china and the caribbean

INTERNATIONAL RELATIONSOF THE CARIBBEAN

China emergence and its presence in the Caribbean

Dr. Jacqueline LAGUARDIA MARTINEZ

China economic figures (2000-2010)2º Largest Economy (7º en 2000) GDP growth (average): 9,7%1º Exporter of Goods1º Importer of Goods5º Exporter of Services5º in FDI1º World Savings (FOREX)1º Market of Renewable Energies1º Market of Iron and Steel2º Scientific PublicationsThe Chinese economy is now not only the second largest in

the world, but it is larger than all the rest of the BRICS economies combined

But in 2013…

• The expected growth of 8% that would allow China to keep on being the main force behind the world economy recovery did not happened (7,3% in 2013)

• China was to supposed to advanced faster towards a new economic model that shift from investment and exports towards domestic consumption…

Lower GDP growth rate (7,5%)Minor dynamics but:•Structural reforms: health and social provisions, pension system, subsidies for housing, changes in the one child policy•Eradicate poverty•Diminish the gap urban-rural societies•Sustainable employment of natural resources•Environmental protection

Reasons to change1. World economic crisis2. The cost of production is increasing due to:• the rising cost of production inputs (energy and land)• Increasing skilled labor shortages• rising wage cost• lack of adequate infrastructure to link production bases

to consumption bases3. Environmental pollution4. Overemployment of resources

Political decision to change towards an economic model more consumption orientated

Similar to the BRICS

Future challenges: to set a new development agenda, which must incorporate elements of inclusive growth, sustainable and equitable development, and perhaps most importantly, uplifting those at the bottom of the pyramid

China is working on changing its economic model to a consumption-led one!!!!!!

How will that change impact on the Caribbean?

China and the Caribbean

Traditional economic relations with China were

established from Chinese migrants who came to

work in the Caribbean after the abolition of African

slavery

The Caribbean’s interest in China

New type of relationship due to the current geopolitical considerations and changes in the global economy

Economy• China could be the main driver of global growth

creating opportunities for a market for Caribbean exports

• Trade that generates long term growth and development

• Opportunity to diversify the Caribbean’s trade and economic relations

• Important source of Development Aid• Foreign Direct Investment (FDI)• China is a Member of the Caribbean Development

Bank and the Inter-American Development Bank

International Politics• China can act as a voice for Southern countries and an

intermediary between the Caribbean and developed countries in multilateral fora

• China has the potential of transforming the global economic order

• China presents an alternative to USA and EU aid and development assistance. The Caribbean has decreased in importance to both the EU and the US (ACP is no longer considered to be a relevant framework to the EU)

• Attracted by Chinese policy of neutrality, non interference and ease of access to Chinese loans

What China wants• To usurp Caribbean diplomatic support for Taiwan

(One China Policy)

• Broader foreign policy objectives in an increasingly globalized economy

• Strategy towards acquiring big power status

• Attaining food, raw materials, energy security for sustaining its economic growth (The Caribbean is the source of minerals: asphalt and gas in Trinidad and Tobago; bauxite in Jamaica and Guyana and timber and minerals in Guyana)

• The Caribbean provides an attractive market for Chinese products and investments

• CARICOM countries provide a ‘production platform’ due to preferential arrangements provided by the Caribbean Basin Economic Recovery Act (CBERA), (Caribbean-Canada Trade Agreement) CARIBCAN and the CARIFORUM–EU EPA

• Openings for Chinese investments and business opportunities for Chinese firms and employment of Chinese labor

Caribbean–China Economic Relations• Largely bilateral• Multilateral effort in the biennial China

Caribbean Economic and Trade Cooperation fora: preferential loans for infrastructural development, training opportunities (natural disaster mitigation and prevention) and increasing and diversification of export

• China is a member of the Caribbean Development Bank as well as the Inter-American Development Bank and has also contributed to the Caribbean Development Fund (CDF)

China comes with “advantages”:

They were never colonizers and is not perceived to have been in an exploitative relationship with the Caribbean in the past

Source: Annita Montoute, Caribbean-China Economic Relations: wha are the Implications?

Development projects• September 2011, Jamaica: agreements totaling US

7.985 million (Montego Bay Convention Centre, Palisadoes Peninsula project)

• 2011, Trinidad and Tobago: received 40 million Yuan in grant funding (National Academy of the Performing Arts)

• 2011, Bahamas: Technical and Cooperation Agreement (total Chinese investment in the Bahamas to an estimated $2.66 billion)

• 2011, Barbados: Grant of approximately BDS$6.15 million for various small scale development projects (Widley Gymnasium)

• 2011, Guyana: RMB 30 million grant for the funding several projects

• Dominica: Infrastructural development on four projects totaling over $100 million

• Antigua and Barbuda : a street lighting program, concessionary loans and grants for the Sir Vivian Richards Cricket Stadium, an airport terminal and a secondary school in Five Islands

• Grenada: 86% of the cost of the rehabilitation of the St. Paul’s Sports, Cultural and Development Organization

• Suriname: Foreign Ministry building; provided military assistance, construction of low-income housing, help with shrimp farming and an upgrade of the national television network

Interesting• In October 2011, China sent a navy hospital ship,

the Peace Ark, to the region; in addition to docking in Cuba, the ship made stopovers in Jamaica, Trinidad and Tobago, and Costa Rica, in a 100-day mission called “Harmonious Mission 2011”

• In Trinidad and Tobago, the Chinese government has developed a program to support martial arts initiatives, bringing performers from the Chung Shan Association to China for further training

• Opening of Confucius Institutes

China’s investments• Particularly strong with the “Big Six” CARICOM

member-states, with Jamaica having become China's top trading partner in the Caribbean in 2012

• China's EximBank is financing the construction of a 3,800-room resort in the Bahamas featuring the largest casino in the Caribbean

• China has become an important source of tourists and CARICOM states have looked to develop new ways to tap this potential

The Caribbean may be able to use the opportunity to take advantage of the competition among the emerging and traditional players for their benefit•Renewed interest in the Caribbean (and Africa) by the EU•Joint Caribbean-EU Strategy (JCEUS)

China’s policy of non-interference in the governance of countries and claims of no conditionality attached to development assistance makes it more appealing than traditional partners (but the use of Chinese labor, design, and technology associated with Chinese aid and investment)

Other consequences to be considered • Increasing trade deficit• Cheaper Chinese imports may also be replacing

local products• the trade relationship is largely based on the

importation of manufactured products from China and the exportation of raw materials from the Caribbean (replicating the previous scheme of trade with traditional partners?)

• Work force unemployed• Investment in manufactured sector, not in services

and does not promote technology transfer

china and the caribbean

Economy & Finance