On China's New Silk Road

ep05China in America’s Backyard: Panama & Mexico

China in America’s Backyard: Panama & Mexico

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Many Latin American countries have joined China’s New Silk Road, including Panama, where Chinese companies now manage ports on both ends of the Panama Canal. As Mexico considers whether to join, some countries in the region are facing heavy pressure from the Trump Administration warning them not to get too close to China. Still, China’s investments and loans are seen by many leaders as a way to help their economies.

Episode Transcript

I set out one morning to travel from one ocean to the other by dusk, by boat. 

(Sound of ship’s horn)

…on the Panama Canal, one of the world’s most important strategic waterways, where two-thirds of cargo ships coming and going to the United States pass through. 

 It was a marvel when American engineers and ingenuity completed it more than a century ago – and it’s still pretty darned impressive. You go up through three locks to reach a lake above sea level. 

(Sound of lock doors opening, and of ship’s motor)

Then you go three locks down to reach the other ocean, with no motorized pumps to make it all happen.

Tour guide on boat: It’s all done by gravity. Communicating vessels do the trick. Water will always seek its lowest level possible, opening and closing the appropriate sequence of valves, gets it to flow in the direction you want to go, at the time they want this to happen. And that’s the easy part. 

Then there’s the sheer scale.

Tour guide: We’re talking about moving 26 million gallons of fresh water into the chamber to raise us one step. And they can do that in just 8 minutes. That’s how long it takes to fill the chamber up. That’s how long it would take to drain it out – 8 minutes…

And this is the original system – the one first used here in 1914. 

Tour guide: Back then, it must have been mind-blowing, for sure. 

(Sound of bell ringing)

Over the past century, the Panama Canal has helped transform global shipping. It can shave two weeks or more off the route of otherwise having to go around the horn of South America, saving time and money, with the bonus of getting to skip the stormy seas.

Shipping cranes on the Panama Canal. (Mary Kay Magistad)

One of my fellow passengers on this boat is retired Sergeant First Class Sidney Thomas. He was born in Panama. He moved to the United States as a kid, and came back to Panama with the US military in the 1970s. Now he’s worried that US interests here are being threatened by China: 

Sidney Thomas: Our government, the generals and the President, should have sat down and said, ‘hey, something is going on around here.’ If they put this here, and they put this here, we don’t have too much of a strategic point of view. And they’re also building man-made islands off China, so they’re getting ready for something.

Mary Kay Magistad: So are you worried?

ST: Yes, you should be worried. It’s like playing checkers, you know? Or even chess. You make a move, and you wait for the other person. If the other person don’t make a move, you study the board to get an advantage. So, yeah. I believe China has an advantage now. 

And speaking of gaming things out, Sidney thinks the US should have been quicker to figure out what China’s investment strategy is in America’s backyard, especially here in Panama, which has joined China’s global infrastructure initiative, the New Silk Road. 

(Sound of Panamanian music from band on boat)

As a Panamanian band plays, we cruise down a canal where China’s expanded a port on the Atlantic side, built a cruise ship terminal on the Pacific side, and is building a bridge over the canal itself. The world’s two biggest economies know how important the Panama Canal and Latin America more broadly are to global trade, and to their specific interests. And China’s now very present in America’s backyard, with some interesting twists. 

(Sound of Panamanian music)

You’re on China’s New Silk Road. I’m Mary Kay Magistad, a former China correspondent for NPR and PRX’s The World, looking here, with the Global Reporting Centre, at how China’s global ambitions are seen around the world, and at the impact China’s New Silk Road trade and investments are having on the ground. 

The New Silk Road, of course, is China’s epic global infrastructure initiative – building roads, railways, ports, pipelines, 5G telecommunications and more, around the world. And most of the world’s countries have signed on. In late 2017, Panama became the first Latin American country to join, just months after switching its diplomatic recognition from democratic Taiwan, to the People’s Republic of China. Then-President Juan Carlos Varela told China’s state-run CGTN television network why he made the move: 

Juan Carlos Varela: China has the largest population in the world, has the second-largest economy, is the second-main user of the Panama Canal, and the most important provider of the Colon Free Zone. Because Colon is a city in Panama. We are like the commercial arm of many Chinese goods to Latin America. 

