CHINA’S increasing involvement in the economy of The Bahamas is inevitably attracting controversy here. Having already invested heavily in Freeport (the harbour, container port, airport and hotels) and in New Providence (the huge Baha Mar project, new roads, a sports stadium, the British Colonial Hilton hotel), it now has plans for the redevelopment of downtown Nassau.
Then, the Prime Minister’s visit to Beijing in January – in order to discuss, among other issues, an air services agreement, opportunities for investment in sectors of the economy like tourism, financial services, agriculture and energy (including BEC), together with assistance in restructuring the country’s debt – has put the bilateral economic relationship under even greater scrutiny.
Not surprisingly, such growing involvement by the Chinese induces fear about a distant foreign country, which is still a communist state but has become an economic powerhouse, acquiring too much control of the affairs of a small nation already closely beholden in many ways to its giant and influential neighbour.
Such apprehension may at first sight be legitimate. But, instead of a knee-jerk reaction, it is important to evaluate it rationally by examining the issue at two levels - China’s strategic long term policy objectives and the immediate reasons for its economic involvement in the Caribbean as a whole.
Meanwhile, unless evidence of China’s intentions is presented, labels like neo-colonialism, which implies hegemony and political control over another country’s whole way of life, are ill informed and unhelpful. Equally, any discussion of the issue of Chinese investment should consider the benefits to The Bahamas itself.
China’s economic emergence followed former leader Deng Xiaoping’s move from Maoist dogma and a planned economy to introduction of market reforms in the late 1970s under the slogan “Reform and Opening Up”.
During the 1990s, the country experienced rapid growth and developed international trade, which led to membership of the World Trade Organisation. Its hosting of the Beijing Olympics in 2008 was a signal of its willingness to engage in the global economy and new world order.
There has grown up a wealth of literature about its rise by well-informed historians and commentators. For example, two important recent studies are “What Does China Think” by Mark Leonard, co-founder and director of the think tank, the European Council of Foreign Relations, in 2008, and “When China Rules the World” in 2009 by Martin Jacques, a distinguished British scholar, writer and columnist. There is also Dr Henry Kissinger’s weighty tome “On China” published in 2012, and, amongst others, a recent study on China’s rising investment profile in the Caribbean by Richard Bernal, a former Jamaican ambassador to the United States.
Such experts explain that domestically, while no longer a repressive communist dictatorship, China is still authoritarian so that genuine political thinking and debate are within strict limits even though a more consultative process, taking account of public opinion, is evolving. It is developing a socialist market economy in which the state will continue to play a more important role than in western models of capitalism. As part of this, it wants access to the benefits of globalisation.
The recurring theme in these commentaries is China’s commitment to a policy of peaceful development.
But it also seeks superpower status – as a reflection of its long and rich history as a pinnacle of civilisation in the face of “foreign barbarians”. To achieve this it needs to expand its economic power, while retaining its distinctive values, in order to challenge, eventually, America’s unilateral position of world dominance. In the judgment of these observers, based on the available evidence, China wishes, in its own interests, to do so by peaceful means.
In an address to the UN General Assembly in 2005, President Hu Jintao expressed a desire for a peaceful environment in a multilateral world together with harmonious development and an emphasis on stability and common prosperity.
Furthermore, Dr Kissinger quotes a statement in 2010 by the then highest ranking official overseeing China’s foreign policy saying that, far from harbouring aggressive intentions, it wanted peaceful development in a non-threatening way as well as participation in global interaction because this best served the nation’s interests.
Sceptics in the West may wonder whether these assurances are purely tactical while China bides its time in face of a weakening America. But, on the road towards its aim of global status, China claims that its priority is nothing more than ending poverty for its 1.3 billion people, 150 million of whom live below the poverty line, and to become a law-abiding member of the international community.
This might seem inconsistent with China’s unbending stance on Taiwan and its assertive behaviour over territorial disputes with its regional neighbours, including its dispute with Japan over islands in the East China Sea, and its claims to the South China Sea. But the Chinese claim they are simply protecting their own national position in the vicinity of their borders and within their sphere of influence and that such an attitude does not constitute a threat to countries further afield or to the global economic order.
In an effort to achieve further economic growth, China has in recent years invested extensively in developing countries in Africa and elsewhere including the Caribbean. The original impetus for this activity was diplomatic competition with Taiwan to secure votes at the United Nations and this remains the case. But it is also driven by the need to secure raw materials for China’s domestic industries as well as outlets for its surplus wealth. In support of this it has expanded its diplomatic presence on a worldwide basis.
In the Caribbean, China has established itself as a major economic partner supplying grants and low interest loans from state banks – mainly for public works projects but also in other sectors like agriculture, offshore fishing, mineral deposits, natural gas, tourism and entertainment. Cuba, Jamaica (bauxite), Trinidad (natural gas), Belize, Barbados, Guyana and Suriname, as well as The Bahamas, have been major recipients.
The benefits of such investment for the countries concerned are self-evident. But there is also a downside; for example, China’s insistence on using its own labour and expertise for construction projects which results not only in the exclusion of local workers but also the loss of any benefit from a transfer of technology.
The Chinese also seek the advantages of possible preferential trade access to the US, European Union and Canada for manufactured goods, and this carries the risk of local firms being squeezed out. Similarly, there is the potential danger of allowing a single Chinese company too much local control; for example, Hutchison Whampoa in Grand Bahama.
It is reasonable to conclude from all of the above that there is no evidence that, while China invariably hopes to maximise the benefits of its investments, it is seeking to use its economic involvement in the Caribbean to pursue, by stealth, some sort of secret political agenda in the longer term. Such a path would be at variance with its publicly declared policy of peaceful development in a multilateral world; and it would not, anyway, be in its own interest as it works towards superpower status because, by so doing, it would put itself on a collision course with the US.
That is not to say that it is necessarily wise for any country in the region to allow itself to become too dependent economically on a single foreign state. As far as The Bahamas is concerned, given the country’s reliance on foreign direct investment for its wellbeing if not survival, the economic reality dictates that in today’s global village it should seek grants and loans from the world’s new emerging powerhouse as long as there is a need for such financial assistance and that there are no overriding political reasons which make such action inadvisable.
China’s policy is not merely altruistic since it benefits from its investment in the Caribbean, including The Bahamas. So this is in the interests of both countries and should not be seen as an assault on this nation’s sovereignty. Rather, it means that the government should not hesitate to take a firm line over the detailed conditions of any project. As in all business deals, negotiators should surely be hard-headed in protecting The Bahamas’ economic interests and ensuring that its culture, customs and way of life are given proper consideration.
Thus, while The Bahamas is likely to continue to look to China for economic assistance and co-operation as well as a source of tourism, in the knowledge that this is in the interests of both sides and that the risks are manageable, it will need to be vigilant in securing the best possible deal for its own people.
To this end, it is welcome news indeed that, reportedly, the government has obtained a commitment that substantial numbers of local workers will be used in all future Chinese-led projects. After the Baha Mar deal, that is certainly a step in the right direction.
• Peter Young is a retired British diplomat living in Nassau. From 1996 to 2000 he was British High Commissioner to The Bahamas.