led by Chinese company Landbridge had its consession for the Panama Colon Container Port cancelled by the Panama Maritime Authority. The reason given was contractual non-compliance. The project was reportedly 40% complete at the time.
It was not all bad news, however. Some major China-related projects did proceed, including the recently completed $1.3 billion fourth bridge over the canal and the delayed Amador cruise terminal.
Also in 2021, Hong Kong-based Hutchison Ports Holdings was also able to renew its 25-year concession to run the Panama Ports Company, which operates Panama’s Balboa and Cristobal ports. This was even after an audit from the Panamanian authorities.
On the trade front, UN Comtrade data shows that trade volume between Panama and China has risen significantly since 2017. Imports from China grew from $6.6 billion in 2017 to $12.6 billion in 2022.
During the same period, Panamanian exports to China increased from $62 million to $1.2 billion. Further analysis of the data shows that China has become the main destination of Panamanian copper.
Cortizo announced in 2022 that Panama was going to restart FTA negotiations with China, however, there has been little mention of it since.
As 2024 is an election year in Panama, will we see a return of the pre-2019 approach to China after Cortizo leaves office? Probably not. Jose Raul Mulino, the current front runner, would likely continue Cortizo’s balanced approach.
During the last presidential election, whilst supportive of relations with China, Mulino spoke critically of Varela’s hasty approach. He also did not want Panama to get drawn into the US-China trade war.
Not all hope is lost for China, however. For example, presidential candidate Martin Torrijos recently remarked that 'we have a relationship with China and we have to try to take advantage of it for the benefit of Panama'.
Whilst recent polls show that Torrijos is currently trailing behind Mulino, there is a possibility that Mulino will be excluded from the race, which would give Torrijos a chance to win. Mulino only recently replaced ex-President Ricardo Martinelli as the Achieving Goals party's candidate after Martinelli was himself banned from the election.
Regardless of who wins the election in Panama, China will still need to contend with the US for influence.
Richard Koster, a Panama-based American author and journalist, told Dialogo Chino that the threat of US visa denial or the inclusion on the ‘Clinton list’ (OFAC Sanctions List) is an effective way of exerting control over Panamanian politicians.
Whilst Cortizo has rebuked claims that he received pressure from the US, it would help explain Panama’s sudden change in its approach towards China in 2019.
It is also possible that the ‘US factor’ was the reason Xu Xueyuan was selected as ambassador. Despite having less experience than Wei Qiang, both as an ambassador and with Latin American affairs, Xu is an expert on the US and has spent most of her nearly 30-year career working in related roles. See the end of this article for more details of Xu’s career.
Perhaps Wei Qiang was too effective at promoting Chinese interests with the Varela Government, and it was the hasty engagement that forced the US’s intervention. Xu’s appointment indicates that China is pivoting to a strategy that is more conscious of the US perspective.
Another factor weighing down China’s progress in Panama has been the Covid-19 pandemic. Whilst Chinese organisations (both government and private) did donate medical supplies to Panama during this time, Covid-19 restrictions will have prevented the bilateral exchanges needed for their relationship to develop further.
With the pandemic now over, China has resumed sending senior diplomats to Panama in an attempt to stimulate more cooperation.
In September 2023, Assistant Foreign Minister Hua Chunying visited Panama after attending a G77 + China meeting in Cuba. Visiting Panama at the same time was a delegation from the China International Development Cooperation Agency, who were there to evaluate several potential projects submitted by Panama.
Most recently, Qiu Xiaoqi, who is the Special Representative of the Chinese Government on Latin American Affairs, only just paid a visit to Panama in March 2024.
It is within this context that Xu Xueyuan has taken office.
Will a more cautious approach guided by Xu’s experience in the US enable a revitalisation of China-Panama bilateral cooperation? Will China be able to change the status quo following this year’s election?
One way to gauge China’s success will be if Panama restarts FTA negotiations or if any major infrastructure projects are announced. Regardless, any progress will need to be at a measured pace to avoid any US intervention.
Xu Xueyuan’s CV
1996 - 1998: Attaché > Third Secretary, Department of North American and Oceanian Affairs, Ministry of Foreign Affairs (MFA)
1998 - 2001: Third Secretary, Chinese Embassy in Trinidad and Tobago
2001 -2010: Third Secretary > Second Secretary > Deputy Director > First Secretary > Director, Department of North American and Oceanian Affairs, MFA
2010 -2011: Study overseas
2011 -2015: Counsellor, Chinese Embassy in the US
2015 -2018: Deputy Director-General, Department of North American and Oceanian Affairs, MFA
2018 - 2024: Minister and Deputy Chief of Mission, Chinese Embassy in the US
2024 - Present: Chinese Ambassador to Panama
Education:
Fudan University
Note: If the URLs of any pages referenced in this article stop working, the archived versions can be found by searching for the page using the corresponding URL over at the Internet Archive.