Indian Council of World Affairs

Introduction 

China’s growing engagements with Latin America are well documented; nonetheless, one often overlooks the growing presence of China in the Caribbean island nations and its impact on China-Caribbean relations. 

Since the early 2000s, China has amplified its efforts to financially and diplomatically engage the Caribbean at a time when Western engagement with the region is relatively lacklustre. China’s 2016 White Policy Paper towards the region suggested that the scope of cooperation between China and the Caribbean is consistently expanding and intensifying across multiple fronts. Over the past few years, an intersection of economic engagement and diplomacy has generated political goodwill and leverage for China in the region. With an increasing number of investments from Chinese State-owned Enterprises (SOEs), American influence is being challenged in its own “backyard,” a fact that has been acknowledged by the United States as it reengages with the region. 

This issue brief delves into how China has strategically utilised its economic strength and diplomacy to make inroads into the Caribbean and its implications. 

Multilateral Institutions and Economic Prowess: A Dual Strategy 

China’s financial footprint spans numerous developing nations, and with the Caribbean nations, it is no different. China enjoys leverage in the Caribbean over other external actors due to its involvement in various regional institutions. It is an observer of the Organisation of American States (OAS) and a member of the Caribbean Development Bank and the Inter-American Development Bank. The US is notably absent from negotiations in forums, such as the China-CELAC Forum. The China-CELAC Forum, China-CELAC Ministerial Forum, China-Latin America and Caribbean Cooperation Forum have collectively augmented China’s regional influence. China’s President Xi Jinping termed CELAC a “key partner in enhancing solidarity among developing countries and furthering South-South cooperation.”[1] 

With comparatively reduced economic engagement stemming from the US and the West, Caribbean islands have welcomed Chinese loans and assistance. China’s economic engagement with the Caribbean Community (CARICOM) has significantly increased, with Chinese imports increasing manifold annually. The Caribbean serves as a diverse market for cheap Chinese goods while simultaneously being a source of bauxite, gold, oil and natural gas, possessing over eight billion barrels of recoverable oil.[2] The volume of Chinese exports to CARICOM was $2.47 billion in 2013. Within a decade, that amount doubled to $4.74 billion, with nations, such as Guyana quadrupling the volume of imports stemming from China since 2010.[3] Guyana has simultaneously been the recipient of the highest amount of Chinese investment and construction in the region. $7.2 billion has been largely spread across Guyanese transportation and energy sectors, with China National Offshore Oil being the biggest contributor.[4] Additionally, since 2013, China has been the third-highest global contributor of Outward Foreign Direct Investment, with $8.6 billion of it being Caribbean-bound between 2000 and 2021.[5] 

The Bigger Picture 

The strategic location of the Caribbean acts as a transit zone and maritime gateway, offering easier access for commercial Chinese ships passing through the Panama Canal to the Atlantic Coast. This consequently facilitates trade with the Americas and the efficient transportation of raw materials from Latin America.[6] President Xi reiterated the importance of such strategic choke points for global trade when he highlighted Latin America and the Caribbean (LAC) as a “natural extension” of the Maritime Silk Road.[7] Moreover, Chinese connectivity and infrastructural projects in such a strategic location allow a gradual increase in Chinese presence amidst numerous US military logistics hubs without directly confronting the US. 

It's not coincidental that the Caribbean, where China has looked to sculpt goodwill, also comprises five of the 12 nations that still diplomatically recognise Taiwan. In 2018, the Dominican Republic witnessed assurances of $3 billion in Chinese investments while Chinese firms made inroads into its mining sector after Dominican Republic suspended ties with Taiwan.[8] This behaviour was also observed when Grenada secured a $55 million cricket stadium after severing relations with Taiwan.[9] In the last seven years, five Central American and Caribbean countries have switched allegiance to China in hopes of greater economic prosperity.[10] 

Additionally, the Caribbean comprises key voting blocs not only in regional bodies, such as the OAS, but also in the United Nations. A recent study found that between 2001 and 2021, OAS member states where the Chinese financial footprint exceeded American aid were now less likely to vote in favour of the US.[11] 

China’s Military Engagement with the Caribbean 

In proportion to the Caribbean’s population, the PRC has dedicated significant level of attention to regional security engagement. This has led to concern among US policymakers and military officials. The US Southern Command Commander, General Laura Richardson, exclaims that “China is exercising our playbook of being present economically and equipping the United States’ hemispheric neighbours militarily.”[12] China’s security engagement with the LAC was highlighted in its 2008 Policy White Paper, 2015 Defense Strategy White Paper, and 2019 Defense Strategy White Paper. 

