Panama: The Gateway for China’s access to New Markets

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Panama has officially established diplomatic relations with China and the two countries have moved swiftly to open up new channels of communications.
Panama’s president, Juan Carlos Varela, announced the change – which entailed breaking off formal relations with Taiwan –saying it represented the “correct path for our country”. On the other hand, China’s Foreign Minister Wang said, “China-Panama relations have opened a new chapter”.
Although Panama is not the first country to break diplomatic relations with Taiwan in order to establish them with China, with Costa Rica having done so in 2007, it is the only country in the region that has the necessary logistical and commercial conditions to become an ideal platform for Chinese investments.

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Economic Benefits

Over the years, China had vied for use of the canal, which provides a key route for international trade and military transport between the Atlantic and Pacific, and diplomatic recognition from Panama itself.
The Panama Canal Authority will by the end of this year officially open a tender to develop land around the waterway into a logistics park. A top executive with the authority said Panama has already been in touch with Chinese state firms that had expressed an interest in the project.

China is the second-biggest user of the Panama Canal and has played a key role in sectors from banking to telecommunications.


Foreign Investment

One of the biggest benefits to Panama’s current economic growth is that it welcomes and promotes foreign investment. reports “most of the investment – 66.6% – corresponds to reinvestment of profits, that is to say, profits of foreign companies that remain in Panama, instead of being remitted to their countries of origin”.
For starters, Panama is far less regulated than a lot of Latin American countries, without jeopardizing its economic safety and currency stability. This opens the doors for a lot of new companies to operate from Panama, both from foreign and domestic companies.
Of the $2,844 million received in the first semester, almost 70% corresponded to reinvestment of profits of foreign companies. Foreign direct investment received by the country in the first six months was 6% higher than that registered in the same period in 2016.
Chinese group Shanghai Gorgeous announced a $ 1.8 billion investment in Panama, the first Latin American country in which to install and build a container port and a thermoelectric plant.
The facility will be located in the Isla Margarita area and will include a logistics park, “which will add value to the cargo, boost the country’s competitiveness and strengthen its logistics platform,” said Shanghai Gorgeous.

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Real Estate Benefits

On the real estate side, Panama has been a major player on the overseas retirement scene for several decades. With its top-notch infrastructure, incredible natural beauty, and attractive visa options, Panama is a natural standout.

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The property market is expected to remain strong medium-term, because of the opening of the expanded Panama Canal and the continued influx of foreign investors into the country. The average price in Punta Pacifica, for example, now stands at around US$2,500 per square meter (sq. m.). In Trump Ocean Club, apartment prices are now almost US$3,300 per sq. m.
China Construction America (CCA), a subsidiary of China State Construction Engineering, sees Panama as having unique appeal, hence its decision to develop Panama’s biggest ever residential project in Vista Alegre named City of Hope Valued at $137-million and boasting 2,250 units, CCA has definite plans to market City of Hope to Chinese buyers.

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Panama is a country in much better shape financially than its Central American neighbors to the north, or Colombia to the south. Annual inflation has averaged 1.4% for the past 30 years, and during the 1990s, it barely exceeded 1% per year.
A democratic constitutional government with an excellent infrastructure, including good hospitals and international schools, the modern Tocumen International Airport and advanced telecommunications, makes Panama a very desirable location for Chinese investors.


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