A Chinese beachhead?

The Caribbean

A Chinese beachhead?
New investors on America's doorstep

Mar 10th 2012 | PORT OF SPAIN | from the print edition

A CROWD of 17,000, almost 5% of the population of the Bahamas, turned up
to watch the firework display when a new national stadium opened in
Nassau, the capital, on February 25th. A celebration of "our Bahamian
identity and nationhood", said the prime minister, Hubert Ingraham. In
fact the stadium was designed and paid for by China, and built mainly by
migrant Chinese labourers.

China's investment and aid looms increasingly large in the
English-speaking Caribbean. Not far from the stadium, China State
Construction is deploying hundreds of Chinese workers at Baha Mar, a
$2.6 billion resort financed by the Export-Import Bank of China. On
Grand Bahama, 80 miles off Florida, Hong Kong's Hutchison Port Holdings
runs a giant container port; a sister company owns a clutch of hotels
and casinos. Norwegian Cruise Line, whose ships tower over Nassau, is
half-owned by Genting Hong Kong.

Jamaica is benefiting from $400m in Chinese aid. In Guyana Chinese
companies mine bauxite and want to build a hydroelectric plant and a
hotel and to modernise the main airport. Chinese firms are helping to
lay fibre-optic cables linking Cuba, Jamaica and Venezuela, as well as
Guyana and Brazil. Work is due to start next month on a $150m
Chinese-funded children's hospital in Trinidad.

Most of these investments are business ventures on commercial terms.
They are welcomed by local politicians, as is the aid. Many
English-speaking Caribbean countries are heavily indebted, and their
economies are stagnant. But local businesses fret over competition from
state-funded Chinese rivals. "Chinese construction has been a disaster
for national development, for the local construction sector and for
local labour, and no money has been saved," says Emile Elias, a
Trinidadian contractor. Many projects, he claims, have been awarded with
no public tender and end up over-budget, late or poorly built.

Some see a political agenda in China's involvement in the Caribbean. A
decade ago this involved wooing islands which recognised Taiwan.
Dominica switched to Beijing in 2004 in return for grants of $122m (a
third of its GDP at the time). Grenada has done the same. But most of
the recent investment has been in countries that already recognised China.

Some locals wonder why Complant, a Chinese company, has bought into
Jamaica's high-cost, struggling sugar industry. American diplomatic
cables released by WikiLeaks speculate that China may be investing in
the Bahamas as a "strategic move" in preparation for the demise of the
Castros in Cuba. China's interest in the region has good "business
logic" but also reflects a recognition of the "strategic value" of the
Caribbean, says Evan Ellis, a China-watcher at the Centre for
Hemispheric Defence Studies in Washington. That motive may lie behind
China's aid programme in the area, which includes small amounts of money
for the police and armed forces. Jamaica's police chief has studied in
Beijing as well as the United States.

Yet it is hard to see the Caribbean becoming a Chinese beachhead on
America's doorstep—a mirror image of Taiwan. Despite the presence of
small ethnic Chinese communities in many islands, the Caribbean
continues to look north. China keeps promising a stream of tourists, but
few come. Baha Mar will be managed by Hyatt and other American companies.

http://www.economist.com/node/21549971