Its 2016 Policy White Paper stated that China would “actively carry out military exchanges and cooperation with LAC countries …”[13] Military equipment exchanges, and military training became common occurrences. After signing a Military Aid Pact, Trinidad and Tobago received an offshore patrol vessel, $1.1 million in non-lethal supplies and 200 police motorcycles in 2019.[14] [15] Similarly, China gifted Guyana two Chinese-made Harbin Y-12 planes, police cars and military construction equipment worth $1.2 billion in 2017.[16] 

China had maintained UN Peacekeeping Mission troops in Haiti, yet a formal Chinese military base in the Caribbean still hasn’t materialised.[17] Cuba is presently the epicentre of Chinese military presence, port visits and joint training exercises in the Caribbean. In 2018, former Chinese Defence Minister Wei Fenghe signalled China’s intent to intensify defence cooperation with Cuba across multiple fronts.[18] Cuba is presently negotiating the creation of a joint training facility, widening the scope for a potential Chinese military presence in America’s backyard in the future.[19] According to White House sources, Chinese surveillance operations have already existed in Cuba since 2019.[20]

Barbados is another intriguing case study. It welcomed military equipment worth $6 million from China after its relations with the US came under stress following the withdrawal of military aid by the Bush Administration.[21] Furthermore, Caribbean military personnel engage in military training and education courses conducted by the PLA at China’s National University in Changping. 

In 2011, the Chinese Navy’s hospital ship, the Peace Ark, sailed through the Caribbean to provide medical aid to armies and the local population.[22] It is not out of the ordinary for China to partner with LAC countries on counter-piracy missions to protect Chinese nationals in the region.[23] With increasing military cooperation, China is laying the foundational stones for potentially utilising Caribbean infrastructure, ports or airfields in the future. China can simultaneously acquire regional knowledge and monitor US activities. 

Chinese Infrastructure across the Caribbean 

Over the years, the pivot of China-Caribbean relations has advanced from trade to Outward Foreign Direct Investment (OFDI) to physical infrastructure projects. China’s footprint in the region has recently become more visible, with Chinese SOEs facilitating this strategy of utilising economic engagement to further enhance diplomatic ties. This was enhanced further when ten Caribbean nations signed Memorandum of Understandings to be a part of the Belt and Road Initiative.[24] 

Jamaica is the centrepiece of China-Caribbean economic relations. As of 2024, China had financed projects worth $2.28 billion. At the epicentre of the majority of transport connectivity projects, China Harbour Engineering Company (CHEC) has been greatly involved in every major Caribbean nation. CHEC was behind the $400 million Jamaica Infrastructure Development Project, the $350 million Major Infrastructure Development Program and the $270 million North-South Highway.[25] CHEC collaborates with the China Development Bank and the China Export-Import Bank to finance such projects. 

Chinese investments depict a pattern of increasing presence at Caribbean ports near strategic maritime chokepoints. In the Bahamas, China acquired control over a strategic port in Freeport, about ninety miles off the Florida coast. China Merchants Port Holdings is another Chinese firm that secured control over Kingston Port, Jamaica’s largest container port.[26] Furthermore, Cuba’s Santiago port welcomed a $120 million Chinese loan to initiate expansion projects.[27]

China’s Increasing Soft Power Influence 

China has notably enhanced its soft power influence by increasing its regional diplomatic presence. It maintains embassies across every Caribbean nation it shares diplomatic relations with. China’s biggest Caribbean embassy is located in Dominica, an island nation of close to 70,000 locals. This is in contrast to the limited diplomatic presence of the US and other Western countries, which have a diplomatic presence on the larger island nations. For example, the US maintains a diplomatic presence in Barbados, which further represents six other Caribbean nations. Hence, it was not surprising when Bahamas’ Prime Minister Philip Davis told US Vice President Kamala Harris, “We in the Caribbean felt truly neglected by the leader of the world, the United States, and that we felt as though … we are only known when we’re needed, and also that the approach to us, or about us, is always without us.”[28]

