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China makes inroads in Caribbean nations through aid, trade

A commentary by Dan Southerland From RFA

In the United States, when we think of the Caribbean Sea, many of us think of beaches and wonderful music.

The music and the beaches still thrive. But a new Caribbean is emerging, with the construction of roads, port facilities, new government buildings, and cricket and soccer stadiums, all thanks to Chinese government donations, aid, loans, and investments.

According to the website Central America Link, as of 2015 while the United States remained the principal trading partner of the Caribbean, China and Venezuela had emerged as new challengers.

In earlier years, China had focused on encouraging Caribbean island and Central American nations that had diplomatic relations with Taiwan to break their ties with the self-ruling island.

On June 14 this year, China gained a diplomatic victory when Panama broke with the Republic of China on Taiwan (ROC) and established relations with the People’s Republic of China (PRC).

And given its current disagreements with Taiwan’s President Tsai Ing-wen, China can be expected to continue its efforts to persuade the five nations in Central America and the six in the Caribbean that retain diplomatic ties to the ROC to cut those ties.

But Beijing shifted several years ago beyond concerns over Taiwan to a broader agenda. Aspiring to be recognized as a global power, China now gives a priority to Latin America and the Caribbean region that has to be seen in the context of China’s global rivalry with the United States.

A turning point for China followed the U.S. financial crisis in 2008 when U.S. private investment in the Caribbean declined even as Chinese investment surged.

A report published by the U.S.-China Economic and Security Review Commission (USCC) in mid-May of 2014 explained that “Chinese companies since 2008 have been expanding investments, contracted projects and bilateral trade in the Caribbean.”

“This has been…enabled in large part,” the report said, “by China’s central government, which since the early 2000s has increased its support for Chinese firms to invest overseas.”

The report added that Beijing and the Chinese businesses it supports were also likely seeking ”to take advantage of what they see as declining U.S. and European commercial engagement in the region in the wake of the global economic crisis in 2008.”

“China’s use of state-owned companies and state-sponsored financing allows Beijing to incorporate many…economic activities into its diplomatic strategy in a way that most other countries cannot,” the report says.

Once President Xi Jinping took power in China in 2012, he made Latin America and the Caribbean the destination for his first overseas trip. On that trip to four nations in June 2013, Xi made his first stop in Trinidad and Tobago and then went on to hold bilateral meetings in Brazil with nine different heads of state.

Xi made clear at the time that China seeks not only trade and investment opportunities for China but also “strategic partnerships” in the region.

As the USCC report notes, “Beijing likely views the Caribbean as strategically important by virtue of its proximity to the United States and major maritime trade routes and infrastructure, such as the Panama Canal and the region’s many ports.”

China’s economic engagement, says the report, is also highly visible because it focuses on infrastructure, such as the building of roads and port facilities.

“Such projects by nature garner widespread attention from the local population as well as leaders and foreign observers,” it says, “which provides China opportunities to leverage its economic engagement for outsized diplomatic benefits.”

While most of the Caribbean’s more than two dozen nations are relatively poor and have small populations, their votes can sometimes prove useful to China in international organizations, including the United Nations.

Big Projects

China’s biggest and most visible projects in the Caribbean include the development of port facilities and highways.

In Jamaica, hundreds of Chinese workers have completed a $720 million four-lane highway stretching from north to south across the island.

According to The Guardian, this is the single biggest Chinese investment in the Caribbean. In return for the investment, Chinese companies will operate the toll road and build three luxury hotels on land granted to them alongside the road.

But The Guardian reported opposition from trade unionists who assert that the Chinese presence will do little to lift Jamaicans out of unemployment, which currently has reached nearly 13 percent, according to the International Monetary Fund (IMF). Other critics allege that much of the work done by Chinese workers could be done by ordinary Jamaicans.

Meanwhile, the China Harbour Engineering Company has agreed to build a deep-water port in Jamaica that will serve as a transshipment hub for giant Chinese container ships arriving through an expanded Panama Canal.

Plans for the port project have triggered a lively debate in Jamaican media, with opposition politicians questioning what strings might be attached to the deal, said to be valued at $1.5 billion.