The CGTN interviewer had to ask: 

Interviewer: Did you communicate with US President Donald Trump before you made the announcement? What was his position?

JCV: No. We just called the US ambassador to Panama, like, a couple of hours – one hour before the announcement. This is our decision, the Panamanian government, the president of Panama, and I think, and I’m pretty sure that I did the right thing for our people.

Six days after giving the US government an hour’s notice for a huge political move, President Varela was at the White House with President Trump:

Donald Trump: It’s our great honor to have President and Mrs. Varela from Panama. We have many things to discuss. We’re going to spend quite a bit of time today. The Panama Canal is doing quite well. I think we did a good job building it, right?

Juan Carlos Varela: One hundred years ago, yeah.

One hundred years ago, yeah, Varela says, with a slight smile, just back from signing multiple deals with China.

Americans didn’t just build the Panama Canal, they controlled it for the better part of a century, after the US military helped Panama break off from Colombia and become its own country in 1903.

(Sound of footsteps in leaves)

And if you walk near the Pacific entrance to the Panama Canal, in Panama City, you may stumble upon a peaceful wooded area, with the graffiti-covered ruins of former American villas, shops, government buildings, even an old movie theater.

Ruins of U.S. housing in the former Panama Canal Zone. (Mary Kay Magistad)

Mary Kay Magistad: So this says, ‘thanks for maintaining the area ‘limpia.’’

Luis Buron: Clean.

MKM: Clean. Thanks for keeping it clean. Take your joints with you after you’ve smoked them.

LB: When the photographer and I came to do this report, there were, like, a lot of cars with people sleeping in them. People came here, have something to eat in their car, and they just do like half an hour’s nap. 

This is Luis Buron. He’s an investigative reporter with La Prensa newspaper in Panama. In fact, he helped report out the Panama Papers, the leak of millions of encrypted financial and legal records from a Panama-based law firm, that led to resignations, prosecutions, and changes to law around the world, related to crime and corruption. And he’s showing me around this area, the former Panama Canal Zone. It was an unincorporated territory of the United States from 1903 to 1979. It stretched 10 miles wide, and the entire length of the Panama Canal. Luis did a story here awhile back. It was called “A Ruined Eden:”

Panama-based investigative reporter Luis Burón in front of former U.S. Army residences.

Luis Buron: I mean, the Panama Canal Zone was the perfect place to live. Because you had all the US regulations, the US food, the US law. You had the US protection, because you had – it was like a perfect society, a utopian society. You were just right behind the sea. You were in a tropical environment. It was like a little piece of heaven.

If you were American. And a few notable Americans lived here.

Luis Buron: John McCain, he was born in the Panama Canal Zone. And I can’t remember his name. I know his last name is Murphy, from the Murphy Law, that everything that can get worse, it will get worse. 

MKM: You mean, it was that Murphy?

LB: He was also “Zonian.”

Zonian – as in, living in the Panama Canal Zone, under US law and US protection. When the US controlled the canal, Panamanians, by and large, were not allowed to go into the Panama Canal Zone. That created both a mystique and a resentment – and eventually, a push for an end to what pro-independence protesters saw as this neo-colonial American presence.

(Sound of walking in Panama Canal Zone)

And now, a short walk from these abandoned American buildings, at the mouth of the Panama Canal, is a brand new, sprawling convention center, built by a Chinese contractor.

China had also been angling to build a new embassy in this area – right at the mouth of the Panama Canal. Those plans changed, after the US government, and many Panamanians, pushed back hard.

Francisco Quezada: (Speaks in Spanish)

This is Francisco Quezada. He’s a 24-year-old photographer we bumped into as we were checking out the ruins in the old Panama Canal Zone, and he was doing a photo shoot with a DJ. We got chatting about what he thinks of the growing Chinese presence, and investments, in Panama.

Luis Buron: Okay, he says that foreign investment is always good, and always welcome. What we have to do is watch really close what are the real intentions behind an investment. We could not accept investment that could harm our country – for example, the thing that happened with the Chinese embassy that wanted to take out some old Panama Canal Zone land. And we as Panamanians [are] opposed to that. So I think every country can bring its investment here to Panama, as long as it brings something good for us.