Along with expanding its diplomatic presence, China is also strengthening its cultural presence. China has established 10 Confucius Institutes in the Caribbean, especially on islands lacking American diplomatic presence, such as Antigua and Barbuda.[29] China has also been providing student scholarships and has been the largest source of applicants for the Caribbean Citizenship by Investment Program, which allows other nationals to purchase citizenship after investing in Caribbean assets.[30] With no visa requirements for Chinese nationals, travel is notably on the rise in nations such as Cuba, which witnessed a 23 per cent surge in Chinese tourists.[31]

Since 2000, senior PLA leaders have visited the LAC over 200 times, and Chinese Communist Party members make frequent state visits to the Caribbean.[32] One of President Xi’s very first overseas visits after taking office was to Trinidad and Tobago. This sense of importance resonated with the Caribbean and was also observed with China’s “mask diplomacy” during the COVID-19 pandemic. China additionally loaned $1 billion to the LAC and deployed its Sinovac vaccine when US medical aid was relatively negligible.[33] 

Local Dissent 

There are growing concerns over the potential harmful effects of the increasing economic engagement with China, such as the high and unsustainable level of debt to China, leaving these economies vulnerable and less competitive in the international market. In Suriname, an island battling an inflation rate of nearly 60 per cent, the signs are worrying. It has accumulated $2.4 billion in foreign debt with Chinese state-affiliated lenders being one of the biggest holders of Suriname’s external debt (about 17 per cent).[34] While nations such as India agreed to restructure these loans to Suriname, China refused to restructure the island’s debt of $545 million, consequently halting IMF aid to Suriname.[35] Additionally, the aforementioned CBI Program has led to corruption allegations and concerns over the potential economic coercion of Chinese nationals in local Caribbean politics.[36] 

Caribbean trade unions have accused Chinese firms of making the market less competitive by possessing an unfair advantage and undercutting costs due to custom duty exemptions and safety cost negligence.[37] Jamaica has seen protests over anomalies in wages and more Chinese workers in projects. In the past, Chinese firms have further been accused of pay discrepancies, dangerous working conditions and firing Jamaican workers seeking union representation.[38] This has led to protests against growing local unemployment and underemployment, wage disparity and a lack of welfare support, such as healthcare, from employers towards the workers. 

Latin American NGOs and environmental groups, including those from the Caribbean, have raised concerns over violations of environmental standards by Chinese investors in the region. They have also voiced their concern over concessions for Chinese projects that pose risks to endangered species, marine protected areas and environmental protected areas and they argue that Chinese investors do not make sufficient investments to avoid negative environmental impacts.[39] Active participation by the local communities ensured that a sensitive ecosystem, the Goat Islands, became an animal sanctuary and not home to a Chinese mega port project.[40]

Conclusion 

China’s multipronged strategy towards the Caribbean relies on a fulcrum of loans and overseas investments spanning various sectors, such as transportation and energy. Consequently, China is increasingly asserting its influence in a region where it had a negligible presence two decades ago. With the help of China, the Caribbean may have become less dependent on the US and other Western institutions. But this has come at a cost. The debacle of local unemployment, lack of labour standards, environmental standards and Chinese reluctance to restructure loans remain a thorn in China-Caribbean relations and taint China’s image in the Caribbean. 

There is growing awareness in the Caribbean about the dangers of China’s engagement and a need to review projects to get maximum benefit for the island nations while ensuring that they can protect their interests. Conscious of the growing Chinese presence, the US is also re-strengthening its links through its development programmes, such as Growth in the Americas and Build Back Better. Both are investment initiatives focused on infrastructure development. The US has also announced its commitment to supporting the region’s food, energy and financial security. In June 2023, on the sidelines of the Summit of the Americas, Vice President Kamala Harris announced the US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC 2030), a new framework created to support climate and energy resilience in the Caribbean, signalling a renewed commitment to US-Caribbean cooperation. The US continues to remain an important security and economic partner for the Caribbean, given its proximity and history. 