In the Bahamas, Chinese companies are developing port facilities along with a major casino and hotel complex. Work on the casino and a Baha Mar luxury hotel fell behind schedule and went into bankruptcy. But after much local criticism of shoddy construction and bad business practices, the project looks likely to be completed.

The Security Dimension

China’s growing presence in the Caribbean poses no immediate military threat to the United States.

China and Cuba hold high-level military meetings and conduct joint training exercises. But the People’s Liberation Army (PLA) doesn’t have alliances or basing agreements in the Caribbean.

However, R. Evan Ellis, a research professor at the U.S. Army War College, says that China’s military activities in Latin America and the Caribbean are “more extensive than commonly realized.”

In a time of conflict, he says “China’s substantial commercial base, its access to ports, and its military-to-military contacts in the Caribbean might prove useful. All of these add up to growing Chinese influence in a region located close to the U.S. as well as its most important Atlantic Coast military facilities.”

China has sold arms, aircraft, armored vehicles, and anti-riot gear to Venezuela. It has donated military riot-control vehicles and equipment to the Bahamas and sold a Y-12 transport plane to Guyana while providing training there.

In 2014, China made one of its most controversial arms sales in to Trinidad and Tobago, the Caribbean’s wealthiest nation.

Following President Xi’s visit to Trinidad and Tobago in 2013, the island nation’s then Prime Minister Persad-Bissessar visited China in February 2014. In Beijing, the prime minister secured an agreement that made headlines and triggered some criticism back home: the purchase by her nation of a long-range maritime patrol vessel facilitated by Chinese loans.

It was the first sale of its kind in the region, but some questioned whether their nation needed such a patrol vessel.

As in Latin America, Beijing has provided scholarships for study in China to military officers throughout the Caribbean region.

From a geopolitical perspective, some analysts view Chinese military activities in the Caribbean as a counter to U.S. naval activities in the South China Sea.

“China’s increased presence in the Caribbean can be understood as a subtle jab at American Western Hemisphere dominance at a time when Washington is pushing Beijing in the South China Sea,” says Jared Ward in a commentary published in September of last year for the conservative Washington D.C.-based Jamestown Foundation.

“At a time when Washington is accusing China of bullying smaller countries in the South China Sea, Beijing has held up the Caribbean as an example of America’s history of big power chauvinism,” says Ward.

According to the USCC report of 2014, Caribbean officials and peoples have tended to view China favorably except when it comes to tensions created by thousands of imported Chinese laborers doing jobs which local workers feel they could have performed.

Some experts, including Ward, report that a favorable view of China persists, but so do the tensions, which erupted into violence in several locations between 2004 and mid-2013. R. Evan Ellis describes how resentment against growing Chinese communities led to violence against Chinese living in Venezuela, Suriname, Argentina, and the Dominican Republic between 2004 and the summer of 2013.

Massive protests against Chinese shopkeepers also shut down parts of the center of Santo Domingo on July 30, 2017.

Guyana, one of region’s poorest nations, provides an example of what can go right and what can go wrong for China in the Caribbean.

On the positive side, China is providing free medical aid, working to expand the nation’s internet and telephone access, and proposing to build a highway linking Guyana with Brazil, Jared Ward says.

A Chinese construction company’s work on modernizing an airport terminal for Georgetown is also going well.

On the negative side, Chinese merchants are outselling indigenous shopkeepers in commercial retail districts in Guyana’s capital, Georgetown.

Cuban itinerant merchants regularly fly in and out of Georgetown to buy cheap Chinese goods. They then resell those goods at a markup back in Cuba and elsewhere. But Guyanese merchants are left out of this trade because they lack access to the necessary distribution channels.

Anti-Chinese sentiment now bubbles beneath the surface in Guyana, a Guyanese source told RFA.

But it usually manifests itself, he said, only through pop culture caricatures of the Chinese language and culture.

In one acrimonious affair, however, the Guyanese government intervened against a Chinese timber company which had been shipping wood to China while failing to uphold its contract with Guyana. The company, Bai Shan Lin Forest Development Inc., failed to meet obligations to build a wood processing plant for local use.

The government expelled the company and took court action to seize its assets.

Dan Southerland is RFA’s founding executive editor.

IMAGE: The Caribbean region.

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