San José, Costa Rica, since 1956

Doting China Still C.R.'s Sugar Daddy

The honeymoon is over, but China is still showering Costa Rica with gifts.

Since cutting ties with Taiwan last June 6, the Costa Rican government has been reaping the benefits that accompany friendship with the growing economic and political giant.

The two nations have swapped secrets and signed a laundry list of accords promising collaboration in areas ranging from technology to free trade, sports to fine arts.

A month barely passes without an official diplomatic mission between the two. This week alone, Vice Premier Hui Liangyu visited San José, while Costa Rican Foreign Trade Minister Marco Vinicio Ruiz flew to China to talk business.

During Hui’s visit, China promised Costa Rica a $10 million check, 200 police cars, 40 scholarships and a credit line for small businesses.

On the other side of the Pacific, Ruiz continued negotiating a possible free-trade agreement between the two countries. The minister also attended meetings to discuss Chinese-directed public works projects on Costa Rican soil.

“The Central American countries hold a very important strategic position,” Chinese spokesman Tiam Qi said in San José this week. “We want to cooperate with those countries.”

Foreign Minister Bruno Stagno said he was not expecting so much so fast from the Chinese.

“This relationship has an intensity and velocity that is truly surprising,” he said.

Stadiums, Sewage and Crude

China’s biggest gift to date is a $72 million National Stadium for soccer and track in La Sabana Park, on the western edge of San José.

The stadium should hold up to 35,000. Demolition of the old stadium is planned for July. A Chinese firm is set to  begin construction in October and finish by May 2010.

The two nations will also cooperate on water construction projects, wastewater treatment, and flood prevention, according to this week’s accord between Environment and Energy Minister Roberto Dobles and Chinese Minister of Water Resources Chen Lei.

In October, the China National Petroleum Corporation signed a cooperation agreement with the National Oil Refinery (RECOPE) expressing interest in tripling Costa Rica’s refinery output and increasing its quality.

The corporation also threw around the idea of offshore oil exploration – talk of which prompted nationwide protests, a multi-billion-dollar lawsuit, and a documentary the last time it was proposed by a foreign company in 2002.

A spokesman from the Environment and Energy Ministry (MINAE) said the agreement is in its initial stages. As with similar plans, it could take weeks to years before the project breaks ground.

While Costa Rica has small oil deposits, drilling could become attractive if prices continue to skyrocket, said Carlos Murillo, a professor of international relations at the NationalUniversity in Heredia, north of San José.

Chinese officials are also considering building a refinery in Costa Rica to process oil purchased from other Latin American countries, such as Venezuela and Ecuador.

China now ships crude oil home – an expensive journey.

Money Talks

As likely recession in the United States threatens to slow trade, investment and tourism, Costa Rica views economic cooperation with China as crucial.

Trade with the Asian giant is currently falling in the home team’s favor. Costa Rica exported $1.4 billion worth of goods to China last year, 30 percent more than in 2006. However, that included about $1 billion from Costa Rica’s Intel factory.

Imports from China and Taiwan, meanwhile, reached $567 million in 2007.

These numbers have not escaped the foreign trade minister as he promotes Costa Rican business abroad.

Sixteen Costa Rican companies traveled with Ruiz’s entourage this past week, most of them from the food and agro-business sectors.

On the flip side, Chinese firms might want to set up shop in Costa Rica to export textiles and other products to the United States tariff-free under the Central American Free-Trade Agreement with the United States (CAFTA), according to Murillo.

Facilitating such business encounters falls into the hands of the group China Ya.

General Director Roberto Guëll said his organization has helped at least 1,000 entrepreneurs travel to China to seek business partnerships.

The flurry of agreements reached in recent months between the two countries could be explained by the Chinese business philosophy.

“Negotiation begins with the signing of a contract,” Guëll explained. “With us, it ends with the signing of a contract.”

Last year, Costa Rica drew nearly a million U.S. tourists but just 2,000 Chinese travelers, who face hefty entry barriers. Chinese tourists who do not have a U.S. or European visa can now enter Costa Rica only with the permission of Immigration Director Mario Zamora.

Under a January accord between Tourism Minister Carlos Benavides and his Chinese counterpart, Shao Qi Wi, Chinese tourists traveling with selected agencies will soon be able to enter Costa Rica with a simple consular visa.

Power and Influence

China’s motives are mainly political, said Dan Erikson at the Washington-D.C. think tank Inter-American Dialogue. China may  be courting the Tico vote on the United Nations Security Council, where Costa Rica has a temporary seat, said Jerome A. Cohen, a China expert at New York University School of Law.

China is also rewarding Costa Rica for changing teams, and it is trying to persuade the 23 nations who still recognize Taiwan to follow suit, Cohen said. Costa Rica is the only Central American nation with ties to China.

“Santa Claus lives!” Cohen said. “If you’re sitting there in some other small country, and you see how Costa Rica has been so beautifully rewarded, you begin to think,‘Maybe we should take these fellows in Beijing seriously.’”


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