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Sunday 26 January 2020
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China's clout

Business Day Editorial

In this 2017 file photo, a A Railway Construction (Caribbean) Co Ltd worker is seen on the site of the new Arima hospital. -
In this 2017 file photo, a A Railway Construction (Caribbean) Co Ltd worker is seen on the site of the new Arima hospital. -

The exploration by the Caribbean Investigative Journalism Network (CIJN) of the extent and impact of China’s increasing interest and investment in the region, which was published in last week’s edition of Business Day, disclosed the startling fact that in the case of TT, senior government ministers spanning different political administrations have confessed to not having viewed final documentation despite giving their approval in Cabinet in relation to Chinese-backed projects.

This fact alone is symptomatic of the power and seemingly inexorable nature of Chinese influence, as well as the lack of transparency with regard to these arrangements.

As a region, it’s clear we need China and China needs us. We gain funding for major projects, and China is able to benefit from long-term repayment as well as increased influence. Because China now has a stake in the region, it’s in China’s interest that we do well to repay. This can only serve to deepen globalisation and economic integration.

Yet, as the CIJN journalists found, the relationship comes with a trail of official secrecy, questionable procurement processes, and the looming threat of insurmountable debt. Is it worth it?

Certainly regional governments think so. From 2005-2018, Chinese banks loaned more than US$140 billion. Of that, TT accessed US$2.6 billion and Jamaica, US$2.1 billion. Over the last 25 years, China has put an estimated US$8.25 billion in the Caribbean and upcoming projects could add another US$8.92 billion. Caribbean nations have readily accepted nearly US$50 billion China has made available for infrastructural development. The Summary Economic Indicator bulletin from the Central Bank estimates debt rising to US$890 million with coming projects.

But the lack of disclosure in relation to these arrangements harms the overall public procurement culture which is struggling to transform into one that is transparent and accountable. At the same time, local contractors are squeezed out and become relatively less competitive when going up against the Chinese behemoth. There are also questions about the regulation of standards, in the context of regional systems which do not have strong reputations when it comes to upholding quality and compliance to codes. The issues relating to the Couva Hospital project and the St Joseph Secondary School raise troubling questions.

How these arrangements are negotiated is also shrouded in secrecy, as made plain by the abrupt cancellation of a major Port of Spain housing contract.

Some argue we are at risk of becoming mere satellites of China, locked into its embrace through high debt levels and punitive contract terms. That’s undoubtedly one way of looking at it. Another way might be to regard China as a positive resource that can, in the long run, help development while also bridging a future market for Caribbean goods. The relationship can, in theory, work both ways.

If not a re-invention, these issues require a re-tinkering of the relationship so that the balance shifts towards a more fruitful Chinese connection, one that ameliorates — not worsens — problems in the region.

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