• Hub and Spokes:
• Setting the China Question: A Caribbean challenge

Setting the China Question: A Caribbean challenge

2 May 2008

In a week which saw the World Health Organisation (WHO) reject Taiwan’s application for membership, and a senior representative of Taiwan hold closed-doors discussion with top officials of the government of China, I was asked on a Caribbean-wide television programme what advice I would give, if asked, to Caribbean governments that maintain diplomatic ties to Taiwan.

My answer was unequivocal. They should begin negotiations with the government of the People’s Republic of China on an aid and investment agreement that gives them as much help as they now get from Taiwan if not more. Once that agreement is tied-up, they should move on, like the nine other countries of the Caribbean Community and Common Market (CARICOM), to pursue a “One China” policy. It is a policy that is followed by the vast majority of countries in the world.

It is in the interest of the entire group of 14 independent countries, which along with the British colony, Montserrat, make up CARICOM to settle a long-term and predictable aid, trade and investment agreement with China along the lines of the Lome and Cotonou treaties that they had with the European Union (EU).

But, CARICOM will not be able, collectively, to negotiate such a treaty with China once five of its members remain tied to Taiwan.

If the point needed further re-emphasising, China’s Vice Minister of Foreign Affairs, Li Jinzhang, recently sent a strong warning that the Chinese government will not compromise its One China policy.

And, the indications could not be clearer that China and Taiwan are moving inexorably toward a means of living together. The newly elected President of Taiwan, Ma Ying-jeou, who takes office on May 20, favours better business ties with China, including more direct air links, more Chinese tourists and normalized trade ties. China is already the biggest market for Taiwanese investment.

Ma has abandoned plans by the previous Taiwanese administration to hold a referendum on Taiwan trying to join the United Nations as a sovereign state, and he has opened exploratory talks with Chinese government officials.

These talks are unlikely to settle arrangements between the two parties anytime soon, but by a process of attrition, they will move toward a solution that is in their interests. When they do, those who have held on to the coat tails of Taiwan may find themselves casualties.

For the time being, even under President-elect Ma, Taiwan will try to maintain diplomatic support for itself from the few remaining countries that do so. So, there will undoubtedly be reaffirmations of Taiwan’s sovereign status and its commitment to providing assistance to its supporters in what has come to be called “dollar diplomacy”.

Eventually, however, there are some realities that have to be faced by Caribbean countries collectively.

· China is one of the five permanent members of the UN Security Council with a power of veto

· China is now the fourth largest economy in the world and growing

· China now has close to US$1.4 trillion in foreign reserves; it has money to spend.

· In 2007, China earmarked RMB 4 billion (about US$1.5 billion) to Chinese companies to invest in the Caribbean

· China also announced in 2007 that the government itself would invest US$553 million in the Caribbean over the three year period 2007-2010.

· China’s middle class is growing and will soon be larger than the middle class of the United States; within the next few years, Chinese will be a significant number of world wide tourists.

· China’s trade with the Caribbean as a whole, including Cuba, jumped from US$450 million in 1991 to US$980 million by 2001.

China has an interest in access to raw materials in the Caribbean. In this connection, Trinidad and Tobago, Jamaica and Guyana are of far more strategic interest to China than the smaller territories that make up the Organisation of Eastern Caribbean States, a sub-group of CARICOM. It is gas and asphalt in Trinidad; bauxite in Jamaica; timber, bauxite and minerals in Guyana that are China’s big attractions.

As has been pointed out by Gregory Chin of York University, it is not that China can not get these commodities elsewhere, but the additional resources that the Caribbean supplies gives the Chinese government comfort as well as the ability to negotiate prices.

In countries such as the Bahamas, Chinese companies have taken advantage of the proximity to the US to establish manufacturing and assembling of products for the US market. Increasingly, the Bahamas’ port services including ship repairs and storage. The relationship works for both countries.

The challenge of the OECS for China is the continued flirtation by some of them with Taiwan. But, China can afford to wait; it has nothing to lose.

At the bottom line what China’s investment and aid gives to Caribbean countries is room to manoeuvre in a limited international economic space.

Because, so far, China’s aid and investment does not come with political conditions, it gives Caribbean governments the ability to pursue infrastructural and other developments for which they would get little or no help from international financial institutions and some traditional donor countries.

But, the relations between China and CARICOM countries have been structured at an individual level. In the course of working these relations, individual Caribbean countries have negotiated very little; they have been recipients of what the Chinese have offered. And, while the Chinese have been relatively benign and helpful, the Caribbean should not count on this remaining so.

This is why all of the countries of CARICOM should join together in negotiating a long term aid and investment treaty with China that provides direct benefits to individual countries at levels no less than they now enjoy (including those who now have relations with Taiwan) and sets an agreed framework for the wider China-CARICOM relationship.

Part of the agreement should be adherence to labour laws in the Caribbean and skills and technology transfer.

To do so, all of CARICOM needs a one China Policy.

By Sir Ronald Sanders

(The writer is business executive and former Caribbean diplomat)

Responses to: ronaldsanders29@hotmail.com

1^st May 2008