China pitches its New Silk Road investments as something that will do just that. China’s leaders say this will be a win-win for all countries that participate, creating a global community of shared destiny. Luis, having just been on a Chinese government-organized trip for Latin American journalists to China – finds China’s rhetoric like this to be a bit much:

Luis Buron: What they were insisting on is, you know, one of the phrases, one of them used is like, ‘we have a good heart. You can trust us.’ (Laughs) That is what everyone says. But they want to sell this image, that they are helping us, because they want to see [us] flourish. They have no interest, just I want to see Panama growing, because we have a good heart, and we want a perfect world. And they want to sell this image that, that is what they want, instead of telling the truth, that is – you know, we want to benefit from this.

Mary Kay Magistad: You seem not entirely sold.

LB: Not really, not even a little bit. Because, you know, it was like, ‘ok, you in Latin America, you read the BBC, the CNN, and those media – it’s manipulative. But our news is not manipulative. Our news is really the truth, is really how the world runs. And it’s – you know. We’re all grownups. You could tell the truth. You can speak the truth. You don’t have to hide behind that image.

After all, he says, Panama’s about business. We get it. China’s leaders haven’t been laying out more than half a trillion dollars – so far, in loans and investments around the world – just out of the goodness of their hearts. They’re building a new network of global trade that puts China at the center, while also being present in ports and other places that are strategically important to China’s interests. And with Panama taking a hit from COVID-19, with widespread infection, and a drop in global trade driving down traffic in the canal by 20 percent in May 2020 alone, help for Panama’s economy would actually be welcome – except Luis isn’t sure that what China is offering is going to get where it needs to go to improve ordinary people’s lives in Panama:

A woman selling crafts in Panama. (Mary Kay Magistad)

Luis Buron: China’s aspiration in this region, I think it could benefit these countries. But since we have like corrupt governments in almost all of the Latin American countries, I don’t think the China aspiration and investment into this country would benefit us. If bad management, we could end up like Sri Lanka. That could be a real scenario for us.

Mary Kay Magistad: That China would take over control of the Panama Canal or something like that?

LB: I don’t think the Panama Canal, but they could take control of a port, a piece of, a chunk of land of Panama. And we are really experienced at giving away land. 

All along the New Silk Road, people are paying attention to what happened in Sri Lanka. And here’s what happened. China extended sizable loans so a Chinese state-owned company could come in and build a port and an airport that Sri Lanka didn’t really need. In fact, they barely got any business. And when Sri Lanka couldn’t afford to pay its debt, in 2017, the Chinese side pushed for a deal that gave China majority control of the port, and of a huge area around it, for 99 years.

Johnny Wong: I did see that in Sri Lanka. It’s very sad.

This is Johnny Wong. He’s a Panamanian, of Chinese descent – a mechanical engineer, with degrees from the University of Texas, and Stanford, who worked on the Panama Canal for three decades.

Johnny Wong: I went to a training, it was a ports seminar. And there [was] a large group from Sri Lanka. And in a way, I don’t want to be offensive, but I was a bit sorry for them. They were like giving this training and all this, but at the same time, you know, you’re up to your ears in debt. But I don’t think – you cannot blame everything to the Chinese. Who signed that? Some ambitious leader who wanted the big projects. So, I think we have to play it smart, and have everything, all the concessions given by open competition with transparency. 

Johnny says that’s what he did when he was designing and overseeing parts of a Panama Canal expansion project, from 2007 to 2016. It added an extra lane, and doubled the canal’s capacity.

Johnny Wong: Even from high in the government, they have recognized that the canal is running efficiently. They even say it’s running better now than in the older system.

MKM: When the US was controlling it?

JW: When the US was controlling it. We can react quicker to customer needs. It’s more like running quasi-privately, trying to respond to our clients.

And he says the canal is making more money now and putting more money into government coffers. In fact, Panama’s got enough money to fund infrastructure projects that Chinese companies have done or are doing, that so far it hasn’t had to rely on loans from China – like Sri Lanka did. Johnny says, as a Panamanian, he’s proud of what Panama’s been able to do on its own. But he recognizes, Panama still has to balance its relationships with contending superpowers.

