by Kenneth Green

The need for serious Caribbean originated policy discussions on how the region and its countries should be engaging with the Chinese Government and Chinese business, is testament to the growing importance of that relationship.

China is the world’s fastest growing economy and carded to become the world’s biggest economy by 2030, according to the think tank, the Centre for Economics and Business Research (CEBR). The importance of China to some countries in the Caribbean, especially Dominica, has already proven to be immeasurable.

The lack of commentary emanating from the Caribbean on the way forward is disappointing, and what research there is, primarily on Latin America, is primarily externally generated and slanted accordingly.

As a starting point, I would recommend McKinsey’s sweeping and comprehensive research study on the relationship between China and Africa, entitled the Dance of the Lions and Dragons, published in 2017. This remains the seminal piece on the Chinese Government and the Chinese private sector and how they have engaged with Africa, and gives pointers for the Caribbean.

It is also a dispassionate and well-studied report, missing out the stereotyping and alarmist tendencies of Western think tanks who mirror the fears of China’s threats to the existing US and Western Hegemony rather than analyzing the difference in approach and the appeal to developing countries.

Emanating from the inception of the Monroe Doctrine in 1823, the Caribbean remains firmly within the sphere of influence of the United States. Caribbean countries and its people are heavily dependent on the US as a majority of immigration from the Caribbean is North America bound, and our financial and security systems are interlocked. Further, a significant amount of Caribbean tourism emanates from North America, the largest percentage of remittances comes from North America and the trade deficit between the Caribbean and the United States alone is over 600 bn dollars.

It is no wonder that the United States considers the Caribbean ‘its territory’, a ‘third border’.

Yet, the Caribbean, as represented by Caricom, has shown a rich vein of independence in carving out specific national interests in preserving its relationships with Cuba and Venezuela, even whilst they have been long term pariahs to multiple United States administrations.  In fact, had the United States treated Caricom with respect and listened to some of the more nuanced voices within the Region, the result might have been different. The creation of the Lima Group, even with select Caribbean countries as members, did not achieve the seeming goal of gaining a new consensus from outside of Caricom, on Venezuela. 

This is quintessential foreign policy, that national interests may differ but friendships are sustained on the basis of mutual respect. In the case of the Caribbean and the US, that respect does not seem to carry the same importance for one of the parties.

The demonization of Cuba, for having dared to nationalize assets that were considered the private property of both wealthy Cubans and their American equivalents is one such point. Therefore, Cuba represents a direct threat to the concept of private property rights vs socialist and state mandated public sector ownership, to the United States

I set this scene because there is tremendous disinformation and propaganda wielded against China in the context of its relationships with not just Africa, but Latin America and the Caribbean amongst others.  There are dry runs of this propaganda every day, establishing reasons to dislike or distrust the Chinese for daring to not share certain value systems.

In turn, the Chinese have no history of exporting ideological systems. Their mantra is trade and whilst it is still classic soft power, it is certainly not big stick politicking as has been the treatment of the West to any Caribbean or Latin American country which has drifted from the prepared script.

The realization that there is a shift coming is real, and even Zbigniew Brzezinski and his Grand Chessboard book, written in his time as one of Americas foremost foreign policy hawks and Eurasian watchers failed to grasp the emergence of China.  It is difficult to imagine China creeping up on anyone but it certainly crept up on the United States, because in its earliest form, the relationship with China, broached by Richard Nixon with the prompting of Henry Kissinger, was supposed to serve a wedge against the then enemy number one, USSR.

The fear of a USSR-China union and China’s focus on Western and global recognition for its one China policy to delegitimize the aspirations of Taiwan led to what was a Faustian deal. Utilise cheap and plentiful Chinese Labour to grow the US economy through a new offshoring paradigm, and the US would turn a blind eye to ideological differences to treat China and not Taiwan as the primary relationship.

No part of this deal included the growth of the Chinese economy to be a rival to the Western powers. Indeed, in the same time span it brought incredible growth to the United States capital owning class and the stock market. When Jack Welch, then CEO of General Electric in the 1970’s stated that public corporations owed their primary allegiance to stockholders and not to employees, the die was cast.  GE offshored much of its manufacturing and its suppliers also offshored their manufacturing under direct guidance from GE. This trend continued in American business through the Internet boom of the 90’s where giants like Apple offshored aggressively and increased their profits exponentially.

Outwardly, the Chinese march to relevance is based on creating more and more relationships and finding common ground even with nations they have less than stellar relationships with. In the case of the Caribbean, the template is still relatively fresh. It is also important to note that neither Africa or the Caribbean had colonial relationships with China. As such, there is peer-to-peer respect given at every level, from private business to the highest echelons of Government. 

