Introduction
The 2025 U.S. National Security Strategy (NSS) prioritizes attention to threats against the United States in the Western Hemisphere, including the commitment to reduce the influence of the People's Republic of China (PRC) in the region and to "deny non-hemispheric adversaries the capacity to position forces or other threatening capabilities, or to own or control strategically vital assets in our Hemisphere." While the focus of the significant expansion of U.S. military presence in the region in 2025 was on drug operations and in Venezuela, the activities of the PRC in Nicaragua represent another example of the threats that the NSS commits to addressing.
Political Linkage
Nicaragua is relatively unique in the region, as its change in relations with the PRC in December 2021 was not the first. The leftist Sandinista guerrillas, who took power in Nicaragua in 1979 through armed means, waited six years before establishing relations with the PRC in 1985. Just five years later, the country withdrew its recognition of Beijing and restored it to Taiwan in 1990, following the restoration of democracy with the election of Violeta Chamorro. Similarly, although Daniel Ortega returned to power in January 2007, he waited nearly 15 years before re-establishing relations with the PRC, partly in response to the expansion of U.S. sanctions and other pressures against his authoritarian regime.
Ortega's most recent recognition of the PRC was relatively slow, both in its implementation and in receiving the benefits coming from China that traditionally accompany such diplomatic shifts. However, by 2023 the PRC had signed various agreements with Ortega's regime for large infrastructure projects, although so far only a few have progressed.
Trade
After establishing diplomatic relations, the governments of Nicaragua and China signed 13 memoranda of understanding (Memorandums of Understanding, MOUs) and began negotiations for a free trade agreement, aiming to expand trade between the two countries. Similar to other small states in Central America, companies based in the PRC have been much more successful in penetrating the Nicaraguan market; meanwhile, Nicaraguan exporters have faced difficulties selling in PRC markets. In 2024, Nicaraguan exports to the PRC totaled just $82.1 million, while imports from the PRC reached $1.65 billion, nearly 20 times more. To generate greater benefits for Nicaraguan exporters while the governments worked to finalize a free trade agreement, the Sandinista government and its Chinese counterpart implemented a provisional "early harvest" agreement cosecha temprana, although this did little to correct the marked imbalance.
Natural Resources
In the mining sector, since diplomatic recognition, companies based in the PRC have significantly expanded their presence in the country through concessions whose terms, as well as the activities of these firms, are not clear. In fact, since December 2021, the Ortega government has granted at least 43 concessions to eight different mining companies based in the PRC to operate in Nicaragua, representing nearly 5% of national territory. These concessions have primarily focused on gold extraction in the remote northeast of the country. Such Chinese concessions often overlap with areas designated for indigenous peoples, putting those communities at risk and causing environmental damage.
Construction and Infrastructure Projects
Like many authoritarian populist governments, the main avenue of China's commercial advancement in Nicaragua has not been direct investment or the purchase of Nicaraguan products, but rather infrastructure projects under questionable terms, financed through loans from Chinese institutions that must be repaid by the Nicaraguan government and, ultimately, its population.
Between 2023 and 2025, the Nicaraguan government signed commitments with PRC-based institutions for 11 main loans intended to execute works and supply products primarily provided by Chinese companies. The terms of these agreements were highly questionable. They included amortization periods of 15 years, unusually short for state-backed projects. The loans also included unusually high interest rates, often between 4% and 6%, in addition to other burdensome conditions such as high origination fees. With these interest and fee structures, even with relatively short maturities, the Nicaraguan government committed to repaying more than $2 billion in exchange for $1.437 billion in credits to be disbursed for works and products from companies based in the PRC.
Moreover, the terms of the loans often included requirements that significant portions of the funds—sometimes up to 20%—had to be paid in advance to companies based in the PRC before any work was performed, allowing them to retain the money if the project was canceled or if problems arose requiring the contract with the Chinese supplier to be terminated.
These loans financed goods whose commercial value was questionable but created strategically valuable infrastructure for the PRC and positioned its companies in deep relationships with Nicaraguan business and political elites.
The flagship project of China was the modernization of Punta Huete Airport by the PRC-based company CAMCE. The airport features an expanded runway, originally designed to accommodate Russian strategic bombers during the Cold War and, in theory, capable of accommodating Chinese aircraft. However, from a commercial perspective, the airport is relatively unnecessary: it is located almost an hour's drive from the capital, Managua, where the existing airport was used at less than half of its capacity.
The Nicaraguan government has also contracted CHINAICTC (based in the PRC) to construct a new $335 million logistics center and undertake other improvements at the port of Corinto, which is likely to disproportionately benefit Chinese companies that import the growing range of products from the PRC through Chinese maritime logistics firms.
The PRC-based company CSCEC has been contracted for the second phase of an upgrade to Nicaragua's Pacific Coastal Road, although China has yet to disburse the funds and, consequently, the project has not yet begun.
The company CAMCE has also been contracted to construct three liquefied natural gas (LNG) storage spheres, although the project's work has not yet started.
