Jamaica’s open arms to Chinese investment in recent years has led many island residents to fret about possible adverse effects on the local economy.
Allan Hope, the Jamaican poet, musician, actor, and talk-show host better known as Mutabaruka, recently voiced his concern during his “Cutting Edge” radio talk show that Chinese road projects in Jamaica will put his country on a path toward debt default, according to a Sept. 25 article by Caribbean news site Loop.
“We must look at what is happening in other parts of the world as it relates to China. Other countries are faltering on loans and they have to take land and seaports,” Mutabaruka said.
Loop highlighted the case in Sri Lanka, when China took control of a Sri Lankan seaport and 15,000 acres of nearby land included in a 99-year lease, after the Sri Lankan government defaulted on a Chinese bank loan.
Beijing is currently financing several road-rehabilitation projects in Jamaica’s capital of Kingston, including projects at Three Miles, Constant Spring Road, Hagley Park, and Mandela Highway. The total cost of these projects would be roughly $88.6 billion.
Additionally, Jamaican government signed a loan agreement with China’s Export and Import Bank in February 2017, for $384 million to renovate 110 kilometers (about 68 miles) of the South Coast Highway, which runs from the Harbour View in Kingston to Port Antonio in Portland, a parish on Jamaica’s northeastern coast, according to the Jamaican government.
“You think it can’t happen to we [sic], after all these pretty lights and motorways?” Mutabaruka said.
Currently, Jamaica sits on a mountain of debt. According to a May 16 article by Jamaica information website DigiJamaica, total debt stands at roughly $15 billion as of the end of March, citing data from Jamaica’s Ministry of Finance. The country’s external debt is roughly $10 billion. It isn’t known how much of that is owed to China.
China’s Interests in the Caribbean
Aside from road-rehabilitation projects, Beijing has invested heavily in Jamaica under the “One Belt, One Road” initiative (OBOR, also known as Belt and Road).
OBOR, first announced by Beijing in 2013, seeks to build Beijing-centered land and maritime trading networks by financing infrastructure projects throughout Europe, Asia, Africa—and most recently, the Caribbean and Latin America.
Under the OBOR initiative, Beijing has begun investing heavily into Jamaica, including a $721 million investment into Highway 2000, Jamaica’s first toll road, which taken over by the state-run China Harbor Engineering Co. in 2014; and the purchase of Jamaica’s Alpart aluminum refinery, which was previously owned by a Russian mining company. China’s state-run Jinquan Iron and Steel bought it for $3 million in 2016, according to China’s official OBOR website.
The Alpart refinery purchase is part of China’s desire to tap into Jamaica’s rich deposits of bauxite, a clay rock that can be refined to produce aluminum. Jamaica has one of the world’s largest deposits of the material.
Separate from OBOR efforts, in June 2013, Beijing offered a $3 billion loan with favorable rates to nine Caribbean countries, including Trinidad and Tobago, and Jamaica, according to China’s finance website Caixin.
While Beijing has claimed its investments and loans to Jamaica are for the benefit of both countries, the former’s motives could be read between the lines in a policy paper on Latin America and the Caribbean issued by the central government in November 2016.
In the document, Beijing called for greater military cooperation with the two regions in the realms of training, trade, and technology. Politically, Beijing stated that it would engage with countries in the region on the basis of the “One China” principle.
According to the Chinese Communist Party, the “One China” principle stipulates that both mainland China and Taiwan are inalienable parts of a single “China,” and Taiwan must one day be united with the mainland, by military force if necessary. However, Taiwan is self-ruled with its own constitution, democratically elected government, and military.
Beijing has targeted the Caribbean for “dollar diplomacy,” because many of Taiwan’s diplomatic allies are in the region: Haiti, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. The Dominican Republic was Taiwan’s ally before Beijing pressured the country to recognize “one China” and drop ties with Taiwan in May.
The U.S. Department of Defense, in its annual report on China’s military and security development prepared for Congress in May, pointed out that China had increasingly used professional military exchanges to build its influence in the region and counter the United States’ presence. The report noted that many countries in the Caribbean and Latin America have sent officers to the Chinese-military-run National Defense University in Beijing.
A letter to the editortitled “China’s Colonization of Jamaica” appeared on the Caribbean regional news site Caribbean News Now on Sept. 4, questioning how much the Jamaican economy and Jamaicans have really benefited from Chinese investment.
For one, Chinese investors often hire Chinese instead of local Jamaicans to work on Chinese infrastructure projects. Such imported Chinese laborers was one reason that Jamaica’s GDP hasn’t shown any significant growth, despite all the direct investment from China, according to the letter.
Between 2013 to 2017, when Chinese investment began pouring in, Jamaica’s GDP has more or less hovered around $14 billion, dipping to a low of $13.9 billion in 2014 and registering a high of $14.4 billion in 2017.
In March 2016, an unidentified local contractor told The Gleaner that Chinese workers were often preferred because they were cheaper to hire: $1 and a bowl of rice for a Chinese worker per day, compared to $4 daily wages for a Jamaican worker.
Meanwhile, the jobs created by Chinese investment were often limited to “cheap subservient marginal jobs in wholesale and on infrastructure projects,” the letter pointed out.
Chinese companies that have invested in Jamaica and dominated its construction sector has inevitably pushed out local construction companies. In August 2017, Peter Bunting, former minister of Jamaica’s National Security, called the Chinese presence “a form of economic colonization,” according to a report by The Gleaner.
He said Chinese companies had an unfair advantage because they were supported by Beijing and had “virtually unlimited resources.”