EXTENDING THE SILK ROAD

Jamaica 2018 | ECONOMY | FOCUS: CHINESE INVESTMENTS

Chinese companies are investing massively in Jamaica, increasing influence beyond the historic Silk Road and building new ties that reach through the Panama Canal.

China and Jamaica have long-standing ties, dating as far back as the mid-19th century, when the UK recruited workers from China. The first groups of Chinese nationals reportedly arrived in 1854 and their descendants have remarkably integrated into the Jamaican social fabric, a number of them becoming distinguished entrepreneurs, especially in retail and manufacturing. Jamaica and China formally established relations in 1972, when Jamaica became the first Caribbean country to recognize the new government of China. In 2015, total trade between China and Jamaica amounted to USD600 million, an increase of 18.7% from 2014. Government loans and grants from China to Jamaica totaled over USD880 million.

China has dedicated renewed interest toward Jamaica in the recent years due to its strategic positioning near an enlarged Panama Canal and close range to main consuming markets. Chinese Harbour Engineering Company (CHEC) is responsible for the single-biggest investment by the Chinese in the Caribbean, a USD600-million, four-lane highway. The North-South Highway opened in 2016 and reduced driving times from Kingston to Ocho Rios from nearly two hours to 50 minutes. In return for financing and conducting the project, the government granted over 1,200 acres of land to the Chinese company, which plans to build luxury touristic facilities. According to Chinese ambassador Niu Qingbao, the North-South Highway is “not only the single-largest investment in infrastructure on the island, but also the first major infrastructure investment overseas ever made by a Chinese company.”
Another main Chinese investment in Jamaica is the reopening of the Alpart Bauxite Refinery in St. Elizabeth. Jiuquan Iron and Steel Company purchased the refinery for about USD500 million from UC Rusal. The Chinese firm has committed to investing more than USD2 billion in several infrastructure development projects, such as a 500,000-ton aluminum plant. The Alpart plant is expected to generate between 800 and 1,000 jobs. Based on the agreement, 70% of the jobs will be occupied by Jamaican employees.
To concretize business developments, Jamaica's Ministry of Industry, Commerce, Agriculture and Fisheries and the government of China signed a Development Cooperation Framework on February 16, 2017. The agreement is aimed at pushing investments for both countries in a range of areas related to construction and infrastructure, cement manufacturing, resource processing, equipment manufacturing, and light industry.
Following these flagship projects, a number of Chinese investments have taken place in Jamaica; however, contractors and businesses have mixed feelings about the reliance on Chinese investment and have complained about the use of Chinese construction workers for these projects. On August 9, Prime Minister Andrew Holness explained that China is probably the largest provider of FDI across the globe and that it would be a mistake to ignore it. On the other hand, the Prime Minister added, “We are claiming independence, but we can only claim and hold that independence when we are economically independent,” adding that independence is “when we have good roads, when we have good institutions, when our GDP is not small.”
In July 2017, the Prime Minister also supported the People's Republic of China's One Belt, One Road economic policy, which is aimed at building a modern-day “Silk Road” for which Xi Jinping pledged USD124 billion. Prime Minister Holness elaborated that Jamaica would like to formally join this project in the future.
Finally, cultural relations between the two nations are also developing. Degrees attained at the University of the West Indies (UWI), University of Technology and Caribbean Maritime Institute are recognized in China, and the Confucius Institute at UWI is developing its activities to meet the increasing demand to learn Chinese.
Despite some concerns about such heavy reliance on Chinese investments, economic and cultural ties between the two countries are only broadening in scope and reaching new depths.