On September 30, the U.S. International Trade Commission (USITC) issued its 25th report on the Caribbean Basin Economic Recovery Act (CBERA), a U.S. program "intended to encourage economic growth and development in the Caribbean Basin countries by promoting increased production and exports of nontraditional products." As part of its analysis of these issues, the USITC has, in various parts of its report, discussed China's trade and investment in the region. It also offers a broad overview and some specific examples of China's foreign direct investment in the region, in which it describes what it sees as China's goal of gaining influence over these governments.
The report is required by Section 215 of the Caribbean Basin Economic Recovery Act (CBERA), as amended (19 U.S.C. § 2704). It covers 17 CBERA beneficiary countries: Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, and the British Virgin Islands.
The report notes that the overall trend of China’s investment and trade in the CBERA region has been expanding since 2010, but with some downturns in 2019. It also points out that most of the Chinese FDI in the region goes to the British Virgin Islands. The report concludes that although seven of the 17 CBERA countries signed MOUs related to the Belt and Road Initiative (BRI), the BRI projects may not have a positive impact on the production and exports of the local economies in the near term due to the nature of these projects.
The report describes China’s FDI in the CBERA Region as follows:
China has been expanding its investment, loans, and trade relationship with CBERA countries since 2010. Overseas investment offers China an opportunity to not just bolster its own economy but also to leverage its economic strength to increase its influence abroad. At the first ministerial meeting of the Forum of China and the Community of Latin American and Caribbean States (China-CELAC Forum) held in Beijing in January 2015, China’s President Xi Jinping set a goal of raising the trade volume between China and the CELAC to $500 billion and China’s direct investment volume in the Latin American region to $250 billion within 10 years. To China, the CBERA region represents a strategic investment destination given the proximity and preferential access to the U.S. market, and its role as a hub for logistics, banking, and commerce.
Between 2010 and 2019, China invested an estimated $64.2 billion in the CBERA region, with the British Virgin Islands accounting for the majority (table 2.12). If the British Virgin Islands are excluded, the total shrinks to $1.2 billion. The British Virgin Islands, Jamaica, Guyana, and Trinidad and Tobago were the major recipients. In 2019, only three countries in the region—British Virgin Islands, Trinidad and Tobago, and Grenada—received a positive FDI inflow from China. All the other member countries had net outflows with China.
In 2013, the Chinese government proposed the Belt and Road Initiative (BRI), aiming at building a trade and infrastructure network globally. By January 2021, China had signed memorandums of understanding (MOUs) on jointly building the Belt and Road cooperation with 140 countries and 31 international organizations. So far, 7 of the 17 CBERA member nations have signed MOUs, all in 2018 or 2019: Trinidad and Tobago, Antigua and Barbuda, Dominica, Guyana, Grenada, Barbados, and Jamaica. The capital flows that China provides under these MOUs have taken the form of loans to governments to finance infrastructure projects and to expand production of oil and other raw materials. Most of these projects as well as those that pre-date the MOUs are in the sectors that are unlikely to increase capacity for production in CBERA-eligible products (table 2.13). However, infrastructure investments could have an impact on logistics performance. Given the limited nature of Chinese investment in infrastructure and the fact that it will take years to complete these projects, the Chinese investment flows may not yet be able to influence the CBERA countries’ export capacity of CBERA-eligible goods to the United States. Further information on selected countries is found in appendix H.
The report later goes into details on Chinese investments in some specific countries, including Trinidad and Tobago, Guyana, the Bahamas, Haiti, and Grenada.
For Trinidad and Tobago, the report says:
In May 2018, Trinidad and Tobago became the first nation in the Caribbean to sign the Belt and Road Initiative memorandum of understanding with China. It was also one of the first countries to embrace multiple Chinese construction projects. Table 2.13 lists some major projects in recent years such as construction of St. James Medical Center by China Railway Construction Corporation Limited (CRCC) in Port of Spain in 2018. Three other projects include the Valencia to Toco highway, the Toro ferry port completed by CRCC, and a $160 million general hospital contracted by Shanghai Construction built in the capital city of Port of Spain in 2019.
As to Jamaica, the report notes:
While the United States is Jamaica’s largest bilateral investment partner, China has been expanding its investment on this island. Infrastructure development remains the key area of engagement between the two countries. The state-owned China Communications Construction Company (CCCC) signed the North-South Highway contract in 2016 (table 2.13). Along with that, the Chinese state-owned enterprise China Harbor Engineering Corporation is in the process of carrying out other road projects as part of a $352 million major infrastructure development program and will construct a new toll road to cost $220 million, which will be funded by the government of Jamaica. The company also has a joint venture agreement with a Chinese government entity to construct 1,650 housing units at a cost of about $62 million. China also gifted Jamaica a Ministry of Affairs building and is in the process of building a new Western Children's Hospital in St James. Table H.1 lists some Chinese private investments in Jamaica.