Johnny Wong: And in the end, we are just a little pawn on a chessboard. We are not that big. We cannot change the influence of power. We are just a little piece that gets moved.

Mary Kay Magistad: As someone of Chinese heritage, are you looking at what’s happening with China’s growing presence in the world and thinking, this is kind of great?

JW: In a way, yes. As a kid, I was really not subject to bullying, but being a Chinese was like – store owner’s kid vs. the wealthier classmates in your group. But I didn’t have really problems, because I was a very good student, honor roll always. So they all needed my homework, so they better behave, not bully me. So I didn’t have any problem in school. But now, you can feel the pride of it (China) being more modern. People being exposed, like in your case. You know, this is not the China that they’ll sell you in the movies.

Chinese started out in Panama in the mid-19th century – coming to build the railroad, just like in the United States. They were known to be hard workers – though, malaria and opium drove more than 400 of them to commit mass suicide in 1854. But others kept going. And these days, many Panamanians claim some Chinese ancestry – a fact about which some, like Johnny Wong, are proud, and some, learn to manage.

(Sound of accordion playing Panamanian folk music) 

Mario Chung is playing a popular Panamanian pro-independence song here, on his accordion. He was a gym owner a dozen years, when he started performing Panamanian folk music. His mom was born in Guangdong. His dad, born in Panama of Chinese descent, was raised in China.

Mario Chung playing a popular Panamanian pro-independence song on his accordion. (Mary Kay Magistad)

Mario Chung: The Chinese community in Panama is more than 7% of the population. And they say that almost 30% of the population here in Panama, they have some kind of Chinese ancestry. But once you are born here, you don’t feel that you are part of China. I have been actively in the Chinese community, playing music. But by the time I get interest directly with diplomatic people of China, People’s Republic of China, I don’t feel like anything that connects me to them. Because I have realized that I am only Panamanian. When I am in society, I try to be like everybody else. So I began playing folk music, because I don’t want to feel that I am a foreigner in my own country.

Mario has not only started playing Panamanian folk music, he’s also learned to carve a Panamanian harp. 

(Sound of harp music)

The one he’s playing is shaped like one of the Panama Canal’s bridges, with red, white and blue strings.

I ask Mario how he’s feeling about China’s increased investments and presence in Panama.

Mario Chung: Well, the symbol of ours, promundo de beneficio – that means we benefit to all the world. We feel that we are neutral. We just welcome all the parties, the world players to Panama. And sometimes I feel that we have to be in harmony with the US, because that is our main…

Mary Kay Magistad: Ally?

MC: Commercial ally and political ally. They have many political interests in controlling the power, and we have to accept that. The history says that the country was born in the United States. We follow their orders – I mean, their suggestions. (Laughs) And, well, China is rising right now. And we will have to see what happens.

But Luis, the journalist, tells me a funny thing happened to China’s Panama plans after elections brought in a new Panamanian president, Laurentino Cortizo, in May 2019:

Luis Buron: With this new government, that project like stopped. I don’t know if it was like, we’re not going to do it, or you just stop to see if they can get offered a better deal, or no. But the relations with China have been getting cold with this government.

Or it could be this. The US government had been pushing back hard, against China’s expanding presence in Panama, Mexico, and Latin America in general. Just weeks before Chinese President Xi Jinping visited Panama in late 2018, US Secretary of State Mike Pompeo visited Panama, and warned against what he called China’s “predatory economic activity.”

Since then, Chinese projects started being scaled back, cancelled or rejected. Four billion dollar high-speed rail? No thanks. Building a $2.5 billion monorail linking Panama City with its western suburbs? Nah – we’ll have South Korea’s Hyundai do it instead. That new Panama Canal bridge, being built by a top Chinese state-owned company? Scaled back. Negotiations with China for a free trade agreement? Stalled. And Panama’s government has said it will audit the Hong Kong company, Hutchison Ports, that has, for 20 years, operated Panama’s ports at either end of the canal, while considering whether to renew its concession when it expires in 2022.

