China’s Growing Presence in the Caribbean

China’s rapid economic growth and increasing international reach creates new possibilities for trade, investment and finance in the Caribbean, according to Dragon in the Caribbean: China’s Global Re-dimensioning – Challenges and Opportunities for the Caribbean, a new book by Ambassador Richard Bernal of the Inter-American Development Bank. The Inter-American Dialogue was pleased to host a launch of the new volume, featuring commentary from Bernal and Sally Yearwood, executive director of Caribbean-Central American Action.

China’s growing profile in the Caribbean is still the result of both economic and geopolitical motivations, according to Bernal. Diplomatic competition between China and Taiwan largely drives Chinese engagement in the Caribbean. Together with Central America, the region remains a diplomatic stronghold for Taipei. Beijing has increasingly challenged Taiwan’s presence in the Caribbean through the generous provision of aid – often known as “dollar diplomacy” – to those countries that cut ties with its rival. Development aid from China is particularly important given declining levels of official assistance from the United States, especially outside of Haiti.

The Caribbean has also become a destination for Chinese exports and investment, however, as China’s firms expand their operations into the Western Hemisphere. Although the composition of China’s economic engagement varies significantly between countries, Chinese capital remains concentrated in commodities and infrastructure, as is also observed in Latin American nations. Caribbean countries may be attractive as an export platform for Chinese firms seeking to access to U.S. and Canadian markets.

Multiple opportunities exist for deeper and mutually beneficial economic cooperation between China and Caribbean nations, but many have yet to be realized. The Caribbean is increasingly consuming Chinese goods, but the region’s exports have yet to penetrate Chinese markets. The proliferation of Chinese labor in the region, especially related to aid projects, has also created tension. Governments of Caribbean nations have begun taking steps in the right direction by initiating trade and investment visits to major Chinese cities. Greater cultural awareness on both sides and enhanced economic ties can be achieved by expanding these efforts.