For Guyana, the report states:
China signed the Belt and Road Initiative memorandum of understanding with Guyana in July 2018. Despite the challenges during the COVID-19 pandemic, China invested over $200 million in 2020 and has thus far invested $25 million in a fish processing plant in 2021. In June 2020, Zijin Mining acquired the Canadian firm Guyana Gold Fields at a price tag of $238 million. Recent oil discoveries in the Guyana-Suriname basin have also attracted Chinese investment. The Chinese National Offshore Oil Company (CNOOC) has a 25 percent stake in the ExxonMobil-Hess offshore Stabroek Block, which was producing 120,000 barrels of oil per day as of June 2021. It is estimated that $53.4 billion will be invested in the Guyana-Suriname basin over the 2019–30 period, with three companies contributing 94 percent of the total: ExxonMobil ($22.6 billion), Hess ($15.1 billion) and CNOOC ($12.6 billion). Almost 20 percent of the investments will be earmarked for expansion projects and the rest will be invested in new projects.
China has also executed infrastructure projects in Guyana. In 2020, with a contract of $50 million, China Railway First Group completed the East Coast Demerara Highway. The China Harbour Engineering Company (CHEC) signed a contract of $150 million to begin the Cheddi Jagan International Airport Expansion project by the end of 2021. In 2021, China is also actively bidding on a contract of constructing the Demerara Harbor Bridge in Georgetown Guyana.
For the Bahamas, the report highlights the following:
Reflecting the severe impact of natural disaster on the tourism industry, net FDI in The Bahamas totaled $488 million in 2019, a drop of 41.2 percent compared to 2018 (table 2.11). In 2018, Chinese outward FDI to The Bahamas was $2.8 billion, and it became negative in 2019 (table 2.12). Chinese bankers and construction companies provided significant loans to The Bahamas for commercial infrastructure programs, including resorts, casinos, and port and road infrastructure. China is also highly active in the telecommunications sector.
Major construction projects include the Baha Mar Resort carried out by China State Construction Engineering in 2009, Nassau Airport Expressway completed by China Construction America in 2013, and a new port project on North Abaco Island started by China Harbour Engineering Company (CHEC) Americas in 2015.
As of the end of 2019, three key construction projects by Chinese-funded enterprises were ongoing in The Bahamas. One is the new landmark project, The Pointe, in Nassau, which is being developed and constructed by China Construction America. The second project was contracted by the Chinese tech-firm Huawei to upgrade The Bahamas’ digital infrastructure, connecting the island’s grid to 4G service and the surrounding region. The third project, providing technical support service to Bahamas Customs container inspection equipment, was undertaken by Tsinghua Tongfang Weishi Company. Table H.2 lists significant Chinese investment in The Bahamas.
The report observes that Chinese investment is limited in Haiti because of Haiti’s official ties with Taiwan:
Chinese investment in Haiti generally remains limited because Haiti has official diplomatic relations with Taiwan. One exception is the Chinese company Everbright Headwear, a subsidiary of the Chinese state owned enterprise Everbright Group, located in Compagnie de Développement Industriel (CODEVI) Industrial Park on the northern border between Haiti and the Dominican Republic. Everbright Headwear purports to employ about 500 workers with an annual production of 3 million to 4 million hats.
Similar to Haiti, Chinese investment in Grenada is also “limited”, according to the report:
In 2019, Chinese outward FDI to Grenada totaled $3 million, about five times that of 2018 level, and more than 30 times the FDI in 2016, $0.1 million (table 2.12). In 2018, the two countries signed the Belt and Road Initiative memorandum of understanding. Since the resumption of diplomatic relations between Grenada and China in 2005, the bilateral economic and trade cooperation has been mainly through grant assistance.
In 2005 and 2013, the Chinese government provided grant assistance of 88 million East Caribbean dollars (about US$32 million) and 60 million East Caribbean dollars (about US$22 million) to rebuild the Grenada National Cricket Stadium and the Athletic Stadium, respectively. In 2019, the Chinese government agreed to provide grant funds to renovate the Cricket Stadium and the Athletic Stadium which had been devastated by Hurricane Ivan in 2004. Other newly signed large-scale engineering contracting projects include the theme park and supporting facilities of the Levina National Tourism Resort.