Caribbean People. Don’t Blame China…time to get up and GO!
January 27, 2022
Perry C. Douglas, theinclusiveagenda
China represents one of the greatest threats to the future prosperity of the Caribbean. China is on a mission to become a geo-political superpower. With a massive population, technology, and a controlled economy, China is a force. China believes this century belongs to them and they have a plan to create a global empire.
China’s attitude is ruthless domination of the factors of production, and make no doubt, China believes this century belongs to them. In China’s eye’s, this is simply a restructuring of the global geo-political power structure away from ‘white-supremacy’ dominance. This is all about a raw power shift in the global capitalist system. China is simply practicing hyper state driven capitalism, which is fundamentally the same thing the European colonizers of the past did to the Caribbean. Nevertheless, it is still up the Caribbean region to defend itself, to have a 21st century strategy to deal with all the moving power shifts and dynamics, and not to fall prey to the same exploitative playbook this time around.
There are tens of millions of Chinese strategically placed around the world, in many cases these Chinese are housed in huge barrack style dorms in many countries in Africa and the Caribbean. China is locked into the global economy and its tactics and lack of shame makes it a particularly challenging force to deal with.
Caribbean states must have a specific strategy for economic growth which includes how to effectively deal with China. The strategy is not to hover in place and be afraid letting China run all over you, instead understand that China is just asserting itself in the hyper globalized capitalist economy, and that’s a good thing, as it off-sets centuries of western white supremacy dominance. Still, the fact remains, Caribbean leadership has failed to secure long-term economic security and prosperity for its people. Other past colonies…the Asian Tigers…Singapore for one, has been able to organize in their own unique way and create enormous prosperity for their people. So, the bottom-line, it’s up to leadership, political and business to lead and provide a workable strategy for sustainable growth, and long-term prosperity. Setting up future generations for magnificent inter-generational wealth transfers to drive future opportunity and increased wealth. Times up, no one wants to hear the long list of bogus excuses any longer, digital transformation is upon us, sitting on the breezy veranda and complaining like miserable old people will not help.
Nevertheless, the region can certainly benefit from economic relationships with China, in fact, it must in order to prosper. Foreign investment is something all nations need. However, how you deal with that foreign investment and China specifically, is central to getting what you want — achieving meaningful positive outcomes. We can benefit from Chinese investments made in the region, but those investments must be in line with specific, well articulated economic growth strategies. Well laid out in the national and regional interests of these nations. The strategy must be relevant to the times, in the context of digital transformation over the decade. It must be intelligence-based, proven, transparent, measurable, and accountable to the people.
Poor countries are being lured in by sweet loan arrangements from China, but the bitterness will come later. This cheap money tactic is the Chinese classic debt-trap. Countries in Southeast Asia, Africa, Latin America, are already experiencing the Chinese dept-trap strategic-playbook; and Caribbean leaders continue to jump into the trap headfirst, like morons. Inept and greedy, non-caring politicians continue to put their own economic self-interest before the peoples’.
How slavery and colonialism fuelled European economic expansion; the Chinese brand of colonialism today is the same, just more sophisticated. Raw materials like aluminum, steel, minerals, fossil fuels, agricultural commodities, are all needed to fuel the Chinese home economy, so it can facilitate its massive export growth markets. Like the European colonizers before, China extracts vast resources and sends them back to Chinese factories for processing, manufacturing, trade, and commerce.
According to the article in NewAfrican: Viewpoint: “Why we should be aware of China’s ‘new colonialism,” by African businessman Benedict Peters, who says that “we are now slowly awakening to the growing menace of China’s plans for economic supremacy. In Africa, it is clear that China’s campaign of foreign investment is a new form of colonialism.” In the following article “Belt and Road: colonialism with Chinese characteristics” author Anthony Kleven points out that:
“While China’s tens of billions of investments and loans are greedily gobbled up by cash-starved African states, they are not as bereft of strings as is often claimed. The BRI is trapping numerous countries in unsustainable levels of debt.”
