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Chinchilla’s trip: What you need to know

From the print edition

President Laura Chinchilla returned to San José Wednesday, wrapping up a two-week trip to Asia with the goal of fortifying ties with China and South Korea. The president and her delegation spent the majority of their time in China, hobnobbing with various business leaders and government heads, including Chinese President Hu Jintao. 

In South Korea, the Costa Rican government honored 50 years of diplomatic relations with the country, and the two nations promised to work on a free trade agreement. 

This marked Chinchilla’s second trip to Asia after traveling to Japan at the end of last year. But how successful was this latest tour for the Central American country as it looks to court investment from the sturdy economies in East Asia? 

Following is a guide to understanding Chinchilla’s journey to Asia.

Was the Asia tour a success?

Laura Chinchilla 2

During an official trip to South Korea this week, Costa Rican President Laura Chinchilla visits the Monument of the Fallen, at the South Korean National Cemetery. Chinchilla and South Korean President Lee Myungbak met Tuesday to commemorate 50 years of relations between the two countries. Courtesy of Casa Presidencial

A success might be going too far at this point. But in the future, we might look back and see the riches it sprinkled into Costa Rica. The trip created a lot of potential for China to invest in Costa Rica. 

Chinchilla met with Chinese leaders to discuss building an industrial park for Chinese businesses, funding for a logistical corridor to ease access to the country’s Atlantic coast, and ways for China to help pay for the expansion of Costa Rica’s oil refinery on the Caribbean coast.

Costa Rica hopes to take advantage of a free trade agreement signed with China last year without resorting to mining (one of the reasons China invests so heavily in other countries). These ideas – the industrial park and fixing up the Caribbean – offered up by the Chinchilla government appear to have China interested.

The two-day South Korea trip felt more symbolic, as the countries celebrated 50 years of ties, while the South Korean government showered gifts upon its Costa Rican guests. 

Still, the impetus behind most of these excursions is to attract foreign investment – and South Korea and Costa Rica agreed to further discuss signing a free trade agreement. 

That advancement came during talks between Chinchilla and her South Korean counterpart, Lee Myung-bak, Lee’s office said in a statement. The two nations emphasized expanded cooperation in the areas of renewable energy, environmental protection and “green” growth.

As for immediate results, Costa Rica did get major donations from China. As reported in last week’s edition of The Tico Times, China offered to fund and constructs a $25 million police academy in the Caribbean canton of Pococí. The Chinese also gave close to 5,000 computers for Costa Rican schools. And just for the heck of it, China threw in $8 million for Costa Rica to use at its own discretion.

The leaders also discussed building a large industrial park inside a Costa Rican free zone, a move that would put more investment dollars into the Central American country and give China a hub in the region for producing and selling its products.

Those are some nice gifts. What does China want from Costa Rica?

Commenters continue to dream up all types of odious intentions for why the Chinese keep giving “gifts” to Costa Rica, such as the $100 million National Stadium, completed last year, and the police academy. But in talks with Chinchilla, China made it clear what it’s looking for: access.

The United States remains the biggest investor in the region. Overall, China only recently has started to put money into Latin America. But the Chinese would like to make a dent into the U.S.’s enormous influence here. 

In Central America, Costa Rica is the lone country with diplomatic ties to China. The rest of the isthmus maintains relations with Taiwan, but in 2007, then-President Oscar Arias dissolved its diplomatic link with the island nation and struck up a relation with China. 

Arias hoped to take advantage of China’s booming economy. He made Costa Rica’s first diplomatic visit to Beijing in 2010. Chinchilla just returned from the second. 

China is intrigued by the prospect of placing an industrial park in Costa Rica. China’s model for maintaining high growth rates focuses on the creation of Special Economic Zones. 

The construction of an industrial park would further enhance Costa Rica’s own system of free zones, which process 50 percent of exports

Costa Rica, the third country in Latin America to sign a free trade agreement with  China, could serve as a home for Chinese companies looking to set up production facilities in the region.