Whether any of that changes or reverses as a result of the hit Panama Canal traffic and profits have taken from COVID-19 is not yet clear. What is clear, is the Trump Administration’s desire to push China out of America’s backyard. That includes in Mexico – which is not yet one of China’s New Silk Road partners – but has been exploring its options.

(Sound of Mexican dance music, and tapping of male dancers’ shoes.)

In Mexico’s state of Hidalgo, the senoritas swishing full skirts while their male dancing partners tap out the rhythm – are at a gala launch of a new line of electric vehicles. They were made in a joint venture bringing together Mexico’s Giant Motors, billionaire business magnate Carlos Slim, and China’s JAC Motors. It’s one of several investments China’s been making in Mexico’s auto industry, including half a billion dollars worth from June 2019 to June 2020 – as it became clear that the new North American free trade agreement would require vehicles to have 75% of their parts produced in North America.

At the launch of a new line of electric vehicles in Hidalgo, Mexico. The vehicles are made by a joint venture between Mexico’s Giant Motors, billionaire business magnate Carlos Slim, and China’s JAC Motors. (Mary Kay Magistad)

(Sound of Mexican dance music)

Giant’s director general, Elias Masri, tells me this new launch is a fresh success, in a long, productive relationship with JAC Motors.

Elias Masri: Well, we have established the assembly factory in Hidalgo since 13 years ago, and we started to develop the assembly process for commercial vehicles. So our history with the Chinese companies is a long way ago. And suddenly three years ago, four years ago, we decided we want to be ready to start with the passenger cars.

So we establish, which is the best cars that we can bring to Mexico according to market needs, according to the suitable product. So we choose JAC, and JAC has been very supportive in terms of what the Mexican market needs.

He says he’s been impressed with how fast China’s grown over those 13 years of partnership, and how quickly JAC Motors learns and adapts – though, there’s always room for improvement.

Elias Masri: The issue is that Mexico is a manufacturing country. And if you want to get in Mexico, you need to play by the rules of the Mexican industry. What we did before we start this project was to establish that we need to have a factory. We apply two rules. One is we have to manufacture and assemble in Mexico, and accommodate the product to the Mexican needs. And the second one is, we’re going to make the relationship with the dealer network that we have in Mexico, that they have the full expertise in terms of the consumer. 

Score one for Mexico, in its drive to keep its business deals with China a real win-win, after a long stretch of losing manufacturing jobs, after China joined the World Trade Organization two decades and was able to become the factory of the world – cheap, efficient, and mostly reliable.

Mary Kay Magistad: What do you think, in general, Mexican companies can learn from their Chinese counterparts? 

Elias Masri: Subtly, probably many things. Because I see a country driving all of them to the same sight. And they have a clear strategy. They know what they want. And they put a term to that, probably five years. And in China, when they decide, the whole country is going to go that way, they’re going to reach it.

MKM: And what do you think Chinese companies can learn from Mexican companies?

EM: Well, I think one of the big issues in terms of the relationship is personal warmth – the business between people, and not companies. Because we in Mexico has a very good strategy among that, and the Chinese, they took more time to do that – the personal contact.

Also at this gala launch is Hidalgo’s governor – Omar Fayad.  

(Sound of Omar Fayad speaking to crowd, then applause)

He wears a leather jacket and flashy running shoes, and with his mustache, he looks a little like Freddie Mercury as he works the crowd like there’s nothing he’d rather be doing. 

Afterwards, he tells me he’d love to see a stronger economic relationship between Mexico and China:

Omar Fayad: (Speaks in Spanish.)

He says, we want to export to China. We think Hidalgo could offer products they’d be interested in. 

Omar Fayad: Speaks in Spanish.

He says, ‘for us, it’s important to diversify. Hidalgo’s economy can’t depend solely on the United States, though we still welcome them with affection. Because, it’s been all walls and threats lately, and both Hidalgo and Mexico should keep their options open – so when the US sneezes, Mexico doesn’t catch pneumonia. 

 After all, 80% of Mexico’s exports go to the United States. Governor Fayad says he’s proud that Hidalgo has jumped from having one of Mexico’s worst performing state economies, to being in the top fifth. That’s because of diversification, he says – bringing in new investments in areas like renewable energy and information technology.

So I ask, should Mexico join China’s New Silk Road? 

