On 9 July 2018, China and Panama started negotiating a free trade agreement (FTA), with which the Central American country seeks to enter the gigantic Chinese market, while China is trying to expand into Latin America. The negotiation began a year after Panama established diplomatic relations with China after breaking off with Taiwan.

China is the third largest export destination for Panama with more than $42 million dollars in 2017. Panama exports mainly coffee, bovine skins and fishmeal to Asia, and sees the possibility of trading other products such as fruits, cocoa and seafood. It also hopes to attract more Chinese investments for its infrastructure developments. Panama on the other hand has excellent natural condition as a logistic hub, commercial hub and distribution and collection center which offers China a faster and more economical route to distribute its goods to Latin America. In fact, China is the second largest user of the Panama Canal behind the United States.

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