The logistical corridor and expansion of a highway to the Caribbean city of Limón could benefit both parties. The corridor would give easier access to the Caribbean ports for Chinese-made products, which would likely be produced in a free trade zone in the Central Valley. On the other side, Costa Rica would see its poor infrastructure improved. 

The Costa Rican government also wants China’s help in upgrading its oil refinery in the Caribbean. The China National Petroleum Corporation and Costa Rica’s National Oil Refinery are negotiating the terms of the $1.3 billion project – and how it could be paid for. Negotiations also are ongoing for the Limón highway expansion.

Still, on a larger scale, those millions of dollars China is sending to Costa Rica don’t mean much for the Asian giant. 

Excuse me, but how is $25 million for a police academy not much money?

It’s a windfall of cash for Costa Rica. But to China, those millions are a drop in the bucket. A million dollars aren’t so cool anymore. What’s cool are a billion dollars, and that amount is exactly what other Latin American countries have received from China. 

According to El Financiero, China represents 9 percent of the foreign direct investment (FDI) in the region. That places the Chinese third in Latin America behind the Netherlands and the U.S. Besides those three countries, no other foreign investor has an FDI greater than 4 percent in Latin America.

But the majority of China’s money ends up in two South American countries: Brazil and Argentina. Costa Rica’s Foreign Trade Ministry (COMEX) received its largest investment from China in 2010, when the Chinese allotted $3.6 million to Costa Rica. In 2011, the latest figure released, Costa Rica received $1.7 million from China.

To compare, citing figures from the Latin American Caribbean Economic Commission, El Financiero stated that Brazil received $9 billion from China in 2010. Argentina received more than $5 billion. China is the largest foreign investor in Brazil, as the Chinese try to take advantage of Brazilian’s natural resources, energy potential and high-tech industries. 

And while Costa Rica certainly appreciates the hand-outs, it’s worth noting that, according to COMEX, China ranks 16th in FDI in Costa Rica. 

Why did Chinchilla visit South Korea?

Chinchilla was offered an invitation to Seoul as soon as she took office, and her trip coincides with a half-century of diplomatic ties with South Korea. 

Other than free trade agreement discussions, the trip seemed to focus on showy gestures and unremarkable statements. 

Chinchilla backed Seoul’s policy on North Korea, agreeing that Pyongyang should carry out U.N. Security Council resolutions and international obligations. President Lee welcomed Costa Rica’s intention to join the Organization for Economic Cooperation and Development. President Chinchilla placed a wreath at the Monument of the Fallen, at the Korean National Cemetery. 

The governments also met to discuss education (and a possible exchange program) and health care. Chinchilla and her delegation, including Foreign Trade Minister Anabel González, met with South Korean business leaders.

Chinchilla became the first Costa Rican president to visit South Korea in 11 years, and during her four-day visit she did well in terms of schwag. 

Hankuk University presented Chinchilla with an honorary degree. The prestigious school, with an emphasis on foreign languages, bequeathed the same degree to U.S. President Barack Obama in March. 

Seoul Mayor Park Won bestowed honorary citizenship upon Chinchilla. Won also offered to train Costa Ricans on urban development. Chinchilla said of Seoul – the second largest metropolitan area in the world – that if she ever had to leave Costa Rica, the president now knows where she could find her second home.

Sounds like Chinchilla had a good time in South Korea. Did the Costa Rican government have as much fun in China?

The China trip included an honorary dinner with Jintao and a sightseeing tour.

Chinchilla, the daily La Nación noted, became the fifth female president to visit the Great Wall of China. She also saw the Bird’s Nest, the famous stadium built for the 2008 Summer Olympics in Beijing.

Finally, the Costa Ricans enjoyed their very own army – at least for a short while. The Tico entourage witnessed the famous Terra Cotta Warriors, a collection of statutes dating back two millenniums in the city of Xi’an.

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