China and Honduras Establish Diplomatic Relations (updated)

Posted by Written by Qian Zhou and Giulia Interesse Reading Time: 3 minutes

Update: As per a statement released by the Ministry of Commerce on July 4, 2023, China has initiated negotiations regarding a bilateral free trade agreement (FTA) with Honduras. Both Wang Wentao, the Chinese Minister of Commerce, and Fredis Cerrato, the minister of economic development of Honduras, confirmed the announcement.

The start of negotiations for the FTA between the two countries aims to enhance bilateral cooperation in the economic and trade sectors. Its objective is to stimulate improvements in the quality and scale of bilateral trade, as well as to strengthen investment and collaboration across various fields, as stated in the announcement.

Update: On March 26, 2023, China and Honduras established official diplomatic relations, with the two countries signing a joint communique agreeing to exchange ambassadors as soon as possible. The establishment of diplomatic relations between China and Honduras opens up opportunities for the two countries to enhance mutual understanding and promote pragmatic cooperation, according to China’s foreign minister Qin Gang. 

We discuss the development and its implications for China’s trade and commerce relations in Latin America.

On March 15, 2023, Honduran President Xiomara Castro expressed her hope that Honduras would seek to establish formal diplomatic relations with the Chinese Mainland, thus ending ties with Taiwan. On the same day, at a regular press conference, Chinese Foreign Ministry Spokesperson Wang Wenbin said that Beijing welcomed this statement, adding that “China is ready to grow friendly and cooperative relations with all countries including Honduras on the basis of the one-China principle.”

On March 26, 2023, China and Honduras formally established official diplomatic relations, with the two countries signing a joint communique and agreeing to exchange ambassadors as soon as possible.

This event is bound to reshape the geopolitical landscape in Latin America, paving the way for Honduras to become an important trade and investment partner for China in Central America.

Honduras: an introduction

Honduras is a country located in the northern part of Central America, bordering Guatemala, El Salvador, and Nicaragua. In the west, it borders the Pacific Ocean and in the northeast, it borders the Caribbean Sea. The country is predominantly mountainous, with many natural and cultural resources, including tropical rainforests, coral reefs, beaches, and ancient cultural sites.

Honduras’ GDP averaged US$7.78 billion from 1960 until 2021, reaching an all-time high of US$28.49 billion in 2021.

The country’s economy is mainly supported by agriculture, manufacturing, and service industries. Its main export products include agricultural products such as coffee, cotton, sugar, bananas, and palm oil, and manufacturing products such as clothing, textiles, and metal. In addition, tourism is also an essential source of income for the country.

Why has Honduras established diplomatic ties with China?

There are various reasons behind the establishment of formal diplomatic relations between Honduras and China, including economic, political, and diplomatic considerations.

Economically, the move makes sense for Honduras since China is the second-largest economy in the world and is also one of its major trading partners. By establishing diplomatic relations with China, Honduras may hope to further promote trade and investment, expand the export market, and attract more Chinese enterprises to invest in Honduras. According to the United Nations Comtrade data, as of 2021, China exported US$1.58 billion worth of goods to Honduras, being the second-largest exporter just behind the United States.

Politically, Honduras hopes to use the opportunity of establishing diplomatic relations with China to consolidate its position in Central America and strengthen its voice in international affairs.

Diplomatically, the country may have also been influenced by other Latin American countries, such as the Dominican Republic, Panama, and El Salvador, which have established or re-established diplomatic relations with China in recent years.

What are the implications?

The establishment of diplomatic relations between Honduras and China will allow the country to benefit from China’s experience and technology and promote its economic development. At the same time, Honduras is also likely to become an important trade and investment partner of China in Central America.

In addition, the establishment of diplomatic relations between Honduras and China will have an impact on the diplomatic landscape in Latin America. The Latin American region is a traditional sphere of influence for the United States, but in recent years, China’s influence in the region has grown steadily. The establishment of diplomatic relations between Honduras and China will further strengthen China’s influence in Latin America, and thus will further tighten the already strained US-China ties.

This article was first published on March 17, 2023, and last updated on July 5, 2023. 

About Us

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.