SOME INTERNATIONAL ENTITIES still refer to China as a developing country, but in reality the Asian nation is an international powerhouse economically and otherwise.
Barbados has had diplomatic relations with China since 1977, and over the years the relationship has grown to the stage where the island has benefited – and continues to benefit – from Chinese financial and other support.
The same has obtained for other countries in the Caribbean that have followed the one-China policy, meaning they do not recognise or have relations with Taiwan, and China’s influence is also highly visible in Latin America.
Indications are that this is likely to continue for years to come, and indeed should increase. This was illustrated most recently by Prime Minister Freundel Stuart, while speaking at the groundbreaking ceremony for the redevelopment of the historic Sam Lord’s Castle into a new Wyndam resort. That project is being funded by Chinese money.
Addressing those in attendance, Stuart said: “The commencement of this project represents the beginning of a new era in Barbados’ cooperative relationship with China.”
But this was not the first time this point was made, and information suggests that Barbados has increasingly been benefiting from Chinese assistance even before the current administration was in office.
A 2013 study by respected Caribbean economist and diplomat Dr Richard Bernal, produced for Washington think-tank the Inter-American Dialogue, showed that China’s foreign direct investment (FDI) in the region amounted to US$2.2 billion between 2003 and 2011, with Barbados receiving about US$25 million of that amount between 2004 and 2011.
“China’s FDI increased by more than 500 per cent in relative terms between 2003 and 2011, with estimated stock of Chinese FDI in the region totalling US$500 million in 2011,” Bernal said. “Rising levels of FDI reflect deepening economic engagement between China and the Caribbean over the past two decades.”
And Bernal also shared his thoughts on what the Caribbean should do to attract even more support from the Chinese
“Caribbean governments will need to advance beyond traditional trade and investment to offer prospects in areas such as entertainment, sports, training and real estate,” he said.
Barbados’ emphasis on its relations in China was illustrated when the current administration established an embassy there. It was initially headed by former prime minister Sir Lloyd Sandiford, and the current office holder is Dr Chelston Brathwaite, a noted regional agriculturalist.
But while arguably the tangible benefits from that effort are not visible to the naked eye, continued financial support from China to Barbados is apparent, especially from a dollars and cents viewpoint.
Addressing the issue from the perspective of FDI, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) said although Chinese corporations were previously “relatively unknown” in this part of the world, “their direct investments in the region have averaged about US$10 billion per year since 2010.
“Their presence and economic leverage have become very significant in many industries and countries of the region, but their motivation, strategy, and procedures are not always well understood by . . . governments, businesses and civil society,” ECLAC said.
“Similarly, Chinese companies still need to gain a better understanding of Latin America’s business environment and opportunities. China is still far from being one of the largest sources of FDI in Latin America, but Chinese companies have a significant presence in many sectors and industries, particularly in oil and mining.”
The report also pointed out that “not all Chinese investment projects in Latin America are successful” because “Chinese companies are still learning to operate in an economic environment that is very different from that of their home country, a factor that can lead to implementation problems and project cancellations”.
These challenges notwithstanding, indications are that Barbados and other countries in the region will continue to benefit from increased support from China, at a time when their economies are still struggling and their debt levels continue to climb.
China has pledged US$250 billion in investment for Latin America and the Caribbean over the next ten years, and President Xi Jinping expects trade between his country and the region to reach US$500 billion in that period.