One of the many examples he gives is Guinea’s bauxite reserves, which is one of the world’s largest. China needs such a vast resource to keep its Chinese aluminum industry running profitably, and provided Guinea loans twice the size of its GDP. And so, as they are unable to service the debt, an abundance of related Chinese companies have now taken control of the Guinea’s bauxite reserves, as payment in lieu of no available cash. This of course is an abundantly better return for China because the natural resource has a significant multiplying effect on the Chinese economy. The Chinese accumulate wealth while the Guinea economy and people suffer in acute poverty, unable to maximize their vast natural recourse to create any wealth scenario for themselves.
Coming back to the dept-trap, this is a simple play that has been used repeatedly by China. China lends desperately poor countries millions and billions for investment in infrastructure, knowing very well they are incapable of paying back. Deals often have predatory type terms and conditions attached for non-performance, allowing China to “contractually” seize vital public infrastructure assets as collateral if those set ‘terms’ are not upheld. Let’s now look at a few examples of the dynamics of how things happen.
In the article titled: China’s Opaque Caribbean Trail: Dreams, Deal, and Debt by Caribbean Investigative Journal Network (CIJN.) The piece is filled with many examples of the Chinese debt-trap strategy. For Caribbean countries, one of the most visible, expansive, and expensive forms of Beijing’s engagement with the region is its financing of large-scale infrastructure projects. The CIJN investigation unveiled a trail of official secrecy, questionable procurement processes, and the looming threat of potentially insurmountable debt. The Chinese playbook is the same everywhere — huge impractical and unnecessary hotel projects, highways, agriculture projects, even building a Prime Ministers fancy new house — according to CIJN. CIJN goes on to say that “China’s Caribbean portfolio is extensive. It includes highways and bridges, housing, energy, mining, air and seaports, tourism projects, hospitals, and even official residences, forming a part of that country’s strategic thrust into Latin American and the Caribbean.”
The investigating team uncovered that in most cases the precise terms of agreements are not routinely publicized, and the procurement processes and concessions are a mystery. The Chinese often end up with all the labour contracts, and their labour practices lack adherence to any type of building codes and other health and safety standards.
A 2012 independent forensic audit of the Jamaica Development Infrastructure Programme (JDIP) and the Palisadoes Shoreline Protection, and Rehabilitation Works Project concluded that there was non-adherence to allocations approved by Parliament and the Ministry of Finance. There was also the arbitrary issuance of Variation Orders and selection of sub-contractors along with the unprogrammed and arbitrary allocation of funds for institutional strengthening, according to the audit document. According to clause 13.3 of the contract ($630 million North-South Highway project signed with China Harbour Engineering Corporation (CHEC) on June 21, 2012): “The Government shall unconditionally and irrevocably waive any right of immunity (to the fullest extent permitted by applicable law) which it or any of its assets now has or may acquire in the future in any jurisdiction.”
To add insult to injury, the highway deal, in a case study conducted by the Caribbean Development Bank (CDB,) found there was “no way costs could be recouped through toll payments.” China then said that since the investment couldn’t be recouped through toll payments, land adjacent to the highway should be given as compensation. Jamaica of course had already agreed to those ‘terms’ in a contract clause. China of course enforced it and the Chinese company promptly brought in 1000+ workers from China to begin work on a commercial project. Free land for China, no Jamaican worker participation, no contracts for Jamaican firms, no economic benefit to Jamaica — absolutely NOTHING! This outcome is a significantly better multiplier return for China than a low interest rate return. New Chinese landlords are now entrenched into the Jamaican economy with no cost base to begin with. Sound familiar? Putting them at an advantage to Black Jamaican land and real estate owners, developers, and entrepreneurs. Basically, the Jamaican government’s incompetency when it comes to Chinese dealings are screwing locals.
In practical terms, this meant that the Jamaican state allowed China, in a case of a breach of contract by the Government of Jamaica, or actions that the Chinese have determined by themselves — results of non-performance would be actionable on Jamaica’s sovereignty. When contextualized, the clause essentially allows for the GoJ to forfeit any current or future owned assets to China, for debt recovery by seizure. A blatant encroachment on sovereignty.
