End the nonsense about China taking over Jamaica

Sunday, May 05, 2019

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Jamaica recently signed the US$1-trillion Belt and Road Initiative (BRI) of the People's Republic of China, and in so doing joined more than 100 other countries including our sister Caricom nations of Barbados and Trinidad and Tobago.

To date, China's Belt and Road Initiative, proposed by President Xi Jinping in September 2013 as an important aspect of China's global outreach, has made practical progress, with 125 countries and 29 international organisations having signed 173 co-operation agreements under the programme.

The BRI, previously known as One Belt One Road until 2017, consists of the overland Silk Road Economic Belt and the 21st century Maritime Silk Road — a massive Chinese initiative to invest in infrastructure projects in Europe, Asia and Africa, encompassing 65 per cent of the world's population and one-third of the world's gross domestic product (GDP) of 2017.

The second Belt and Road Forum for International Cooperation will be held in 2019 and makes it clear that the drivers of this policy are economic, — that is, sustaining economic growth, and diplomatic — that is, increasing China's international influence.

The BRI's US$1-trillion investment programme is seen as necessary because of the magnitude of the deficit of investment in infrastructure — mainly ports, roads, railways, airports, electricity plants, and telecommunications networks.

The McKinsey Global Institute estimates that the world needs to invest an average 3.8 per cent of global GDP, or US$3.3 trillion annually to 2020, just to support currently expected rates of growth. Emerging economies will account for some 60 per cent of that need. The world invests some US$2.5 trillion a year on transportation, power, water and telecommunications systems.

It is obvious to us that signing the BRI is a step to retaining access to development loans from China, and we should look at it dispassionately and not with the usually misinformed hysteria about the Chinese taking over Jamaica.

Our debt to China represents approximately 3.9 per cent of the country's total debt and will be paid off in the next decade. The loans Jamaica has received from China have some of the lowest interest rates in the country's debt portfolio. Indeed, 90 per cent of the debt Jamaica owes to the Government of China through the China Eximbank is at two to three per cent. These loans also have less conditionality and are not intrusive in policy areas which are not strictly economic.

Jamaica needs more investment in order to increase the rate of economic growth. The encouragement of private foreign and local investment must be facilitated and supported by public sector investment in education, health, and infrastructure.

Loans from China have been of considerable assistance to Jamaica. What we must continue to bear in mind, however, is that if these loans are to finance construction projects, the Government must at all times seek to maximise the benefits to the country.

This can be done by ensuring that Jamaican architects and engineers have an opportunity to bid for the contracts in an open, transparent bidding process. In the event that Chinese firms win these contracts, they must be required, to the greatest extent possible, to employ Jamaicans and subcontract local suppliers.

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