The Inter-American Dialogue just published a new report on Chinese investment in the Caribbean. And what did it find? Nothing!
Seriously, nothing. There is nothing to be seen here. The headline number for the stock of Chinese FDI in 2011 was $469 million. This is not a whole lot, even considering the small size of the Caribbean economy. Moreover, the geographic distribution shows there is even less to this than meets the eye.
Investment in the Bahamas and Barbados totalled $1.6m and $3.1m respectively; this is the equivalent of a couple very nice beach houses. (And significantly down in both places.) In Trinidad, perhaps the Caribbean’s most important economy, and certainly the one with the greatest growth prospects, China has invested a risible $900,000.
In Jamaica, China has more significant investment: $39 million and rising fast. The Jamaican government got out of the sugar business in 2011, selling three sugar factories and leasing 30,000 hectares of cane fields to Complant International. Complant then began a four-year investment program to put about $156 million into improvements in fields and factories, plus a new refinery to process 200,000 tons of raw sugar per annum.
How has that been working out? Not too well. First, it got hit with a drought. Then it got slammed by a fall in the Jamaican dollar. (Jamaica, unlike the rest of the West Indies, floats its currency. See the previous post.) Adding insult to injury, the company purchased $160 million in new plant and equipment ... of which an astounding $28 million was promptly stolen. Complant then fired 132 guards on July 31, 2013 ... only to face a sympathy strike by the rest of the workforce. The strike was resolved, but the Jamaican sugar industry is still in trouble, and the company is now in trouble over a decision to terminate the credit-support facility to its sugar-cane suppliers.
Another big rise has been in St. Vincent, from $6m to $36m between 2003 and 2010. I have not been able to find out what that was about, and I should note here that St. Vincent still recognizes Taipei as the official capital of all China.
Two-thirds of Chinese investment in the Caribbean is in Cuba and Guyana, with the bulk of the rest in Suriname. Cuba is, well, Cuba. The Guyanese investments are in bauxite, where the Bosai Minerals Group purchased 70 percent stake of Omai Bauxite Mining (the remainder staying in the hands of the Guyanese government). The Surinamese investments are in palm oil. Neither in Guyana nor in Surinam have Chinese investments lead to great leaps in output or productivity; Guyana is in a mining boom, but the lead is not Chinese.
There is more debt invesment (for example the giant Baha Mar complex in the Bahamas is on track, although the China Ex-Im Bank never seems to have taken an equity stake) but other than the Bahamian mega-resort none of it is economy-changing.
In other words, China has a presence in the Caribbean, but it is concentrated in a few countries, not particularly successful, and a harbinger of nothing other than the fact that Chinese banks and companies have dollars to burn.