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Dominican Republic 2019 | ECONOMY | FOCUS

China and the largest Caribbean economy have renewed their diplomatic ties more than half a century after they fell out with each other.

bilateral relations between China and the Dominican Republic were initially kindled in the 1930s, and a Chinese diplomatic mission was set up in the capital city of Santo Domingo in 1943. Since then, the relationship has been through many ups and downs and even full-fledged crises, especially during the years that followed China's 1949 revolution. However, things were finally restored to normal on April 30, 2018, when the Dominican Republic officially severed ties with Taiwan.

China's growing influence in the global scene has discouraged many nations from maintaining diplomatic ties with Taiwan, which China regards as an inseparable part of the mainland that “must be reunited with China sooner or later."
Indeed, over a dozen countries have terminated their diplomatic relations with Taiwan in the past decade. Panama and El Salvador, for instance, were two other Central American nations that parted ways with Taipei to pave the way for more cordial relations with Beijing.

The cut off did not catch Taipei by surprise, as Taiwanese politicians had predicted this shift almost a year ago, pointing out that bilateral relations with Beijing could present the Dominican Republic with excellent business opportunities beyond the means of Taipei. This prediction has come to pass. Wang Yi, China's State Councilor and Foreign Minister, recently commented that the Dominican Republic has become China's main trade partner in the Caribbean region.
This—it goes without saying—will translate into many economic benefits for the Dominican Republic, including largescale investments in the island by Chinese banks and industries. The renewed ties between the two countries were symbolized by the inauguration of a Chinese embassy in Santo Domingo on September 21, 2018. The ceremony was attended by senior Chinese diplomats as well as Dominican dignitaries, including Minister Wang and the Dominican Republic's Foreign Minister, Miguel Vargas.

Wang and Vargas also unveiled the embassy's plaque, which was engraved in both Chinese and Spanish, before proposing a toast to honor the historic occasion. Envoys from the Dominican Republic's private sector were also present in the ceremony, as the sector can benefit hugely from Chinese technology and finance. Although business dealings between the two countries had begun even before the restoration of political ties, passing this milestone will bring economic interactions to an altogether higher level.

Chinese-backed factories are already appearing in the Dominican Republic's free economic zones, creating job opportunities for the local population. The first Chinese-owned factory was launched a few months prior to the formal renewal of diplomatic ties. In April 2018, President Danilo Medina and Kingtom Aluminio's CEO, Zheng Qinqin, together opened an aluminum extrusions plants in the capital city. The factory was built with an investment of around USD10 million, and it is expected to be the first in a series of investments by Chinese industries.

Luisa Fernandez, the woman in charge of the country's National Free Zones Council, highlighted the importance of the event by pointing out that, “This isn't just the first manufacturing company launched with investments by business groups from the People's Republic of China to open in our free zones; it is also the first Chinese manufacturing plant to open in the entire Dominican Republic."

Other China-based industries are following suit. In February 2019, President Medina inaugurated yet another plant in the Las Americas free zone, located near Santo Domingo. The state-of-the-art injection molding plant was built with an investment of USD60 million and belongs to the Hayco Group, which is originally based in southern China.
2018 also saw the first state visit to China by a Dominican president. The visit resulted in the signing of a dozen agreements that will create opportunities for cooperation in areas such as infrastructure, agriculture, and tourism—as Caribbean islands are very popular with Chinese holidaymakers.

The Chinese businesses' interest in the Dominican Republic is not difficult to explain; the country's proximity to the Americas makes it a highly convenient location for exports to strategic markets such as the US and Brazil.
As far as business statistics show, reestablishing diplomatic relations with Beijing has been a good move, and as long as the Dominican Republic keeps its equally strategic trade ties with the US healthy, it will have the best of both worlds.