While the Caribbean is in focus due to growing US-China strategic competition, the increased focus on the Caribbean by both the United States and China also provides the regional countries with a unique opportunity to seek assistance from both to develop their economies, address pressing challenges, such as climate change, and improve the quality of life of their citizens.

*****

*Abon Gooptu, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal.

Endnotes

[1] China’s Engagement with Latin America and the Caribbean,” Congressional Research Service, June 23, 2023. https://crsreports.congress.gov/product/pdf/IF/IF10982/ Accessed June 12, 2024.

[2] Scott MacDonald, “Sino-Caribbean Relations in a Changing Geopolitical Sea,”

Journal of Chinese Political Science, January 15, 2019. https://link.springer.com/article/10.1007/s11366-018-09590-y/ Accessed June 16, 2024.

[3] Data on ‘List of importing markets from Caribbean Community (CARICOM) for a product exported by China’ provided by Dr Hari Seshasayee, Visiting Fellow, Observer Research Foundation, upon request over email.

[4] China Global Investment Tracker, The American Enterprise Institute and The Heritage Foundation, n.d. https://www.aei.org/china-global-investment-tracker/ Accessed July 7, 2024.

[5] Enrique Dussel Peters, “Monitor of Chinese OFDI in Latin America and the Caribbean 2022,” Red ALC China, May 31, 2022. https://www.redalc-china.org/monitor/images/pdfs/menuprincipal/DusselPeters_MonitorOFDI_2022_Eng.pdf/ Accessed June 16, 2024.

[6] Scott MacDonald, “Sino-Caribbean Relations in a Changing Geopolitical Sea,”

Journal of Chinese Political Science, January 15, 2019.

[7] Pan Deng, “China and LAC are becoming close friends through BRI,” China Global Television Network, April 28, 2019. https://news.cgtn.com/news/3d3d514f32457a4d34457a6333566d54/index.html/ Accessed July 1, 2024.

[8] R. Evan Ellis, “China’s Advance in the Caribbean,” The Wilson Center, October 2020. https://www.wilsoncenter.org/publication/chinas-advance-caribbean/ Accessed June 10, 2024.

[9] “China Outplays Taiwan in Cricket Diplomacy,” ABC News, February 9, 2009. https://abcnews.go.com/International/story?id=2980988&page=1 / Accessed July 2, 2024.

[10] Margaret Myers, “China’s Increasing Involvement in Latin America and the Caribbean.” By Aruna Muthupillai. The National Bureau of Asian Research, August 25, 2023. https://www.nbr.org/publication/chinas-increasing-involvement-in-latin-america-and-the-caribbean/  Accessed June 21, 2024.

[11] Margaret Myers, “China’s Increasing Involvement in Latin America and the Caribbean.” By Aruna Muthupillai. The National Bureau of Asian Research, August 25, 2023.

[12] John Grady, “SOUTHCOM Commander Warns of Risk of Chinese Investment in South America, Caribbean,” U.S. Naval Institute, March 12, 2024. https://news.usni.org/2024/03/12/southcom-commander-warns-of-risk-of-chinese-investment-in-south-america-caribbean/ Accessed June 15, 2024.

[13] “China’s Policy Paper on Latin America and the Caribbean,” The State Council, The People’s Republic of China, November 24, 2016. https://english.www.gov.cn/archive/white_paper/2016/11/24/content_281475499069158.htm#:~:text=China%20is%20committed%20to%20building,affairs%2C%20as%20well%20as%20mutual/ Accessed June 16, 2024.

[14] “Chinese vessel coming to Trinidad,” The Jamaica Observer, February 24, 2014. https://www.jamaicaobserver.com/2014/02/24/chinese-vessel-coming-to-trinidad/ Accessed June 19, 2024.

[15] “Police get 200 motorcycles from China,” Trinidad and Tobago Guardian, September 21, 2019. https://www.guardian.co.tt/news/police-get-200-motorcycles-from-china-6.2.914424.9562095eb4/ Accessed June 28, 2024.

[16] Willem Oosterveld, Eric Wilms and Katarina Kertysova, “China in the Caribbean.” The Belt and Road Initiative Looks East: Political Implications of China’s Economic Forays in the Caribbean and the South Pacific. Hague Centre for Strategic Studies, 2018.

