In October 2023, almost two years after establishing diplomatic relations, Laureano Ortega Murillo returned from Beijing with a portfolio of major projects China was set to develop in Nicaragua. These included the expansion of an airport, which would become the largest in the country, and a railway project to connect the Caribbean Coast to the Pacific by rail.
The list also featured the purchase of buses, hydroelectric projects, and the construction of a railway line that, as in the past, would link the cities of Managua, Masaya, and Granada. These and other initiatives were projected to cost approximately $4 billion.
On December 17 of this year, the Chinese Embassy, together with officials of the regime, celebrated three years since the reestablishment of diplomatic relations between the two countries.
To date, the only agreement that has been fulfilled is the purchase of 3,000 Chinese buses.
What did Nicaragua get?
In 2021, Nicaragua’s exports to China were estimated at around $6 million. According to official data, this figure increased to $34.5 million the following year and reached $44 million in 2023.
Experts consulted by La Prensa point out that this growth is modest, considering that Daniel Ortega’s regime aims to position China as one of its primary trading partners.
Moreover, they explain that following the Free Trade Agreement signed by both countries on August 31, 2023, which came into effect on January 1, 2024, an increase in exports and imports is to be expected.
According to projections, the Gross Domestic Product (GDP) between 2024 and 2028 is expected to grow at a rate of 3.8% to 4.5%, a range consistent with an economy lacking significant investments like those promised by China.
Nicaragua imports from China
According to official data, in 2023, imports from China remained stable at approximately $1.3 billion, accounting for 12.3 percent of the country’s total imports.
By the third quarter of 2024, imports of goods from China showed an increase, particularly in categories such as consumer goods and capital goods, reflecting the growing demand for Chinese products in the Nicaraguan market—or more precisely, the influx of Chinese stores, which is putting small and medium-sized local businesses on edge.
The main products exported to China included beef, seafood, and agricultural products such as coffee and peanuts.
Meanwhile, Nicaragua primarily imported machinery, electronic equipment, vehicles, and chemical products from China.
Economist Enrique Sáez explained in an interview with an international media outlet that the only way for exports between the two countries to be beneficial is through the export of large volumes of goods. “Nicaragua’s economy is very small. The transportation and insurance costs to China are very high. For this trade to be profitable, you need to export large volumes, and Nicaragua doesn’t produce them.”
Redeemable points
Another expert consulted stated that there are a couple of points that can be considered positive in the relations between China and Nicaragua. Among these is the acceleration of exports, which has been observed each year.
“It could be said that Nicaragua has managed to establish a strategic alliance with China. Beyond that, a free trade agreement was reached, which in practice is likely to benefit China more commercially than Nicaragua. It took ten years to reach about $150 million in exports to Taiwan, with China the increase in exports is a bit faster, but it hasn’t even reached $100 million yet, and China sells over $1.3 billion worth of goods to Nicaragua,” he said.
This same expert argues that through these transactions, Nicaragua would benefit from cheaper products, which could have a positive impact on small retailers. However, the trade relationship would still remain deficit ridden.
The other point to highlight, according to this source, is that many of these projects will enable the regime to continue investing in public projects, albeit with an increase in debt.
“However, these loans are not as concessional, but for now, they potentially contribute to improving the country’s competitiveness. However, this economic relationship must be understood as a business relationship, where even the buses have to be purchased by Nicaragua. The government needs to adjust its expectations realistically regarding what it can expect,” concluded this expert, who requested anonymity.
“Paper projects”
In December 2024, the final fleet of Chinese buses arrived in Nicaragua, completing a total of 3,000 units. It is worth noting that the regime continues to conceal the real price of these buses.
Economist Óscar René Vargas is critical of the projects presented by the regime in partnership with China. According to him, the Interoceanic Canal project is the best example of the lack of seriousness and viability of these initiatives.
“If the previous route, which was shorter, was going to cost about $100 billion, now imagine with the new route that is longer. This is a ball of hope that Ortega is throwing, because he knows there is no hope in the country. Geopolitically, we will see what happens with President Trump. We already saw that he referred to trying to control the Panama Canal, and I can only imagine what he must think about the construction of a canal in Nicaragua by the Chinese,” he said to La Prensa.
Another economist consulted pointed out that beyond the projects, what stood out the most in the country’s relationship with China was the increasing debt, citing as an example the project for the reconstruction, expansion, and modernization of the Punta Huete International Airport in San Francisco Libre.
“For the Punta Huete airport, the contracts are for $200 million each. From this, we know that they have already paid about $80 million in advance. The accelerated level of indebtedness that the government is incurring is striking,” said this specialist.
The regime of Daniel Ortega expects the Gross Domestic Product (GDP) to grow by 4 percent next year, reaching 4.2 percent by 2026, and 4.5 percent in 2027 and 2028.
These expectations are higher than those of the International Monetary Fund, the World Bank, and Fitch Ratings, which project growth rates between 3.4 percent and 3.5 percent for the upcoming year.