Prime Minister Skerrit, being the first leader in the Region and Latin America to have a call with Chinese President Xi Xinping in 2021, is proof positive of that approach.  As one African technocrat related, when a top-ranking minister tried to meet Nancy Pelosi on a visit to the United States, her office rebuffed him with the point that she only met Heads of State. Such is the level of disdain. Gyude Moore’s lecture on YouTube entitled China in Africa, an African Perspective, outlines the disparity in how China deals with Africa versus the West. The same approach of mutual respect given even to the tiniest of nations compels a shift in the way the Caribbean interacts with China.

Certainly, China’s goal to eradicate poverty is something to not only take note of, but to emulate, and their goal to create future South – South cooperation is an admirable channel through which cooperation can build strength. Caricom can learn much from adopting that objective and how China has fashioned a generational baton into an overriding national objective rather simply creating more avenues for the pursuit of wealth generation for a few.

So now that we know what is at hand, how does the Caribbean interact with China? How do we extract what is valuable and avoid what is perilous?

It is instructive to look at an example from McKinsey’s study:

“The expansion of Chinese business and investment in Africa is akin to that of a bamboo plant: from modest beginnings, it has shot up at record speed. As with bamboo, that growth springs from long-established roots. Although the Chinese naval explorer Zheng He sailed to the east coast of Africa in the 15th century, China’s modern ties with Africa date back to the earliest years of African independence in the 1950s and 1960s, when leaders such as President Julius Nyerere of Tanzania turned to China to build “Third World solidarity.” One concrete expression of that early cooperation was China’s 1968-76 construction of the TanZam Railway, which linked landlocked Zambia with the Port of Dar es Salaam in Tanzania. Britain, Japan, West Germany, and the United States, as well as the United Nations (UN) and the World Bank, had all declined to fund the project, deeming it financially unviable.  Only China—at the time poorer than both Tanzania and Zambia—agreed to fund it, to the tune of $3 billion in today’s money. Mao told Nyerere, “To help you build the railway, we are willing to forsake building railways for ourselves.”

This is a classic example of Chinese thinking, long term to the future and how this would colour future relationships not just with Tanzania but other African countries. This is why it is critical that Caribbean policy makers understand that trying to extract maximum benefit as part of one-shot deals with China is a mistake best avoided. Better to slowly build the relationship and extract value when China in turn requires mutual benefit.

The BRI (Belt and Road Initiative) is therefore the single biggest opportunity for Caribbean policy makers and with Jamaica, Grenada, Barbados and Dominica being first subscribers to that platform it is critical that they set the example for what should be a blueprint for interfacing with China and Chinese companies.

To understand China a bit further (credit to Pepe Escobar) we can throwback to Deng Xiaoping: “at present, we are still a relatively poor nation. It is impossible for us to undertake many international proletarian obligations, so our contributions remain small. However, once we have accomplished the four modernizations and the national economy has expanded, our contributions to mankind, and especially to the Third World, will be greater. As a socialist country, China will always belong to the Third World and shall never seek hegemony.”

China has a motivation for working with the Caribbean which is very different from how the Caribbean is perceived by the West. Latin America and the Caribbean is equally important as a link across the Belt and Road Corridor as anywhere else. It may be that a stronger more assertive China may emerge in which that dynamic changes, but at present it is important to learn from the approach that highlights partnership and cohesion, than points fingers and is quick to sanction.

The obsession with building through trade is a trademark of China.  However, In December 2020 President Xi gave a speech in China where he emphasized the need to get value for money in financing projects in Latin America and the Caribbean. They recognized that they had made mistakes in trying to build relationships too zealously. At the same time, China’s unwillingness to export ideology along with its trade goals is a major plus for the Caribbean and Africa. Put simply, whether it is Cuba or Venezuela or Dominica or Ecuador, China works with governments to the interests of their development goals. Unlike Western multilateral organisations who often front for value systems that are intrinsically linked to their assistance, China does not force systems onto countries. 

That is a major plus, ironically, that the Chinese Communist Party (CCP) does not get enough credit for. The situation in Ecuador, where just in January 2021, the US IDFC (Intl Development Finance Corporation) signed a groundbreaking agreement to finance an up to 2.8bn dollars deal to fund infrastructure projects (and to refinance so called Chinese debt) also came with the caveat that oil and infrastructure assets had to be privatized and Chinese technology banned. Herein lies the difference in the long-standing Western approach. My way, or no way.

So what lessons do we have to learn in order to deal with Chinese business (and the State by extension).

