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Why is China spending billions in the Caribbean?

The Caribbean lacks commodities, it's not a major producer of raw materials and it has relatively little buying power. Yet China is investing billions there.

Bernal believes China's motivation for targeting the Caribbean is diplomatic.

"There are few countries around the world that have maintained ties with Taiwan, and 12 of them are in Central America or the Caribbean," he said. Of the 23 countries to keep formal diplomatic ties with Taipei, six are in the Caribbean: Belize, the Dominican Republic, Haiti, St. Lucia, St. Kitts & Nevis, and St. Vincent.

China’s ambassador to Barbados, Wei Qiang, told GlobalPost that China has no interest in competing with other world powers in the Caribbean. Rather, it sees the islands as fellow developing countries and potential partners.

“The Caribbean countries form an important part of the developing countries world, so to speak. One pillar of China’s foreign policy is to increase the unity with fellow developing countries. In that sense, the Caribbean is a fundamental part of that strategy,” he said.

But it appears China has received little in return. Unlike other regions that China has targeted, like Africa and South America, the Caribbean largely lacks the commodities the rising superpower craves. The Caribbean is not a major producer of raw materials or food. Tourism is almost universally the economic driver.

And with relatively little buying power — the total population of the 39 islands is about 40 million, about 3 percent of China’s population — the Caribbean will not be a major importer of China’s goods.

Take Grenada. Among the Spice Island’s largest exports are nutmeg, cloves, ginger and cinnamon, hardly the basis of the Chinese economic expansion. Its population is under 110,000. China has 655 cities of at least 100,000 people, according to a 2010 report by Deloitte.

Yet, the island has seen an influx of Chinese money since the building of the cricket stadium in 2007.

“The Chinese government and private companies are stepping in finance projects, big projects, that were stalled due to the recession,” said Richard Simon, press secretary to Prime Minister Tillman Thomas.

Simon could not name the projects because the sides are still negotiating terms. “We believe that the relationship with the People’s Republic of China can only grow. China will be the main country to deal with going forward,” he said.

Aside from those major investments, Simon said Chinese business owners are opening convenience stores and restaurants. “On the streets, you’re seeing a presence that you didn’t see just a few years ago.”

The warming relationship has benefited Chinese companies, Ambassador Qiang said, but “these are small markets and small countries and we don’t have huge amounts of trade in terms of volume. From the point of view of diversification of our foreign trade partners, we think all these markets are worth working on as far as we can.”

Residents of the islands seem to have a different take. Tomas Lora, who drives a cab in Santo Domingo, Dominican Republic, said a few months ago the company he drives for upgraded its vehicles to a fleet that looks and rides like a Toyota. “It’s not, it’s a Chinese car,” he said. “You wouldn’t know the difference because it looks like a Corolla. But they say it costs about half as much as a Toyota.”

“You’re seeing Chinese products everywhere in the last few years,” he said. “It’s all ‘Made in China.’”

More on China in Latin America:

The spread of Chinese restaurants

China considers building rival to Panama Canal

China's Brazilian shopping spree

http://www.globalpost.com/dispatch/news/regions/americas/110325/china-caribbean-investment-tourism