Omar Fayad: (Speaks in Spanish.)

Yes, absolutely, he says with a grin. We want a direct route from China to Mexico.

All this happened on a sunny day in early November 2019 – before the COVID-19 virus spread from China to the world, before Mexico’s two top trading partners – the United States and China – both contributed to Mexico having one of the worst COVID-19 outbreaks in the world – China, by not containing it early on – and the United States, by not containing it later. 

Isabella Cota: It feels a little bit surreal. Every day, we get new numbers on the number of deaths, and the number of confirmed cases, and the numbers are rising really rapidly. And that always rattles people. There’s a lot of businesses that have shut down. And it’s easy to imagine that those businesses will not be coming back anytime soon, not because of the restrictions but because a lot of businesses have lost the money that they needed to keep going.

Mexican partner reporter Isabella Cota, a correspondent for El País, in Mexico City. (Mary Kay Magistad)

This is Isabella Cota. She’s a Mexican business journalist, and she’s the Latin America economic correspondent for the Spanish newspaper El Pais. We reported together when I was in Mexico. Here, we’re chatting remotely in August 2020, me in San Francisco, Isabella in Mexico City. 

Isabella Cota: So, I was telling my friends the other day that every economic story I write that has an outlook just makes me a bit – not depressed, but it just kind of like drains me. It’s really hard to be reporting on this right now. And just thinking about what the lives of Mexican people are going to look like in the next few years is honestly kind of painful.

People are getting kicked out of their homes, she says, and the government is doing nothing for them. People are going door-to-door, looking for work.

Isabella Cota: Mexico has been a country that had slowly, slowly reduced the rates of poverty, even though we have among the highest rates in the region, still. And so, this (COVID economic fallout) will erase the effort of all previous administrations, and probably make them worse. Some estimates say that around 15 million people could fall into poverty, from being middle-class, over the next year, because of this pandemic. 

Mexico’s Central Bank has warned that Mexico’s economy could contract by almost 13 percent this year. And Isabella says, she sees Mexicans looking to the new US-Mexico-Canada free trade agreement to help them out of this, more than anything else:

Isabella Cota: Mexican officials are just so hopeful that this is going to be the thing that makes the economy come back in Mexico. I’m not so sure it’s going to work out that way, at least not immediately. But this shift in mentality is important. It’s been kind of like being more grounded, being more realistic about Mexico’s opportunities. I don’t know how China is going to play into this. I don’t know how the Mexican government is going to strike a balance between these two powers. But I think that they’re going to try. I think that that has changed. And I think that they’re going to try and get the best of both worlds and get away with it which – you know what? Quite frankly, I hope they do. Because we need as much investment, and as much opportunity as we can get, in Mexico.

That was true even before COVID-19 hit, when Isabella sat down to talk with Mexico’s former Secretary of Economy Ildefonso Guajardo: 

Isabella Cota: Mexico is one of the few countries in Latin America, if not the only one, that is not part of the Belt & Road Initiative by China. Do you think that Mexico could benefit? Do you think that it could benefit marginally? Do you think it could benefit greatly? Or it wouldn’t even make a difference? And do you think that we will ever be part of this Belt & Road Initiative? 

Ildefonso Guajardo: It is very simple to see how China relates to countries in Africa, how China relates to countries in South America. It has to do a lot to do with financing, a lot with natural resources, a lot with infrastructure projects that are being done basically by full teams of Chinese that come into the Latin American country, and they bring their technology, they bring their own engineers. And obviously, they are very interested in expanding their ties in strategic regions of the world. Mexico has to be always open to build up a strategic relationship with China, but being always very, very clear – it has to be a relationship that is well balanced. You don’t want to create any type of dependency, nor to China, neither to the US.

And so, he said, when he was negotiating with US counterparts for the new North American Free Trade Agreement – which went into force in July 2020, and is now called the United States-Mexico-Canada Agreement – he pushed back against initial US insistence that no country in the deal could have a free trade agreement with China.

Ildefonso Guajardo: And I said, my friend, it is impossible for me to sign an agreement that has that type of wording. You cannot restrict our sovereign right to do a trade agreement with whoever we wish. But I understood why he was upset. Because exactly one of the elements of the negotiation, he wanted to make sure that we will not be used as a backdoor to Chinese imports.