  1. Guanxi. It is important to understand the concept of relationship, but also to understand that not asking for what you want is often more important than asking for it.  Instead, understanding what is important to the Chinese side is critical. Describing Guanxi is difficult but it is effectively relationship building through networking and trust.  In the context of the Caribbean it is critical for policy makers and business people to establish Guanxi through mutual contacts for research for example, visiting fellowships and also using students who have graduated from China in contact with Chinese to show connectivity between Chinese systems of learning and developing partnerships and professional relationships. Caricom should be looking to build Mandarin into the education system to show the seriousness of its engagement with China. Engaging China is inevitable; not being prepared would be a cardinal sin. For business, establishing a Caricom-China Business Council would also be a welcome avenue. Interestingly, Dominica through its Prime Minister appears to have Guanxi with China, a long and trusted relationship which continues to offer potential for future ventures.
  1. Patience. As alluded earlier, being able to look long term is critical to dealing with Chinese business people and Government.
  1. Collaboration. The term win-win is a popular Chinese euphemism for collaboration but it often does not work out so. Chinese business people are notorious for their negotiating manners, often getting to the brink of a negotiation and then withdrawing for a considerable time just when you thought there was agreement and then downshifting the negotiation to a lower tier. To deal with that, trying to get transaction-based relationships where your side is the clear ‘winner’ is not going to go well. Therefore, emphasizing joint ventures is important. Again, like point 2, trying to go all in on first pass is not the best approach. 
  1. Respect. The idea that Chinese business people and the State are homogeneous and part of one big organism is misleading. There are rogues and saints and everything in between. If Chinese private sector firms or individuals try to break the law and are allowed to get away with it within sovereign countries in the Caribbean, that is a bad precedent. The Chinese Government will not protect them, but neither will it tolerate unlawful interference in contractual agreements or business ventures.  Systems have to be robust and have to be protected with zero ambiguity. 
  1. Unity. The quintessential Caricom weakness, the tendency to one-up each other is a big problem in dealing with China. BRI as a trade platform emphasizes the importance of connectivity so therefore developing a common stance on inter-Caribbean transportation vis-à-vis trading with China would be critical. This requires Unity, whether in touting for Chinese investment for regional airlift, a regional ferry system, or in integrating energy and financial platforms.  Our size is a huge deficiency so therefore building collective business cases to be able to extract value is a stronger sell to China’s development institutions especially as Caribbean business cases are small in comparison with most other regions.
  1. Representation. Having an intermediary in China (and out of China) is crucial. A native Chinese speaker will read and explain the facial expressions, mood, and body language Chinese negotiators exhibit during a formal negotiation session. Caricom (and any Caribbean country) would need to have Chinese representation who will not only work to their interest but act as a sign of the seriousness of networking.  This zhongjian ren, the intermediary, can actually act as part of the Caribbean team with even greater effect. It is highly recommended that a native Chinese be incorporated into the highest levels of negotiation working in the interest of the deal to be discussed.
  1. Endurance. A negotiation can take considerable time because of the need to engage the process. In the West, which Caribbean countries are patterned on, the result is everything. Therefore, when a Caribbean person wants something, they simply ask for it. This does not work the same way in negotiating with Chinese business in particular. Meetings, drinks, more drinks, meals and direct contact between the principal owners and their families is crucial as part of the process. In turn reciprocation in terms of extending social niceties and showing the importance of a new technology or project to your firm or country is advisable whilst at the same time not directly pursuing it.  

The biggest external issue to the Caribbean – China partnership is the level of disinformation that talks to that same relationship between Caribbean countries and China and ultimately the paranoia displayed by the United States towards that relationship shift.  That campaign is effective because the Chinese Government has a weakness in PR which may be a result of the cultural and language differences. The fact is that often China is viewed with suspicion because of the language barrier, the lack of religion as a unifying force in the relationship, and the labelling of China as undemocratic. It is worth pointing out though that it is arguable that people-led systems are more democratic that capital- led ones.

There are very few large private sector entities from China in the Caribbean simply because of the economies of scale. However, there is potential which can be massaged through joint ventures. This should be emphasized and encouraged to ensure that real value chains enter the region. At present, the Chinese Government engages with Governments across the region and the relationships are defined by the application of the benefits by the Governments of the day. Private sector engagement and employment as increasingly seen in the success stories in Africa, have not yet penetrated this region. It is that which will capture not just economic consensus, but hearts and minds and show real value to the ordinary man and woman across the region. 

Conversely, Caribbean systems of governance are not robust and need to be to deal with Chinese private sector firms. 

If a Chinese company is building in your environment and there are no robust environmental laws or regulations and there is no one to hold their feet to the fire, they cannot be blamed if they do not observe them. They will follow the law to the letter if it is observed and will ignore them if they are allowed to. As such it is crucial to have key meetings to point out their obligations under agreements. The more regular the more effective. 

Lastly, the concept of loss of ‘face’ in relationships with China cannot be emphasized enough. We will deal with this in a follow-up to this article and how it and other external influences can affect Sino- Caribbean relationships.

One Response

Leave a Reply

Your email address will not be published. Required fields are marked *