Paraguay Willing to Open Up to Chinese Investment, says Finance Minister

Beijing is now a top trading partner of many countries in the region and a major investor in mining, agriculture and infrastructure

Photographer: Lam Yik/Bloomberg
By Ken Parks
September 18, 2023 | 08:29 AM

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Bloomberg — Taiwan’s last South American ally would consider Chinese investment to develop its nascent green hydrogen industry as it seeks to become a regional fertilizer supplier, Paraguay Finance Minister Carlos Fernandez said.

Paraguay has ample supplies of the two key ingredients needed to produce green hydrogen — water and renewable power from two massive hydroelectric dams — that can be further processed into synthetic fuels and fertilizers.

“I’m open to talking to any entrepreneur from China who wants to invest and create jobs in Paraguay,” Fernandez said in an interview with Bloomberg TV. “It’s not a question of China versus Taiwan. We are open to everyone.”

China has steadily picked off Taipei’s diplomatic allies in Latin America with Honduras switching sides this year. Beijing is now a top trading partner of many countries in the region and a major investor in mining, agriculture and infrastructure.

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President Santiago Peña, who started his five-year term in August, has said he will maintain the alliance with Taiwan that dates to 1957.

The Peña administration wants to diversify Paraguay’s $43 billion economy that’s heavily dependent on soy and meat exports by developing green hydrogen and expanding a manufacture-for-export industry that shipped goods worth more than $1 billion last year.

Fernandez warned that Chinese investment is displacing the US and Europe in Latin America.

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“The US could play a bigger role on economic investment in the whole region and not only Paraguay,” he said. “Otherwise someone else will take its place.”

Other key items from the interview:

  • Fernandez expects Paraguay’s central bank to continue lowering borrowing costs after last month’s quarter-point cut to its benchmark interest rate.
  • “We are in a different cycle from the US and Europe because we already have inflation converging around 3%,” he said.
  • Paraguay might sell four- or five-year global bonds next year instead of longer-dated debt amid high US rates.

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