By Entorno | 2025-07-18

Two years after Honduras broke diplomatic ties with Taiwan in favor of Beijing, officials say a free trade agreement (FTA) with China is nearly complete. However, on the ground, the economic gains promised remain elusive, while key industries struggle and trade imbalances deepen.

According to a June report by Hibueras, a spokesperson from the Chinese embassy in Tegucigalpa said the FTA is "practically ready" and needs "only a final push."

Since negotiations began in July 2023, both sides have completed six rounds of talks and reached consensus on trade, services, investment and cooperation.

Still, many in Honduras are questioning whether the shift has been worth it.

"China has promised much, but so far we've seen little more than symbolic cooperation," said Javier Amador, director of the National Association of Aquaculture Producers of Honduras (Andah), in a report published by Expediente Público on March 26.

Lost markets, little aid

Since the switch, the shrimp industry, once a major exporter to Taiwan, has been hit hard. About 65 shrimp companies, including two processing plants, have shut down, mostly because of the loss of access to Taiwan's market.

Even after Honduras and China signed an Early Harvest Agreement in 2024, allowing tariff-free Honduran exports of shrimp and melons to China, Honduran producers say the profits from sales in China do not match profits in Taiwan.

"Even with a 20% tariff," Taiwan is more lucrative than China is for Honduran producers, said Amador.

Meanwhile, aid and investment from Beijing have largely failed to materialize. China pledged $96.8 million to build houses for hurricane victims and $285 million to rebuild 12,000 schools, but as of mid-2024, most of those funds remain undelivered.

Although the Honduran government has reported progress, claiming 5,000 schools rebuilt, the credit goes to Honduras’s own Social Investment Fund, not to Chinese aid.

A growing imbalance

The trade deficit with China continues to widen. In 2024, Honduras exported just $35.8 million to China, while importing more than $2.5 billion in goods. For every dollar it exports, Honduras imports almost 70.

"This asymmetry leaves us at a structural disadvantage," political analyst Lester Ramírez told Expediente Público.

The country remains dependent on exporting raw goods, while China sends in high-tech products.

Even so, FTA negotiations are advancing. Of the 23 chapters, 22 have been finalized, with talks ongoing over market access and rules of origin.

"This is the most delicate part," Helui Castillo, trade policy manager at the private sector council Cohep, was cited as saying by Expediente Público. "It's better to have a slow negotiation than a bad one."

Many business leaders see the alliance as ideologically driven.

"This decision seems more political than strategic," said Eduardo Facussé, former president of the Chamber of Commerce and Industries of Cortés. "If China doesn't open its market to us, we shouldn't keep ours open."

Facussé and others have called for tariffs on Chinese goods until reciprocity is guaranteed.

Honduras must study China carefully before finalizing the deal, journalist Marcos Gonzáles, co-founder of Reporte Asia, said.

"China is unstoppable. If you're not ready, they'll dominate your market," he warned. "Everything depends on how much sovereignty you're willing to give up."

Despite Beijing's rhetoric of "win-win," two years into the China–Honduras partnership, the benefits remain heavily one-sided.