The compromise was to say if the United States, Canada or Mexico entered a free trade agreement with any non-market economy, each of the other two would have the right to decide if they wanted to stay in this US-Mexico-Canada Agreement. Ironically, Canada and Mexico are already in another trade grouping – the Trans-Pacific Partnership – which the Obama Administration launched – and which includes a non-market economy, Vietnam. A Democrat in the White House might decide to rejoin that grouping. Later, Isabella tells me that a change of residents in the White House also sounds good to many Mexicans:

Isabella Cota: I would speculate that if in January a new president comes in the United States, which I’m assuming would be Biden, I think Mexicans would breathe a sigh of relief. Because this resentment that we are seeing is very much focused in the figure of Donald Trump. I think it’s an understanding that even though the US government has gone through its own changes, that Donald Trump is really the figure that is causing so much of this polarization, and this hatred towards Mexicans.

Which has made other potential partners look better by comparison – including China. 

And throughout Latin America, over the past 15 years, China has been a very active investor – 86 Chinese infrastructure projects, worth $78 billion, generating almost 300,000 jobs. Most of the projects have been in energy or transportation. And almost all were done by Chinese state-owned companies. 

Enrique Dussel Peters: Unfortunately, Mexican and Latin American elites have not invested institutionally in long-term knowledge on China, no? Which is rather surprising.

This is Enrique Dussel Peters, a National Autonomous University of Mexico economics professor, who also heads its Center for Chinese-Mexican Studies.

Enrique Dussel Peters: But what are the reasons? The reasons are, one, well, from a Latin American perspective, China is probably geographically and culturally the furthest away that you can imagine, no? 

But that’s no reason not to try to close the knowledge gap, he says – and his center has a library full of reports his group has done, that he’s happy to share. 

Enrique Dussel Peters: Things that might be of your interest, we just published this two weeks ago, China is at the eye of Latin America, if you are interested.

Mary Kay Magistad: Thank you.

He’d like more Americans – including those at the highest level of government to understand a simple thing:

Enrique Dussel Peters: In Mexico, China has been the second trading partner for more than 15 years, since 2003. So to ask and request the Mexican government, to say you know what we don’t want to see Chinese investment and infrastructure projects in Mexico – would be [to] ask the new government to go back to before 2003, or even to return to the 20th century, Impossible, no?

Mexico hasn’t signed on to the New Silk Road. But it has been getting Chinese investments – including a stake in an oil refinery, and the purchase of two of the 10 oil blocks Mexico put up for auction in 2010. Mexico’s busiest container port is operated by the same Chinese company – Hutchison Ports – that operates ports on both ends of the Panama Canal. The Chinese telecommunications company Huawei is building a 5G network in Mexico. A high speed rail project was abruptly cancelled, in 2014 – by then-President Enrique Pene Nieto – because, he said he, he wanted to avoid any doubts about the legitimacy and transparency of the bidding process, but another Chinese contract is going forward: 

(Sound of Train Maya promotional video)

This project, called Train Maya, will, when complete, run about 900 miles along the Yucatan Peninsula, bringing some 8,000 tourists a day through one of Mexico’s largest natural protected areas, from Cancun to the Mayan archeological site of Palenque. Many Mexicans have voiced concern about the potential environmental and social impacts of this project.

Alejandra Cuellar: So the big environmental pushback has been against, because it’s passing through Indigenous, protected territories and in areas that threaten the jaguar. It’s in areas where the jaguar lives. 

This is Alejandra Cuellar, a journalist with China Dialogue – which focuses especially on environmental issues. She’s its regional editor for Mexico and Central America. 

Alejandra Cuellar: You know, that’s sort of been like also face of the opposition, like the face of the jaguar. And what are you doing? So AMLO (short for Andres Manuel Lopez Obrador), the President, has had these like shamanic ceremonies saying like, “it’s all fine”, you know, burning sage and saying it’s going to be great.” But people are not happy. And that’s, I mean, if you compare to the other projects, it has the same elements for failure because local communities are not accepting it, you know? And there hasn’t been like a process. 

