Uruguay’s China overtures find resistance at home and abroad. And the suspension against Rafael Correa’s Citizen Revolution party in Ecuador.
Ignacio Portes & Jorge C. Carrasco
FOREIGN AFFAIRS
Uruguay’s China overtures find blowback at home and abroad
In a meeting with business leaders last week, Uruguayan Economy Minister Gabriel Oddone said that the US is applying “unimaginable” and “unsustainable” daily pressure on his country to loosen its ties with China.
The warning followed officials from the now-departed Gabriel Boric administration in Chile being sanctioned by the US after they approved the construction of an undersea cable project with Beijing, and, not long after, China was forced to sell two ports in the strategic Panama Canal in response to demands from Washington.
While Oddone did not specify which Beijing ties the US objected to, the pressure followed Uruguayan President Yamandú Orsi’s visit to China in February, during which he met his counterpart, Xi Jinping, and signed more than 10 bilateral agreements on investment promotion, trade and other areas.
After that meeting, Xi said “China and Uruguay should continue to firmly support each other’s core interests and major concerns.”
Chinese companies have invested in the modernization of Uruguay’s Port of Montevideo, financed the construction of solar farms, and helped build the infrastructure to roll out 5G telecommunications in the country.
Under Luis Lacalle Pou, Orsi’s center-right predecessor, Uruguay even threatened to break with its Mercosur partners in order to sign a bilateral agreement with China. Orsi, meanwhile, has suggested another path to grow closer to Beijing: a Mercosur-China trade agreement, still highly unlikely in the short term.
👉 Why it matters. The implication of Washington’s pressure seems clear: these newfound ties with Beijing could come at a cost for Uruguay’s relationship with the US. But resistance to China is not only coming from Donald Trump’s administration, as local industries and retailers have also forced Orsi’s administration to regulate imports from the Asian giant, whose mass-produced, cheap goods were threatening local businesses.
China has been Uruguay’s top trading partner for the last 14 years, and its presence has become increasingly disruptive. Chinese e‑commerce platforms such as Temu and Shein have surged in the country since 2024, offering clothing, electronics and household goods at prices that local retailers cannot match.
For consumers, Chinese platforms offer relief from the high prices in the Mercosur area. Clothing is the clearest example: inside the customs union, apparel prices are structurally higher than in much of the rest of the world due to import tariffs, domestic protectionism and local taxes. The so-called “Zara Index,” developed by Brazilian investment bank BTG Pactual, found that clothing sold by Zara in Uruguay was 19% more expensive than in the US, and 75% higher when adjusted for purchasing power.
Opening the door to platforms like Shein and Temu compresses prices almost instantly, benefiting consumers but threatening the survival of local producers and retailers who operate under far heavier cost structures. Shop owners and small manufacturers warned that competing with China’s industrial scale and state‑supported logistics was “extremely difficult, if not impossible.”
In response to the flood of low‑cost imports, Uruguay announced that it will impose a USD 800 yearly cap on tax‑free online purchases under its franchise regime. The measure was framed as a way to restore “fair competition,” but critics say it is also an admission that existing trade and tax models were not built for frictionless global e‑commerce.
In Brazil, President Luiz Inácio Lula da Silva imposed a tax on cheap cross-border imports in 2024 after intense pressure from local retailers. However, polls show it has been the single most opposed policy of his term.
Just as Beijing’s investment in local logistics and infrastructure set off alarm bells in Washington, China’s growing e-commerce footprint in Uruguay was met with angst and unease among local business leaders, two signs that the Asian giant’s increased role on the continent will be far from seamless, despite its indisputable appeal.
ECUADOR
Correa’s party suspended amid campaign financing probe
An Ecuadorian investigation into campaign financing has led to a nine-month suspension for the left-wing Citizen Revolution party, founded and still steered from abroad by former President Rafael Correa, raising red alerts ahead of next year’s local elections.
The decision was based on a money-laundering probe into allegations that Venezuelan cash was used to finance Luisa González’s candidacy in the 2023 snap presidential elections. Electoral laws passed by Correa’s own government in 2009 allow for parties to be suspended for up to 24 months amid ongoing investigations.
Prosecutors claim that cash from Caracas entered the campaign through informal channels in what they call the “Caja Chica” operation, and was then distributed by party insiders. The case was built around the testimony of former Citizen Revolucion member Santiago Díaz, who says he was ordered to transport money directly from Venezuela.
The suspension came just 10 months into the second term of right-winger Daniel Noboa, meaning that Correa’s party could still contest the next presidential election in 2029. But the ban still leaves large parts of Ecuador’s electorate without political representation in 2027, as the movement will be unable to register candidates for the 222 cities and 23 provinces up for grabs in next year’s vote.
👉 Why it matters. The ruling adds another unpredictable element to an already unstable country. Correa’s unproven electoral fraud allegations in 2025 left him isolated in the region, while the incumbent Noboa was weakened by a referendum loss shortly after, and his tough-on-crime policies have so far failed to curb the nation’s crime epidemic. The latest stories suggest that both leaders could be credibly accused of authoritarian tendencies by their rivals, risking a polarized situation with no clear resolution in sight.
Speaking from exile in Belgium, Correa called the decision a “monstrosity,” criticizing the prosecutor’s office and the electoral judge who issued the ruling. “They want to compete alone in the elections to see if they can win,” Correa quipped. “Does anybody still doubt that we live in a dictatorship?” added Citizen Revolution in a statement.
Correa’s party could resort to backing allied candidates that don’t run under Citizen Revolution’s banner, as it has successfully done in the past in key races like the Quito and Guayaquil mayorships. But it will inevitably lose some leverage in negotiations with allies as it tries to hold its ground in the 9 provinces that it currently controls.
The party plans to appeal to the Inter‑American Commission on Human Rights and the UN Human Rights Council, arguing that the measure violates political rights and is backed only by uncorroborated testimony from a discredited witness.
Noboa dismissed claims about persecution, saying the probe was not politically motivated. “This is part of the fight against criminality, transnational political corruption and drug trafficking,” the president argued. Links between Citizen Revolution and Venezuela’s regime have been discussed many times, including when current President Delcy Rodríguez handed an oil deal to allies of Correa.
The case remains sealed, limiting what is publicly known, but the Ecuadorian press has reported that raids have already been conducted at party headquarters and private residences.
QUESTION OF THE WEEK
Last Friday, we asked about the unorthodox way Alberto Fujimori resigned as Peruvian president in 2000. While 51% guessed that his stepdown announcement was made through a VHS tape, the real answer was via fax, which only 27% of you got right.
Fujimori was on an official visit to Japan, where he held dual citizenship, and announced his resignation from there to take advantage of tougher anti-extradition protections.
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