As it has done in Africa, China is spreading its investment wings across the Caribbean and that’s expected to continue, perhaps accelerating in the years ahead.
And that’s happening at a time when Barbados is getting ready to send a new envoy, Dr Chelston Brathwaite, a former Inter-American Institute for Cooperation in Agriculture director-general, to China as the island’s ambassador and when many Caribbean states, Barbados among them, are going through some of their toughest financial times.
That assessment of China’s expanding presence in the Caribbean came from Dr Richard Bernal, a senior counsellor for the Caribbean region at the Inter-American Development Bank who had previously served as Jamaica’s Ambassador to the United States and the Organization of American States before becoming head of the Caribbean Regional Negotiating Machinery.
In a paper published by the Inter-American Dialogue, an independent think tank in Washington that focuses on Western Hemisphere issues, Bernal traced China’s growing foreign direct investment (FDI), which amounted to US$2.2 billion between 2003-2011. Of that amount, Barbados received almost US$25 million during the 2004-2011 period compared with Grenada’s US$52 million between 2006 and 2011.
Chinese companies have initiated ventures in more than a dozen countries; Cuba, Guyana, Suriname and Jamaica stand out as the most important destinations for investment.
“Rising levels of FDI reflect deepening economic engagement between China and the Caribbean over the past two decades,” Bernal added. “Beijing signed a series of bilateral investment treaties (BITs) with Cuba, Jamaica, Belize and Barbados in the 1990s and with Trinidad and Tobago, Guyana and the Bahamas in the 2000s. High-level Chinese delegations and investment missions, some involving the China Development Bank, have visited the Caribbean to identify projects.”
Historically, according to the former trade negotiator, China’s relations with the Caribbean were “driven by so-called cheque-book diplomacy or aid-based political competition with Taiwan”. But the reality was that the Caribbean represented a voting bloc in various international institutions, such as the United Nations, “making them attractive to China as it promotes foreign policy interests”.
When combined with the fact that China has its eyes on demonstrating to the international community that it maintains a commitment to “South-South” cooperation, the mix of factors explained why “China is reportedly expanding the size of its official missions in many Caribbean countries”.
Bernal, who has written extensively on Caribbean issues for United States and Caribbean publications, described Chinese state banks as the “leading lenders in the region”. Over the past five years they have extended credits to the region amounting to US$35 million, primarily through grants and loans for large-scale public works. On the list of Chinese-financed projects are:
Chinese state-owned enterprises acquiring stakes in Trinidad and Tobago’s offshore oil industry.
The Chinese company Bosai Minerals Group bought a controlling stake in Omai Bauxite Mining, Inc. in Linden, Guyana, in 2006 for US$100 million. The Guyana government retained 30 per cent interest.
Agricultural investments in Jamaica where the Chinese company Complant International bought three sugar factories and leased 30 000 hectares of cane fields. Complant started a US$156 million improvement programme in Jamaica.
China Zhong Heng Tai Investment has acquired a stake in palm oil production in Suriname.
Chinese banks have become involved in the Caribbean’s tourism industry. Two years ago they began the construction of a 3 800-room Baha Mar, a US$3 billion resort in The Bahamas, financed by the Bank of China.
The Foreign Trade Bank of China and the Bank of China are providing US$462 million in financing for the Punta Perla tourism complex in the Dominican Republic, a project spearheaded by Spanish investors.
After Grenada switched its allegiance to China from Taiwan, Chinese FDI in the Eastern Caribbean nation ballooned “from almost nothing to more than US$ 11 million two years ago. In 2011, the Chinese national oil company, CNPC, began a US$6 billion expansion of Cuba’s Cienfugos oil refinery.
That’s not all, says Bernal. “As in other regions of the world, Chinese firms in the Caribbean also focus to a considerable extent on infrastructure development,” he explained. “Multiple deals have been negotiated in the transportation sector.” And more involvement in the region can be expected, writes the experienced Jamaican diplomat.
“With China’s expanding population and rapid economic development come a growing demand for energy and food,” he went on. “As they have elsewhere in the Western Hemisphere, Chinese companies have shown escalating interest in the Caribbean’s natural resources and agricultural sectors.”