Additionally, a Chinese construction company has been contracted to build the social interest housing complex "Nuevas Victorias," delivering 920 homes in July 2025, and ".other 100 in December. However, the units are not delivered for free, but are sold, with financing under burdensome conditions that makes it difficult for low-income people —for whom the properties were built— to become owners.
In the electricity sector, companies based in the PRC have been contracted to build multiple solar and wind energy generators, mainly through China Construction and Communications Corporation (CCCC), which has been included in blacklists of the World Bank for fraud and the U.S. Department of the Treasury for its ties to the Chinese military. Among these projects are the “El Hato” solar park, worth 67 million dollars, the Nindirí solar park, worth 71 million dollars, the “El Barro” wind park, worth 69 million dollars and the “La Mesita” wind park, worth 57 million dollars, among others.
Digital Sectors
Chinese telecommunications companies, particularly Huawei, play a dominant role in the sector in Nicaragua, despite concerns raised about digital espionage. In fact, Huawei is at the center of the government's plan to integrate 5G and other new digital technologies in the country.
Other lesser-known Chinese companies have also been contracted for digital infrastructure. Among them is a project worth 86 million dollars led by Zhengzhou Coal Mining Machinery Group.
As in other countries under authoritarian regimes —including Venezuela, Cuba, and previously Ecuador and Bolivia— companies based in the PRC are also being contracted to build digital infrastructure that, under the argument of public safety, will support state surveillance and control. In Nicaragua, the main Chinese project in this category is the National Emergency Response System, Sinarem.
Chinese Expansion in the Nicaraguan Retail Sector
An unforeseen side effect of the incentives created by the Sandinista government to attract Chinese investment was the proliferation of Chinese retail stores across the country, competing with —and often displacing— local businesses. Local merchants report sales declines of up to 70% as a result of the influx of new Chinese stores and the advantages they seem to have in financing and regulations. By the end of 2023, there were estimated to be about 400 Chinese retail establishments in Nicaragua, ranging from small businesses to large stores like “China Mall.” The trend was so pronounced that Nicaraguan authors talk about the “chinification” of the country.
In an attempt to attract Chinese investment to Nicaragua, Ortega's government is establishing free trade zones. However, some analysts fear that this will only grant greater competitive advantages to companies based in the PRC over local ones, facilitating the import of more Chinese goods, while reducing tax collection for the Nicaraguan state.
Chinese Penetration in Nicaraguan Society
With the political backing of Ortega's regime and thanks to personal and commercial relationships between Chinese personnel and key figures in the administration, such as Laureano Ortega, entities based in the PRC have gradually built networks of influence in Nicaragua. Among these initiatives is the establishment of a Confucius Institute at the National Autonomous University of Nicaragua, in Managua in September 2024, as well as the relocation of Nicaraguan journalists to the PRC for training programs and visits aimed at strengthening ties.
The Chinese penetration in the Nicaraguan business community has also deepened, as evidenced by the organization of the 17th China-Latin America Business Summit in Nicaragua in November 2024.
Security Cooperation
In the military sphere, at least since 2023, the PRC has sponsored trips of members of the Nicaraguan National Police for training in China. In 2025, the General Commissioner of the Police, Francisco Díaz, reported that Nicaragua sends 400 police officers to the PRC for training each year, in addition to sending another 500 to Russia.
Military cooperation between China and Nicaragua is not limited to training and visits of personnel. Since at least May 2025, the Nicaraguan government has also acquired security equipment from Chinese companies, including the renowned defense company Poly Technologies.
In December 2025, the People's Liberation Army Navy vessel Silk Road Arc made an unscheduled stop at the port of Corinto, Nicaragua, which the PRC has turned into its main maritime logistics center for trade with that country, before crossing the Panama Canal towards port commitments in Jamaica and Barbados.
In the event of a military conflict between the PRC and the West in the Indo-Pacific, military relations, logistics, and other forms of Chinese presence in an opaque and openly anti-American regime like Nicaragua's create options for the EPL to operate from Nicaragua against the United States. Recent exercises that include military operations of the EPL in the Gulf of Mexico and the Caribbean, as well as public reports on the possibility of a military base in Cuba, suggest that this is a plausible threat.
Conclusion
The sustained advance of China in Nicaragua poses a double-edged threat. For Nicaraguans, the multiple signs of questionable contractual conditions and the non-transparent manner in which their projects are advancing in the country make it highly likely that the companies based in the PRC executing the works, as well as the elites linked to Ortega's regime signing the agreements, benefit more than the Nicaraguan population. From a broader strategic perspective, however, the physical presence of China and its ability to operate opaquely in the country increase the risk that Nicaragua could be used as a platform for Chinese anti-American activities, both in times of peace and in a war scenario. These types of threats to the United States in the region are precisely what the new National Security Strategy of 2025 promises to address.
Dr. Robert Evan Ellis is a Research Professor on Latin America at the United States Army War College. He is also a specialist in China's expansion strategy in the Latin American region and Transnational Organized Crime.
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