Panama`s economy has always been hallmarked by foreign investors. This began with the US construction of the Panama Canal in 1903 and continued over the years through infrastructure funding, capital deposits and real estate investments from the USA, Canada and South America. Europeans have only recently begun to arrive, and that in small numbers. In the past, investors from China and the Arab world were hardly represented at all. That is presently changing as China has now discovered Panama. Investments in their billions and Chinese companies and investors alike are now on the way. Here you can read more about the ongoing changes that Chinese interest brings.
Chinese groups were already involved in some Panama infrastructure projects during the last few years. Yet new developments between both nations are of a more significant and extensive size, and will have massive effects on Panama`s economy. The Chinese telecommunications giant Huawei and the world`s largest building firm China Construction both opened head offices for Middle and South America in Panama at the end of 2015. Chinese companies have currently approved projects to the tune of 2 billion US dollars. This is immense for a small country like Panama. Chinese businesses will establish a new container port on the Canal (900 million USD), a thermoelectric power station (also 900 million) and the most state-of-the-art conference centre in Middle America (200 million).
Yet the biggest bombshell came just two weeks ago. Panama took up diplomatic relations with China and simultaneously ended them with Taiwan. China is a more significant economic partner for Panama. It represents the largest trading partner in Panama`s free trade zone (number two in the world after Hong Kong) and the country which uses the Canal the second most.
Where does Chinese interest in Panama come from?
In Latin America, China has made plans for trade deals worth 500 billion and direct investments worth 250 billion over a 5 year period (2015-2019). It would accordingly like to use Panama as a trade and logistics centre. In the meantime, China is financing more infrastructure investments in Latin America than the World Bank. So too, since Panama`s currency is the US dollar, China`s requirement for dollar investments is satisfied.
Such a development between the two countries is not only positive for Panama`s economy (GDP growth since 2002: 8.5% per annum), it will also influence real estate prices. Workers and employees will come to Panama thanks to the big companies and new projects. Furthermore, Chinese investors will be in a position to see that there are not many places in the world offering best-located apartments on the Pacific promenade for 2500 USD per square metre and a 7% rental yield per year. And all that in a democratic, emerging country with the US dollar as its currency.