The Tribune

By MALCOLM STRACHAN

DURING the last week, there have been multiple pieces in both major local publications covering the quiet storm that has developed following China’s new policy on outbound investments. What is concerning is the reaction to this new policy from the “people’s government” who would have us believe this would not impact the Bahamas, and generations of Bahamians to come in a serious way.

Last week the Government issued a statement that wasn’t worth the paper it was written on. To many of us who can think and reason for ourselves, this statement was laughable, and an insult to the collective intelligence of our people.

Here is what our “people’s time Government” said: “With specific reference to investments in The Bahamas, such as the Pointe project, the Government is of the view that the new policy will have no impact as such investments were approved developments.”

Let us pause there for a moment, and remember this is supposed to be an official statement from the Government of the Bahamas - a sovereign nation, saying that it is “of the view” that this new policy would not impact us.

For those uninitiated in the language of Government “talk” let us explain what that term “of the view” means. It means we have no idea what we are saying, but we hope that it doesn’t refer to us. Being “of the view” on something is like saying, “I am of the view that the world is flat, and I am sticking to that view so stop asking me about it already!”

But that’s not the best part. The Government’s statement went on to say: “The Bahamas is confident that its ongoing excellent relations with China will continue and be further strengthened in the years to come, and that any future investments will continue to meet the standards deemed acceptable to all.”

Now before you fall over in laughter, take a moment to consider how serious this paragraph is to the Bahamas. Remember that just months ago, this FNM administration while in Opposition warned that the Chinese were on the verge, thanks to the then PLP Government, of colonizing the Bahamas. This comment came during a nationwide uproar after the press revealed that the then PLP Government was entertaining a proposal to allow Chinese businesses to farm and fish in our waters. The deal, promoted as a $2.1billion investment for the Bahamas was roundly denounced as the people rose up against what they felt was an over reliance of their Government on China, who they already felt had too strong a foothold on the Bahamas.

The FNM used this concern, not just on the fisheries deal, but also on other Chinese backed projects like Baha Mar, and the Pointe project in downtown Nassau to expand their popularity with the people who desperately wanted a shift in not only foreign policy, but economic reliance. They wanted a return to the west, and not the east.

So for this new Government to be foreshadowing a “further strengthening” of relations with China is already rubbing the Bahamian people the wrong way.

Last week in Insight we shared the example of China’s neo-colonization of Jamaica from our discussion with Jamaica’s former Minister of National Security Mr. Peter Bunting. Now an Opposition MP in Jamaica, Mr Bunting gave us a vivid and frightening snapshot of the terrible hardships his people are forced to endure as politicians, who are only focused on their 5-year terms in office, making decisions with China that would impact the future of their country for generations.

Mr Bunting referred us to an Inter-American Development Bank (IDB) paper that was published in July 2016, titled, China’s Rise in the Caribbean. He noted that it speaks to some of the “potential challenges that Caribbean states have in negotiating with such a powerful counterparty.” This document, line by line, outlines and analyzes the strategy behind the masterful foreign policy that has bolstered China’s geopolitical position, allowing them to garner a vast collection of economic vassals.

Jamaica, a country with 45 years of diplomatic history with China, is far richer in resources than The Bahamas, and consequently is further along a path of a self-inflicted economic dependence on the People’s Republic of China.

We would do ourselves a grave injustice walking down this path with China. As much as there is to learn from them as a partner, we have been nothing but a footstool in their grand strategy.

China’s Rise

In 1999, China’s desire to encourage investments overseas led to the government and the Chinese Council for the Promotion of International Trade (CCPIT) architecting the ‘Go Out Policy’. Whereas other developing nations predominantly sought after foreign direct investment, it was China’s success attracting inward capital flows that led it to setting its sights abroad.

Home to a population of 1.4 billion people - nearly twenty per cent of the world’s population – China carries the mammoth task of adhering to the social-political contract existing between the ruling party and the populace. This contract makes it incumbent upon the government to reduce poverty and grow the middle class.

In 1981, China’s poverty rate was 88 per cent. In only 31 years – a time period that saw 500 million Chinese lift themselves out of poverty (according to the World Bank) - their poverty rate was reduced to 6.5 per cent by 2012.

Known for their proclivity to trade off short-term “losses” to realize long-term horizons, China’s strategy to invest outward has effectively reversed the fate of its people, but not without a few casualties along the way.

The main goals of their policy to invest outward were clear: to acquire much needed natural resources, to promote the export of domestically produced goods, to encourage the promotion of Chinese multinational firms and through mergers and acquisitions, attain advanced technology and expertise – all the tools for a country waiting to be the world’s next great superpower.

Developing nations throughout Africa, Latin America and the Caribbean have all come face-to-face with the warm smiles and “strings attached” gift offerings of stadiums, infrastructural development and billions of dollars of “low interest” credit.

Even though it’s not many to boast, in cases where nations are able to derive some benefit from their economic relationship with Mainland China, the gains are tragically lopsided in favour of China.

In the past, we needed only to go 55 miles off our coast to find a natural fit for a trade partner. Our proximity to the U.S. is clearly to our advantage. However, as luck would have it, China struck gold after the 2008 financial crisis when it ramped up its efforts in the Caribbean.

By 2009, China emerged as the world’s largest exporter of goods and the fourth largest exporter of services.

Although China approaches developing countries under the cloak of “win-win cooperation”, Caribbean countries, as a collective, have experienced a negative balance of trade with China since the Great Recession, with a few exceptions.

