The Tribune

With much of the US media obsessed with endless so-called breaking news about the state of the Trump presidency, it seems less attention than it deserves has been given to this month’s important bilateral trade talks with China.

The threat of a trade war between the world’s two largest economies has been looming since the US deficit with China reached a record high in 2017 and President Trump complained constantly about the unfairness of the bilateral trade relationship, saying not only was the trade deficit unacceptable but Beijing was restricting US investment and stealing American intellectual property. In April, he proposed a 25 percent tariff on a range of imports from China who responded on a tit for tat basis.

Following the trade talks, China has agreed to increase significantly the purchase of American goods and thereby reduce the trade deficit while also strengthening co-operation on intellectual property. So it seems there has been a truce and a full-blown trade war has been averted, at least for the immediate future – in the words of the US Secretary of the Treasury, the two sides are “putting the trade war on hold”.

This is important for the rest of the world because a bilateral trade dispute on such a scale could not only translate into wider tensions affecting global supply chains but could also have a bearing on the broader Sino-American relationship and global security including such major issues as militarisation of the South China Sea and denuclearisation of the Korean peninsula.

It is encouraging that, notwithstanding these trade differences, bilateral relations between the US and China remain good. The remarks this week in Washington by the Chinese foreign minister about the need to address the trade imbalance and conduct further consultations will surely be welcomed by all concerned. He also gave assurances about China’s continuing commitment to help to bring about a solution to the nuclear weapons dispute with North Korea.

All the while, what happens between the two behemoths could be significant for us in The Bahamas given that we are dominated by one of them - our giant neighbour who is our major investor and source of tourism - and are becoming more and more involved with the other through its increasing direct investment in our country.

Over the past decade, China’s involvement in Latin America and the Caribbean has increased significantly. Concentrating on spending on major infrastructure like ports, roads, hotels and sports stadia as well as energy and agricultural projects, it invariably insists on tough conditions and advantageous terms including tax concessions and the use of Chinese labour. Some observers see this growing economic support and involvement as a means of China broadening and improving its international relationships and increasing its influence in regions that are on the doorstep of the US whose engagement in the area has been declining. Meanwhile, the issue of recognition of Taiwan by Caribbean countries appears largely to have fallen away as most have switched allegiance.

China’s outreach seems also to be intended to enhance its status as a world power and to increase its prestige while demonstrating to others that its own political and economic model is an alternative to the West’s liberal democratic values.

However, the Chinese themselves maintain they are not trying to challenge or replace the US by being a strategic competitor – rather, they are simply on a path to modernisation of their nation that is unstoppable.

One notable development is China’s declared intention to extend to the Caribbean its One Belt and One Road Initiative. This is designed to deepen and expand economic co-operation through trade and investment and creation of a unified large market and also to include issues like promotion of sustainable development and diversification based on projects financed by the Chinese; and it is interesting Trinidad has recently signed a partnership agreement with China under its Belt and Road programme.

Since The Bahamas depends on foreign direct investment, there can be no doubt Chinese financial involvement here presents welcome opportunities for our economic development. The most significant recent example is Baha Mar which is now functioning properly and will provide a substantial boost to the economy - as should The Pointe - though the development of both has been mired in controversy which should not be easily forgotten.

We believe, however, that overall we ought to be wary of becoming too dependent on excessive Chinese involvement in our economy because it is now clear they will probably be seeking in the long-term a breadth and depth of co-operation which may not be suitable for us as a small and proud independent country. This is likely soon to become an important issue which the Government will need to address.

We need, of course, to interact as widely as possible with other countries to sustain our living standards and to secure economic stability. But, while not relying on any single source of investment, it would be wise to continue to concentrate on our traditional partners like the US on whom we rely for our security. It is in our interests as a nation to maintain and strengthen the existing close economic and other co-operation between our two countries – and we should surely now also seek to foster anew our links with Britain as the former colonial power that has now revived its interest in Commonwealth countries and has announced plans to re-establish a diplomatic presence here.