The Mexican government’s response has been – this will help the economy, and the economy needs help. 

Interestingly, one of the companies in a consortium that won the contract for the first phase of construction – is the Chinese state-owned China Communications Construction Company. It’s one of the top Belt & Road contractors – also doing projects in Panama and elsewhere in Latin America. And it helped build artificial islands for military bases in the South China Sea, to help China defend its contested claims there. The Trump Administration has accused this company  of corruption, predatory financing, environmental destruction and other abuses, and has urged everyone to stay away from it. Apparently, Mexico’s got different plans. 

(Sound of organ grinder, and passersby in Mexico City’s Zocalo central square)

Later, as I walk through Mexico City’s main square to meet an old friend – I think about how much China is building in America’s backyard – Mexico, Panama, throughout Latin America – and why it chooses the projects it does. Sure, some are pure bottom line. Some are strategic. But some also seem symbolic – a bridge over the Panama Canal. A hand in building a tourist train to the ruins of one of Mexico’s great ancient empires. This square in Mexico City was once the main ceremonial center in the capital of its other great ancient empire – that of the Aztecs. When the Spanish conquered this place and slaughtered the natives, they built right over their capital. 

Laura Daverio: Yes, we can only see a very small part of what was the Temple Major, the major temple which was the biggest ceremonial place right in  the middle of the old Aztec capital. And in fact even where we’re standing here, underneath, there would be a part of that temple.

You may recognize this voice, if you listened to my earlier episode on Italy. If you didn’t, this is Laura Daverio, an Italian journalist who, for about a decade, lived just down the street from me in Beijing, when we were both correspondents there. Now she’s based in Mexico City, and she helped report this episode.

Laura Daverio: This was a symbolic place for the Aztecs, and it became a symbolic place for the Spanish empire, and even today, it’s still a very symbolic place of Mexico.

Mary Kay Magistad: Does it remind you of any other Square?

LD: (Laughs) Oh yes. Very much so. I think squares are always in a way are similar in symbol. For me comparing this, this is a huge square. And of course, the first thing I can think of, coming from a long chapter of my life living in China, is Tiananmen Square.

And Tiananmen Square, like this square, like many squares in Europe, Laura tells me, was built by a new power – on the ceremonial site of a previous one – in Beijing, on a smaller square used by emperors, and here, at the heart of the Aztec empire.

Partner reporter Laura Daverio looks on at Aztec ruins in Mexico City’s Plaza del Zócalo. (Mary Kay Magistad)

Laura Daverio: The same people that conquer, in a way, they have this element of, ‘ok, we got to the heart, to the heart of this.’ I think it’s a way to say, ‘we got here, and now it’s our time.’ But in a way, you absorb that same symbolism and that same power, of now ‘we are in the middle of this,’ now ‘we have the power,’ and this is going to be a symbol of us,’ whoever ‘us’ is in that historic moment.

China’s leaders are planning for it to be them, and they’re making moves – economic, strategic and symbolic – on the New Silk Road and in America’s backyard – to make that clear. Much is uncertain, much could go wrong, but fortune favors the prepared, and even in the midst of a pandemic – perhaps especially in the midst of a pandemic – China is looking ahead.

(Sound of music)

Thanks to partner reporters Isabella Cota and Laura Daverio in Mexico City, and Luis Buron in Panama City.

Our editor is Dave Rummel. Our sound designer is Tina Tobey. Our executive producer is Christine Brandt. 

On China’s New Silk Road is a production of the Global Reporting Centre, a nonprofit group that teaches, practices and promotes innovation in global journalism. Peter Klein is the GRC’s founder. Philippe LeBillon, a Global Reporting Centre partner and geography professor at the University of British Columbia, provided valuable input to this series.

On China’s New Silk Road was made possible by generous funding from Humanity United, and from the Social Sciences and Humanities Research Council of Canada. You can find photos, transcripts and more at globalreportingcentre.org. While you’re there, check out other great journalism from the Global Reporting Centre.    

Next up: 

Unidentified voice: Looking at China, there are apparently issues concerning with the security, and the extent of how much China gets involved in Greenland. I think that’s the balance we need to look at. 

China’s Arctic Ambition: Next, on China’s New Silk Road.

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