“New roads, new businesses, new hotels, and booming Chinese immigration has led to many companies being staffed with more Chinese workers than local Bahamians.” (Forbes)
In Trinidad and Tobago, the sudden termination of the Government’s $71.7 million project between China Gezhouba Group International Engineering Company and the Housing Development Corporation (HDC) in 2019 has also drawn attention to a lack of transparency in the awarding of the contract, and what has been described as overly generous concessions to this Chinese company.
In Suriname, there are increasingly alarming rising fears that mounting debt to China, spanning decades, can have the impact of stalling future development and exposing the country to liabilities way above its ability to pay.
Nevertheless, it’s not China’s responsibility to look after the interest of the other side, that’s the responsibility of Caribbean leadership; everything is a negotiation. The highly skilled Chinese negotiators need to be matched with equally skilled negotiators on the Caribbean side — not greedy, desperate, and inept politicians trying to enrich themselves through public office.
China’s engagement in the region does not necessarily have to be negative, it could be a big positive for growth. Notwithstanding, it depends very much on how the region plays it — understanding the colonialism playbook of others, and developing your counter offences is essential to winning. Being proactive, not reactive, and setting out your goals and economic objectives for the nation strategically, is the key to positive outcomes. Remember China needs global relationships to expand, so the Caribbean has something to offer, and we can’t care or get distracted about China’s geo-political ambitions, that’s not our fight. All we should care about is how we can get the best deal for ourselves, maintain our sovereignty, and focus on the long-term prosperity and survival of our Caribbean ‘species.’
What these local politicians don’t get, is that China is fundamentally an ‘investor,’ so in the end, it’s about what you can negotiate successfully with them. China is in the region for a reason, they see opportunity that is aligned with their own long-term strategic goals, so they need the Caribbean or they wouldn’t be there. China is practical, and it will push and do what-ever it can get away with, so if local leadership and stakeholder continue to hand over the people’s natural resources, national assets, China will continue to take it. Wouldn’t you? China, nor the universe, has any moral obligation to the region, in fact, the nature of the universe and economics is about conflict, scarce resources. So ‘nature’ tells us that it’s impractical to believe any global actor would behave differently. That’s the nature of things. So don’t blame China. They’re an actor playing their part in the global capitalist system, and it’s up to you to figure out and play your role. No one is going to come and save you. This is about winning, nothing else, and Caribbean leaders (political and business people alike) have an obligation to win for their people.
The region can’t continue to run without a clear comprehensive Caribbean-centric growth strategy. The strategy must be creative and innovative, aggressive, formattable, backed up by strong executable mechanisms, a progressive and accommodative regulatory environment, compliance, governance, abiding by sturdy democratic principles of the rule of law; and enhanced transparency. This is the type of environment entrepreneurs thrive in, and we do need entrepreneurs so very much!
ASSETS BELONGING THE PUBLIC, to the people, are being offered by unintelligent and corrupt politicians as collateralized property in business deals with China. This is beyond the pale of anything, it’s egregious, anti-democratic, anti-patriotic, illegal, and plain stupidity. Sovereignty represents a state’s most precious right and freedom under international law, under basic universal principles. Nonetheless, this is still happening. A project in Guyana for example, signed January 9, 2017; in Article 8.1 shows how fragile Caribbean nations’ sovereignty has become: “The borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding…or with the enforcement of any arbitral award pursuant thereto.”
“This is Guyana dangerously agreeing to cede sovereignty. It plays into the Chinese strategy of using economic weaponry in the pursuit of influence and domination,” says attorney and chartered accountant Christopher Ram. In short, these governments have signed away their nation’s sovereignty, dignity, and basic self-respect, to China. China could simply walk in and take control of Guyana’s assets through its preset debt trap.”
July 2020, a Kenyan Appellate Court halted a construction deal, by pronouncing the $3.2 billion contract between Kenya and China for the construction of the Standard Gauge Railways (SGR,) as illegal! The recent judgment effectively lifted the lid on the “dragon’s debt-trap diplomacy.” China had been pressuring Kenya to pay the huge debt, while in the middle of battling a pandemic.