Resource-rich countries like Cuba, Suriname, Jamaica, Trinidad and Tobago, and Guyana – all produce the four leading products exported to China from the Caribbean; ores and metal scrap, aluminium oxide, oil and gas, along with minerals and timber.

Unfortunately for us, other countries in the region that depend heavily on tourism and financial services have not yielded the same benefits as their neighbours.

Wins and Losses

The IDB, through its research, determined that countries that boast a fortune of natural resources, if managed appropriately by governing bodies, can derive an equal benefit when trading with China. Among some of the benefits for Caribbean countries that were noted in the paper were China’s rising purchasing power and large market size; which makes it an attractive export destination.

Secondly, as mentioned, China provides a flexible source of loan financing and foreign direct investments to developing countries. The rising superpower has loaned upwards of $100 billion to Latin American and Caribbean countries since 2008 – the year of the Great Recession.

Thirdly, China also wants to be seen as a potential market for tourism-dependent countries to source new visitors. Then, as the middle class strengthens from the fruits of China’s outward investments, they then market the potential of their people becoming future heads in beds.

I know what you’re thinking.

These things require the perfect storm for countries in this region – in particular – The Bahamas, to achieve any semblance of a “win” in this arrangement. We simply do not stand a chance.

Mr Bunting may have described the key impediment to Caribbean states winning in negotiations with China perfectly: “Essentially, our weak bargaining positions cause us to have to settle for suboptimal outcomes”.

As difficult as it may be for some to hear, he’s absolutely right.

For a country such as ours, which has nowhere near the abundance of natural resources or exportable goods as the likes of Trinidad and Tobago, Cuba, Jamaica, Guyana and Suriname – our prospects of achieving holistic long-term trade success with China are nil.

Further, after receiving financing that we cannot afford to pay back, China is “flexible” enough to accept payment in the form of natural resources – our most precious of which – is our waters and what’s in it.

To date, Chinese officials have not been shy about voicing their desire to tap into our fisheries.

As a matter of fact, in March of this year, Chinese Ambassador, Huang Quingo, said as much in an editorial published in The Nassau Guardian: “The Bahamas is rich in marine and fishery resources, and the trade potential with China is huge and remains unexplored.”

They certainly aren’t afraid to let our Government know what they want.

Although the Government has long protected our fishing industry from foreigners, when it’s time to “pay the piper”, this Minnis administration could be in a precarious position.

It wasn’t so long ago that the nation rumbled from public uproar when news of a proposal from the Ministry of Agriculture, then led by V. Alfred Gray, made its rounds. And even though, the previous government wisely backed away from this, the intentions were clear on all sides.

Corruption among the political elite has certainly been a factor in our station. The urgency for previous administrations to secure miniscule victories within election cycles have severely limited our ability to trade on a level par with China. Furthermore, as successive leaders place a higher value on self-enrichment, rather than the elevation of generations of people, the results will only be worse.

Trained as an engineer himself, Mr Bunting shared with us the journey that his countrymen who began working as draftsmen in local Alumina plants, and later climbed the ranks as the industry became wholly run by Jamaicans – only to now witness a shift towards a Chinese takeover.

It is a quite a devastating reality – one that our diversification-averse leaders flirt with daily.

It is undeniable that any wholesale giveaway of a sovereign nation can only take place under myopic leadership. When asked if he thought any resistance to China would be detrimental to Jamaica’s viability, he said no.

“Overall, it’s a commercial venture for them. I don’t think that we’re yet in the position that we can’t make our own choices, but I will tell you that we are fast getting there,” Mr Bunting warned.

Aside from diplomatic gifts from the Chinese – which can be written off as a cost of doing business - Mr Bunting affirmed that because of the commercial nature of the China-Jamaica relationship, that finding a substitute for commercial ventures is not impossible.

As a sovereign nation, the same can be said for us. However, it simply comes down to discerning leadership.

The Prime Minister’s

Next Move

Our leaders should be using China as a blueprint on how developing countries can forge our economic horizons. At present, we are a mere pawn on a chessboard. And as our government continues to grapple with the reality of being in charge, Prime Minister Dr Hubert Minnis is faced with the choices of continuing down a path that was initiated, and then escalated by his two predecessors, or steering us away from a course that may catapult the country back to colonialism.

China’s new policy to promote projects that advance the One Belt, One Road initiative has created nationwide uncertainty. Multiple government officials have acted as if it is no big deal, but we all know better than that.

With two major hotel investments – one with a casino as the centrepiece – one would think this is cause for great concern as they both fit the criteria for China’s ban and restrictions on outbound investments.

The nation needs to hear from its prime minister, and he needs to reassure the Bahamian people that they are being led by a steady hand.

With the dust not yet settling on the news that we were spared a downgrade by Moody’s, any inkling that there is trouble in paradise will surely plummet our credit rating.

Understandably, Prime Minister Minnis may not want to do anything to excite the credit ratings agencies, but he should be mindful that they are also watching to see what affects China’s new policy will have on our economic prospects, as well as how the government will react.

This is a defining moment that Prime Minister Minnis faces.

While the government did what the economic climate dictated after the global financial crisis, that was nearly a decade ago. We now need a diversified portfolio of foreign direct investments and to see the end of those that marginalize Bahamians.

Any sensible government that is interested in protecting its country’s sovereignty should do its best to ensure that there is broader ownership of its country.

Instead of putting all our economic hopes and dreams in the hands of the People’s Republic of China, the Government should ensure there is a broader investor field in this country to ensure that a foreign power could not bankrupt our country, both figuratively and literally.