Chinese investment has poured into this Caribbean Island, most notably the enormous resort of Baha Mar, a 1000 acre development with 2,200 hotel rooms and a 100,000 square foot casino. The funds were provided by the Chinese Export Import (EXIM) Bank and it was built by the China State Construction Company. The Chinese have also built as a gift a $35 million stadium in the capital Nassau. This generosity has been repeated across the region, leading to accusations that China is effectively bribing national governments, providing symbolic buildings in return for political favours.
Jamaica recently signed a $340 million deal with the Chinese EXIM bank to fund the Jamaica Development Infrastructure Programme (JDIP). The JDIP was set up to rehabilitate the country’s roads and bridges, but there have been accusations that the funds have been misused and the programme has cost far more than it should have done.
Chinese firms have also been active in Jamaica’s iconic sugar industry, Complant has brought three factories and plans significant investment in the sector. However, thanks to mass imports of cheap textiles and manufacturers, Jamaica has a huge trade deficit with China and is seeking ways in which it can increase its own exports to help address this shortfall. The country is looking beyond its traditional exports of aluminium and sugar to its famous Blue Mountain coffee brand, hoping Chinese drinkers move away from tea to the black stuff.
The Chinese Export Import Bank have been active in Guyana, financing $130 million to extend the country’s only international airport, which is seeing increasing demand thanks to the island’s gold and diamond industries and rising tourist numbers.
Trinidad and Tobago.
These islands in the Southern Caribbean have proven reserves of over 13,000 billion cubic feet of natural gas in a nearby offshore basin. The US has been the main purchaser of this gas, but as it has recently discovered its own ample shale gas reserves, Trinidad and Tobago’s supplies will become less valuable. This development could make China the perfect replacement customer. Indeed the China Investment Corporation has already purchased 10% of GDF Suez’s share of an offshore gas field.
China and Cuba have developed strong trade ties and under the leadership of Raul Castro and the country is “updating” its economic model to allow market reforms. China is of course the obvious country to take lessons from in this regard. Cuba is no export powerhouse, but China buys the island’s sugar and nickel and in return receives electronic goods and construction materials. The Chinese government seems to be slightly embarrassed by Cuba’s old fashioned socialism, perhaps an uncomfortable reminder of its own recent history.
Cuba’s most significant foreign relations lie to the south with Venezuela, which has supplied it with cheap oil and diplomatic support in the face of the longstanding US embargo.
British Virgin Islands
Probably the most interesting relationship between China and a Caribbean Island is with the British Virgin Islands (BVI). Around 10% of all Chinese investment overseas originates from the BVI. The reason for this is that the BVI has become the favoured jurisdiction for Chinese companies to “rest” their money for a period. The money is not there to get a suntan, but as a ruse to hide it as a foreign investment, thus avoiding tax. Offshore shell companies (the BVI has 900,000 and counting), helps companies to hide assets and tax. The practice of using offshore entities makes it very different to measure China’s true level of outgoing FDI, as so many funds are funnelled through BVI and other “treasure islands”.
Also check out my post from last year on China – Caribbean relations: The Dragon in the Sun.