The FTA with China transforms Nicaragua into the most important operations center for Latin America

What has happened one year after the Free Trade Agreement between Nicaragua and the People's Republic of China came into force? This historic agreement, which is advancing by leaps and bounds, has further forged the unity, development, prosperity and future of both nations.

According to political analyst Adolfo Pastrán, "One year after the FTA we can see tangible and demonstrable results. Nicaragua's exports to the People's Republic of China have increased by 80%, generating significant income for the country, more opportunities for the production sector and more job opportunities for Nicaraguans."

As of 2021, there was a reestablishment of diplomatic relations between the two countries. This has allowed the signing of important agreements, memoranda of cooperation and investment that have been strengthened exorbitantly with the Free Trade Agreement.

According to Pastrán, "this relationship was raised to the level of a strategic partnership, and we saw different important signatures throughout 2024. These agreements and projects are already underway. One of them is the accelerated construction of the Coastal Highway, the new Punta Huete Airport, the Bluefields Deepwater Port, numerous solar power generators and other projects in health, education and culture."

Investment growth for Nicaragua
Nicaragua demonstrated the capacity to become the "hub" of Chinese foreign investments in Central America, this through the holding of the China-LAC Business Summit in November 2024. The benefits and advantages of the strategic position make Chinese businessmen have this Central American country in their sights; as the Most Important Operations Center for Latin America.

While this treaty provides opportunities for the national product to have preferential access to the vast Chinese market, it also provides opportunities for the installation of Chinese companies in Nicaragua, which according to authorities of the Association of Merchants exceed 800; It allows the final consumer to be the most economically benefited, obtaining quality products at affordable prices.

This positive factor of access to quality and price adjusts the budget of small entrepreneurs like Xiomara Montiel, owner manager of Baho, Sopas y Más «Los Tres». She assures that, 4 months after its establishment; she has acquired her glassware in Chinese businesses, which has allowed her to reduce costs in instrumentation.

«This treaty has been very important, since Chinese businesses have been established in our country, giving small entrepreneurs the opportunity to be able to acquire items at a low cost. For example, I bought cups and plates to provide my buffet services at 30 cordobas per unit price, and in other places they were quoted at 50 or 60 cordobas. So, this allowed me to extend my budget.»

Introduction of more products from China
The equipment of this business with products manufactured in China, which also, according to Montiel, have excellent quality and elegant details, has allowed a good acceptance of the clients, which has generated a growth of the staff in the small company. Currently, 4 job openings have been created; thus contributing to the family economy.

«We, as Nicaraguans, must think about the basic needs depending on the sector where we are investing and not think in a way that 'they are taking over', but rather that they are giving us the facility to be able to undertake and develop ourselves in order to have supply and demand within the country, which allows me as an entrepreneur to develop, have excellent products and continue advancing in our businesses»; added Xiomara Montiel.

Challenges and goals for 2025 for Nicaragua
Thanks to the Free Trade Agreement, Nicaragua was able to diversify its markets. It is now part of one that has more than 1.4 billion consumers; a sector where many countries want to enter.

One of the achievements is that the sugar quota signed during the FTA was 50,000 metric tons per year, and this was over-projected, selling quantities greater than 70,000 tons. In other words, Nicaraguan sugar is well received by the Chinese market.

In addition, greater growth is expected for the tobacco, coffee, bovine, rum and seafood sectors. Expectations have been exceeded thanks to the work carried out by the Central Government so that small and medium producers are prepared to compete with the standards requested for a demanding market.

Regarding road infrastructure projects, the political analyst assures that "we need to sell more to China and China wants to sell to Latin America through Nicaragua."

Project development
"For that, we need to have better, more expanded roads. This is why we have seen the start of the third expansion of Puerto Corinto, the deepwater port in the Caribbean and an air terminal that will allow large-capacity aircraft to land to attract passengers and cargo. So, all this positions us as a very important strategic partner of China in the Central American region; and gives a leap in the regional competitiveness of Nicaragua.»

Added to this is the Sunny Fortune, the first direct trade route between China and Nicaragua; which saves navigation and waiting times for ships. In addition, it reduces maritime freight costs; improves supply chains and strengthens the integration of multimodal transport.

Source: TN8