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The importance of continued partnership with China

Published: Aug 11, 2017

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The government and Chinese embassy are hosting a reception today to commemorate 20 years of relations between our two countries. The Bahamas and China established diplomatic relations on May 23, 1997.

Hubert Ingraham and his government made the decision to recognize the People’s Republic of China, leading to the end of our relationship with Taiwan. This was the right move.

China now has the second largest economy in the world. There have been significant capital flows to our country, including Baha Mar, The Pointe, the Airport Gateway project, the port in Abaco and the national stadium.

The Baha Mar bankruptcy slightly shifted public opinion against China. Two of its companies were caught up in it. Some think the resort’s developer, the Christie administration, the Export-Import Bank of China, the lender, and China Construction America (CCA), the builder, treated Sarkis Izmirlian unfairly.

The bank took control of the property as a result of bankruptcy proceedings in The Bahamas. A sale is underway to a Hong Kong-based conglomerate.

Others are concerned with the overall scale and scope of China’s ambition in such a small place. They fear domination by a country with a population of 1.4 billion. They see China’s play as more geo-strategic, wanting to set up shop off the coast of a rival, the United States.

We do not think China wants to take over The Bahamas. China wants to invest and make a profit. The government of The Bahamas has the responsibility to ensure that the interests of The Bahamas and Bahamians are advanced in its negotiations with all outside parties. There are no heroes and villains in these matters. Each side seeks to do its best in order to make money. Neither the Baha Mar dispute nor paranoia should prevent us from growing a win-win relationship with China. Let’s remember where we are.

Our unemployment rate has hovered between 12 percent and 16 percent since the fall of 2008. Our debt-to-GDP ratio is in the 70-percent range. We are quickly using up the last bit of debt headroom we have before facing serious borrowing problems. In 2013, there was zero growth in the economy; -0.5 percent in 2014; -1.7 percent in 2015; and 0.1 percent in 2016, which is essentially zero growth again. We are stuck in a stagnation-contraction phase.

The Bahamas must seek all the investment it can get. China wants to invest. Let’s welcome that money, while advocating for our interests.

China attaches labor requirement to its lending. To get the money you have to accept its people and companies doing most of the work. This is a source of contention in The Bahamas. The government of The Bahamas should push at every negotiation to reduce the Chinese labor component of the deal to an irreducible minimum. Our people need work. We need the skills transfer that occurs when our young men and women have jobs on such projects.

China has set aside billions in investment funds for Latin America and the Caribbean. Its new Belt and Road Initiative is a further opportunity for The Bahamas to lure capital to our shores.

While we want more investment from the United States and other Western nations, China’s money is on the table. Let’s engage to secure as much as possible.

It is critical that Bahamian policymakers and thinkers accept that we must open the door to large capital flows to this island chain if we are to get out of the mess we are in. Our problems with crime, education, debt and a collapsed electricity system could all be helped if the economy grows robustly.

Our relationship with China over the past 20 years has benefitted The Bahamas. Let’s go further together in a spirit of mutual cooperation and trade.

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