CHINESE ACTIVITIES IN EL SALVADOR

S E C R E T SECTION 01 OF 02 SAN SALVADOR 002426

SIPDIS

E.O. 12958: DECL: 08/30/2025
TAGS: ECON PREL ETRD ETTC EINV ENRG EAGR EFIN PHUM EMIN CH ES ESENV
SUBJECT: CHINESE ACTIVITIES IN EL SALVADOR

REF: A. SAN SALVADOR 2333


B. STATE 138041

C. 04 SAN SALVADOR 3103

Classified By: Michael A. Butler, DCM, U.S. Embassy San Salvador.
Reasons: 1.4 (B) and (D)


1. (U) The following is provided in response to Ref. B.

Summary
--------------

2. (C) El Salvador does not have diplomatic relations with
China and instead has ties with Taiwan. As a result, official
Salvadoran contact with the Chinese is limited. Trade and
investment volumes are very low. However, the leftist FMLN
political party does maintain direct contact with the Chinese
and has hosted Chinese visitors on several occasions.
Military to military contacts are nonexistent. Although there
is some diversity of opinion among Salvadoran government
officials regarding expanding the country's relationship with
China, official recognition of Taiwan is likely to remain in
place at least while President Saca is in office. End summary.

Economic relations weak
--------------

3. (U) According to Ministry of Economy data, El Salvador's
total trade with China was valued at $117.2 million in 2004.
Of the $3.6 million in exports from El Salvador to China,
$2.2 million were scrap metals and 0.5 million agricultural
goods. Salvadoran imports of Chinese goods totaled $113.6
million, including $19.1 million in textiles and apparel, $18
million in shoes, and $7 million in audio/visual equipment.
Detailed trade data for 2001-2004 is available at
www.minec.gob.sv for download in spreadsheet format. There
have been no discussions on trade agreements between El
Salvador and China. There may be limited Chinese investment
in El Salvador, but only indirectly through cross-ownership
of Taiwanese firms by Chinese investors (Ref. A). The Chinese
provide no development assistance to El Salvador.

Political relations through FMLN
--------------

4. (S) El Salvador does not maintain official political ties
with the Chinese and instead maintains diplomatic relations
with Taiwan (see Ref. A). However, from February 28 to March
2, 2005, a Chinese delegation headed by Vice President of the
Institute of External Affairs Wang Zhen spent three days in
El Salvador meeting with Salvadoran businessmen and leftist
political leaders. SIMO reported that President Saca had
authorized the visit at the behest of the FMLN, a leftist
opposition party, which supports breaking ties with Taiwan
and establishing relations with China. SIMO also reported
that Saca prohibited members of the government from meeting
with the delegation. However, Wang did meet with FMLN
deputies. Wang told the media that diplomatic recognition
would enhance commercial relations with China and made clear
that such recognition would necessitate the severance of El
Salvador's diplomatic ties with Taiwan. In keeping with El
Salvador's historical position, President Saca publicly
replied to the Chinese suggestion that it break ties with
Taiwan by saying, "No country can place conditions on El
Salvador's external relations . . . If Chinese investors want
to invest in the country (El Salvador),then let them come,
but we are going to continue to have relations with Taiwan."


5. (S) As noted above, the FMLN maintains a direct
relationship with the Chinese, and were the FMLN to win the
presidency, there is no doubt that El Salvador would cease to
recognize Taiwan and would instead establish diplomatic
relations with China. SIMO reported that in late June China
opened a "Friendship House" in Quezaltepeque, an FMLN
stronghold. The house is intended to support cultural
exchanges between the people of El Salvador and China, but
Salvadoran officials have expressed concern that it will be
used for political purposes. SIMO reported that in early June
2005, the Chinese notified the FMLN that it was canceling a
planned mid-June visit by a high-level FMLN delegation to
China due to Beijing's displeasure with internal dissension
within the FMLN that led to the resignation of 300 FMLN party
loyalists. SIMO also reported that on December 12, 2004, a
Chinese delegation headed by the Central Committee's
Sub-Director for Latin America and the Caribbean met in San
Salvador with representatives of the FMLN and leftist groups
from Guatemala, Honduras, Nicaragua, and Mexico. On December
13, the delegation met with FMLN Mayor of San Salvador Carlos
Rivas Zamora.

No military relations
--------------

6. (S) DAO reports that the Salvadoran military has no
relations with the Chinese and is not interested in
establishing such a relationship. As noted in Ref. A, the
Salvadorans maintain an extensive military relationship with
Taiwan.

Comment: Future diplomatic relations unlikely under Saca
-------------- --------------

7. (C) We believe it unlikely that El Salvador will change
policy and sever ties with Taiwan to establish them with
China while Saca is President, given the Chinese support for
the opposition party (Ref. C.). There is a belief among some
that a more vibrant trade and investment relationship with
China could bring benefits to the Salvadoran economy.
Balanced against this potential, however, is the tangible aid
and investment that Taiwan currently offers (Ref. A.). End
comment.
Barclay