This came to a head because since 2013, Kenya has saddled itself with more than $5 billion in loans from China for construction on the project. However, in just its first year of operation, the project reported losses of about $98 million US, making servicing the debt impossible. And of course, the terms of the deal made it such, that if Kenya couldn’t repay, it could have ended up giving China control over some of its most important assets. In this case, it would have been Mombasa Port, Kenya’s largest and most valuable port in east Africa, the gateway into Kenya and landlocked neighbouring nations Burundi, Congo, Rwanda, South Sudan, and Uganda. “Therefore, losing control over the port would mean erosion of Kenya’s sovereignty.” The implications are freighting, thousands of port workers would’ve been forced to work under its new Chinese lenders — colonialism 2.0 would have crept back, if it hasn’t already. Fortunately, Kenya’s court system saved the day, bringing a wake-up call to all those involved in similar entanglements with China. Caribbean nations are headed down similar paths and I wouldn’t trust Caribbean courts to save the day like the Kenyan courts did. In general, Caribbean systems don’t have the wear-it-all and veracity and good sense to protect the region from this type of sovereignty encroachment. They’ll all run scared, like usual.
Based on the existing information about China’s involvement in the Caribbean, there is a better than 50% chance that Caribbean states, for all intent and purposes, will be owned by China. A more sophisticated form of colonialism but colonialism, nonetheless.
COVID-19 has provided us with a pause, an inflection point, to shift our thinking and strategy focus on a better future, we can’t remain stuck in the past any longer, behind amateurish politicians, with nothing but stale ideas and acting like desperate and hungry stray dogs. If we stand still, we perish; we must move in the same direction that the rest of the world is moving in, or be left tragically behind. Again!
Like Africa, the Caribbean desperately needs Foreign Direct Investment (FDI) to develop its economy, and with the global economy transitioning into the digital age, even more so now than ever. However, the specifics of every deal and financial structures must be transparent to the public and always in its economic interest. Furthermore, the base economics supporting the investment must be presented ahead of time, including performance-based metrics, data sources supporting the investment case, critical data-driven analysis, specific modelling, including advance predictive decision-making algorithms to strengthen the success odds. Most importantly, deals must be inclusive to the broader population, and that population must ask, what’s-in-it-for-me, before giving the green light.
A digital transformation agenda can help us flip the script; help underwrite a future prosperity reality. Resources must be mobilized in triple-time with the stated objective of leapfrogging the regional economy into the prosperous global economy — the digital economy. Ambitions must be focused, we must think big, we cannot afford to sit and be spectators in our own demise.
A real strategy is required, a fundamental change in mindset and approach relative to the underlying variables in the new economy, relative to how to achieve Caribbean-centric growth. The Caribbean needs a new common Investment Policy Statement, a new operating paradigm, one that is progressive, inclusive, with drive towards sustainable socioeconomic development. Politicians should no longer be put in charge of investment decisions, instead, a professional data and applied intelligence-driven performance-based approach to execute a common socioeconomic vision must be taken. It must be about entrepreneurship, sustainable bottom-up approaches that are results oriented. What exists now is just folly!
Scientific ecosystems coupled with highly qualified investment committees, driven by application and real information, relentless iteration, responsible to the people, is the push! Driven by intelligent scientific data-based decisioning and predictable modelling, powered by big data, artificial intelligence, machine learning, followed up with fearless actions and implementation; transparent and measurable. We know that the best ideas are those ideas that are supported with real information and are improved through an iterative process. An applied intelligence process that identifies and determines the correct problems to solve. It defines solutions based on evidence and selects the right technology applications to solve them with. Filtering ideas down to the optimal potential for success using computational, quantitative, and qualitative measures to evaluate growth outcomes for business ideas through rigorous testing. This is inherently a “bottom-up” process, and by using data for effective decision-making enables leaders to be confident in their decisions. This new paradigm includes an advanced level of due diligence, all of which must be brought to the investment decisioning forefront to examine potential opportunities based on merit and its exponential growth function, and fitting that into the stated investment agenda and vision. This must be the true Caribbean push to sustainable prosperity and happiness — so time to get up and GO!
