Jamaica and the region are entering into a New World Order shaped by China, according to the United Nation’s (UN) regional body Economic Commission for Latin America and the Caribbean (ECLAC) in its recent publication.
Essentially, China is investing heavily in the region in order to facilitate trade for its economy, but in the process it is crowding out other investors, according to the ECLAC in Horizon 2030: Equality at the Centre of Sustainable Development released in summer 2016.
“A new world order is taking shape around China,” the report states.
ECLAC explained that China’s progress impacts Latin America and the Caribbean in international relations, United States-China relations, and the regional integration process.
“In Jamaica and Nicaragua, for example, China is investing in transport infrastructure to be used as an offshore platform for its trade. In other Caribbean and Central American economies, Chinese firms have identified investment opportunities that were not taken up by domestic or third-country investors,” stated the report about a strategy which increases Chinese influence in developing economies.
ECLAC, however, never described the expansion of China’s hegemony in negative terms. But indicated that its influence would impact the region into 2030.
In Jamaica, the Chinese through Jiuquan Iron and Steel (Group) Company Ltd (JISCO) acquired bauxite interests with plans to invest up to US$3 billion in Alpart Alumina refinery with the possibility of a coal plant. The Chinese government through China Harbour Engineering Company (CHEC) invested upwards of US$700 million in highway projects. Earlier CHEC also planned to develop a US$1.5 billion transshipment cargo facility at the Goat Islands off the coast of Jamaica. The current JLP led Administration are still interested in the project but blocked the development set for those islands which are currently nature reserves. These projects are public-private partnerships, however, direct government to government loan projects also represent a large lump sum.
For instance, development assistance from China to Jamaica equated to US$880.4 million ($113 billion) for 11 projects. Most of that amount related to loans rather than grants, according to the latest Economic and Social Survey Jamaica (ESSJ) 2015, published by the Planning Institute of Jamaica.
Returning to the ECLAC report, the authors reasoned that notwithstanding China’s multitude of projects, it still needs to get its currency ‘the renminbi’ within the markets as a reserve currency. However that’s unlikely due to the fear of its knock-on effect on the Chinese market.
“This in turn requires that China adapt to a more liberalised capital account,” stated the report about a policy which China would resist.
The report concludes that China does not want to be seen as a threat to the United States’ standing in the region. However, the surge in Chinese trade, investment and lending has created a new configuration of influence and power.
“This is not only because China has financed numerous projects and has become an alternative source of funding and technology for several countries with current account difficulties, but also because the commodities boom gave the South American economies extra scope for autonomous decision-making,” ECLAC said.