Home' Trinidad and Tobago Guardian : August 29th 2013 Contents BG24 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 2013 • WEEK FIVE
China may still be classified as
a "developing" country
because of its per capita
income, but that is as far as
the description is pertinent.
In almost every other way
China is in the league of developed nations.
The World Bank gives China s per capita
income in 2012 as US$6,091. By comparison,
with the exception of Haiti (US$771), Guyana
(US$3,584), Belize (US4,577) and Jamaica
(US$5,472), the per capita incomes of
Caribbean Community (Caricom) countries
are greater than China s. Even so, it is difficult
to regard China as a "developing" country in
the common understanding of that term.
China continues to define itself as "devel-
oping" because of its need for diplomatic sup-
port from developing countries for the issues
that are important to it in the international
community. These are Tibet, human rights,
Taiwan and reform of the global economic
institutions that would give China a stronger
Over the last three decades, the infrastruc-
ture of a great portion of China has been
upgraded. Its major sea ports and airports are
far superior to those in many industrialised
nations, and while the latter are crumbling
and in need of major rebuilding, China s new
infrastructure has been constructed for the
Further, China s internal transportation sys-
tem -- its highways, railways and bullet trains
are modern and futuristic. Above all else, the
Chinese people remain disciplined, hardworking
and thrifty, contributing immensely to China s
global competitiveness and to the healthy
finances of the Chinese government. Chinese
savings at the end of June this year stood at
China is already a magnet for financial serv-
ices and Information Technology (IT) busi-
nesses. The government has now announced
plans to fully connect China to the internet
in two years time with urban and rural broad-
band speeds reaching 20 megabytes per second
(Mbps) and 4Mbps respectively. Consequently,
the value of IT businesses is expected to
increase by US$2 trillion.
China is the world s second largest economy
after the United States. Even with the slowing
down of its economic growth from a ten per
cent average over the last two decades to a
projected 7.5 per cent this year, China is expect-
ed to become the world s largest consumer
market within the next five years according
to a Standard and Poor s report.
A further indication of the wealth in China
is a report by Forbes Magazine in March which
puts China as the home of the second largest
number of billionaires (122) after the US (442).
The China Daily also reports that the number
of millionaires in China this year is 1.05 mil-
This is not to suggest that all of China has
been modernised and is free of poverty. The
Western area of China lags behind the devel-
opment of the East. But this, too, is changing.
Since 2000, the Chinese government has
embarked on a programme to develop the
West covering more than half of the country s
land and almost a third of its population. It
has now decided to introduce "differentiated"
policies for the region that will include huge
spending on infrastructure.
The government has announced that it will
move "labour-intensive and environmentally
friendly industries from the coastal region to
the West." Already, three Western cities have
grown faster than their wealthier counterparts
in the East.
All of this is to say that China is a strong
economy whose growth may have slowed, but
it has slowed to a rate that every other nation
fervently wishes it had. China will continue
to grow and it will remain an economic pow-
erhouse. With US$3.4 trillion in foreign
reserves, China also has an interest in investing
in projects around the world that would not
only give it multi-national companies but also
a wider and diversified portfolio for a return
on its money.
Apart from the mineral and forestry
resources that China wants, Caribbean busi-
nesses cannot take advantage of the Chinese
market. Access to affordable capital, costs of
transportation, insurance, labeling in Chinese
and marketing are beyond the capacity of the
relatively small companies in the region. Of
course, opportunities that are available for
companies to integrate their production to
penetrate the Chinese market (and others) are
not even being considered.
Absent, the capacity of the private sector
in many Caribbean countries to export to the
Chinese market, China will continue to enjoy
a huge balance of payments surplus with Cari-
com countries. China had a balance of trade
surplus with the 15-nation Caribbean Com-
munity (Caricom) countries of US$3 billion
in 2012 according to China s trade figures.
Only Jamaica, Guyana and T&T, which have
resources such as forestry and minerals that
China wants, could reasonably expect to export
meaningfully to China. But, on present form,
their exports will hardly compensate for the
imports from China that now flood their mar-
kets leaving them with balance of payments
deficits in 2012 of US$755.4 million, US$173.4
million and US$172.5 million, respectively.
And since the balance of trade surplus in
China s favour is not likely to be reduced in
any significant way, the sum of US$3 billion,
which President Xi announced last June would
be made available to Caribbean countries as
concessionary loans, is simply not enough
compensation. China will undoubtedly enjoy
another trade surplus of US$3 billion this year
and the next.
In this context, Caribbean countries should
develop a strategy for their economic relations
with China that would secure aid for trade,
concessionary loans for national infrastructure
projects and pan-Caribbean projects that would
benefit countries nationally and regionally.
The strategy should also pursue investment
by Chinese companies in financial services,
tourism facilities and manufacturing not nec-
essarily for the Chinese market, with such
investment financed by the China Development
Bank and the China Export-Import Bank on
soft terms and conditions.
But, Taiwan remains the fly in this ointment.
In August, in the wake of China s President
Xi s visit with nine Caricom leaders in June,
Taiwan s President Ma Ying-jeou toured four
of the five Caricom countries with which
diplomatic links continue. He has pledged
ongoing economic assistance to each of them,
and they have all pledged loyalty to Taiwan.
This suggests that Caricom should now
accept that regional co-operation has been
trumped by division on the China-Taiwan
issue, and the nine independent countries
with links to China should proceed to formalise
an economic partnership agreement with China
outside of the Caricom Treaty but with the
concurrence of the five member states tied to
The alternative is the present beggar-thy-
neighbour practices from which the Caribbean
is not a winner.
The writer is a consultant, senior research
Fellow at London University and former
The Jamaican Government on August 21
signed four agreements with the People s
Republic of China worth millions of dollars,
as Prime Minster Portia Simpson Miller con-
tinues her official trip to that country.
Chief among them is an agreement with
the China Exim Bank for a preferential loan
for the Major Infrastructure Development
The others are letters of agreement on eco-
nomic and technical co-operation between
both governments; letters of exchange on the
construction of infant schools by the gov-
ernment of China for Jamaica; and letters of
exchange on the feasibility study, Teaching
Building of the Confucius Institute, by the
government of China for Jamaica.
The agreements were signed on behalf of
the Jamaican Government by Foreign Affairs
and Foreign Trade Minister, Senator AJ
Nicholson at the Great Hall of the People in
the Chinese capital, Beijing, minutes after a
meeting between Simpson Miller and her
delegation and the President of the People s
Republic of China Xi Jinping.
Under the MIDP, several hundred kilome-
tres of roadway will be rehabilitated; bridges
and retaining walls will be constructed or
rehabilitated as well as the completion of
sub-projects started under the Jamaica Devel-
opment Infrastructure Programme (JDIP).
The project is slated to provide employment
for thousands of Jamaicans.
In the meantime, both countries signed an
agreement with a view to further developing
friendly relations and economic and technical
co-operation between the two countries.
Under this agreement, the Chinese gov-
ernment will provide grant aid in the amount
of RMBY 100,000,000 or approximately
US$16 million. This will be used for projects
to be mutually agreed on through consulta-
tions between the two countries.
"Detailed accounting procedures for the
disbursement of funds concerning the imple-
mentation of the agreement shall be settled
between the Accountant General s Depart-
ment of the Ministry of Finance and Planning
of Jamaica and the China Development Bank,"
the agreement states, adding that it shall
in force until both governments have ful-
filled all their obligations stipulated in the
For another agreement, the Chinese gov-
ernment has agreed to dispatch a technical
group to Jamaica for a feasibility study on
the project---Teaching Building of the Con-
fucius Institute---on the Mona campus of
the University of the West Indies. If this is
feasible, a specific supplementary agreement
will be signed between both governments.
"The cost, in the amount of
RMBY500,000 for implementation of the
mentioned feasibility, shall be disbursed
from the grant aid stipulated in the Agree-
ment on Economic Co-operation between
the government of China and the govern-
ment of Jamaica signed on February 1, 2005,"
the agreement states.
"The government of China shall designate
an institution to issue a bill, in quadruplets,
to settle accounts through the China Devel-
opment Bank Corporation and the Account-
ant General s Department of the Ministry
of Finance and Planning of Jamaica," it adds.
The Prime Minister arrived in the People s
Republic of China on August 20 for a five-
day official visit.
The Prime Minister and her delegation
met with the leadership of important state
institutions, such as the China Export-
Import Bank and the China Development
Bank, as well as major firms currently doing
business in Jamaica and those with strong
(Jamaica Information Service)
Jamaica and China sign four agreements
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