[17] Caitlin Campbell, U.S.-China Economic and Security Review Commission Staff Report, November 20, 2014. https://www.uscc.gov/sites/default/files/annual_reports/Executive%20Summary.pdf/ Accessed June 13, 2024.

[18] “China, Cuba pledge to deepen military ties,” Xinhua News Agency, November 23, 2018. http://www.xinhuanet.com/english/2018-11/24/c_137627401.htm/ Accessed June 26, 2024.

[19] “China negotiating new military training facility in Cuba,” Al Jazeera, June 20, 2023. https://www.aljazeera.com/news/2023/6/20/china-negotiating-new-military-training-facility-in-cuba-report/ Accessed June 13, 2024.

[20] Alex Marquardt, Jasmine Wright and Zachary Cohen. “China has been operating military and spy facilities in Cuba for years, US officials say,” CNN, June 10, 2023. https://edition.cnn.com/2023/06/10/politics/china-military-spy-facilities-cuba-us/index.html/ Accessed June 16, 2024.

[21] Letta Teyler, “The United States withdrew military aid at the time of the Bush administration when Barbados,” The Global Policy Forum Archive, October 17, 2004. https://archive.globalpolicy.org/component/content/article/164-icc/28476-bush-administration-suspends-aid-to-nations-that-refuse-to-shield-americans-from-war-crimes-court.html/ Accessed July 3, 2024.

[22] “A look at China's 'floating hospital' Peace Ark,” Ministry of National Defense of the People's Republic of China, April 23, 2019. http://eng.mod.gov.cn/xb/News_213114/Videos/4840098.html/ Accessed June 19, 2024.

[23] Evan Ellis, “Chinese Security Engagement in Latin America,” Center for Strategic and International Studies, November 19, 2020. https://www.csis.org/analysis/chinese-security-engagement-latin-america/ Accessed June 24, 2024.

[24] “Countries of the Belt and Road Initiative (BRI),” Green Finance and Development Centre, n.d. https://greenfdc.org/countries-of-the-belt-and-road-initiative-bri/?cookie-state-change=1673034707836/ Accessed June 14, 2024.

[25] Rasheed Griffith, “Assessing China’s Presence and Power in the Caribbean,” Lawfare, June 17, 2021. https://www.lawfaremedia.org/article/assessing-chinas-presence-and-power-caribbean/ Accessed June 22, 2024.

[26] R. Evan Ellis, “China’s Advance in the Caribbean,” The Wilson Center, October 2020.

[27] “China helps convert Santiago de Cuba into modernized port,” Xinhua News Agency, December 8, 2017. http://www.xinhuanet.com/english/2017-12/08/c_136810814.htm#:~:text=With%20120%20million%20U.S.%20dollars,200%20Chinese%20and%20Cuban%20workers./ Accessed June 13, 2024.

[28] Krishna Russell, “PM: I told US Caribbean nations feel neglected,” The Tribune, June 15, 2022. https://www.tribune242.com/news/2022/jun/15/pm-i-told-us-caribbean-nations-feel-neglected// Accessed June 26, 2024.

[29] Daniel Runde, Linnea Sandin and Amy Doring, “Reimagining the U.S. Strategy in the Caribbean,” Center for Strategic and International Studies, April 8, 2021.

[30] Rasheed Griffith, “Assessing China’s Presence and Power in the Caribbean,” Lawfare, June 17, 2021.

[31] Gabriel Vera Lopes, “China resumes direct flights to Cuba to strengthen relations with the Caribbean,” Brasil de Fato, May 27, 2024. https://www.brasildefato.com.br/2024/05/27/china-resumes-direct-flights-to-cuba-to-strengthen-relations-with-the-caribbean/ Accessed July 2, 2024.

[32] “China’s Influence in Latin America and the Caribbean,” United States-China Economic and Security Review Commission, n.d. https://www.uscc.gov/sites/default/files/2021-11/Chapter_1_Section_2--Chinas_Influence_in_Latin_America_and_the_Caribbean.pdf/ Accessed June 24, 2024.

[33] Evan Ellis, “Chinese Security Engagement in Latin America,” Center for Strategic and International Studies, November 19, 2020.

[34] “Suriname: Request for an Extended Arrangement under the Extended Fund Facility-Press Release,” The International Monetary Fund, December 23, 2021. https://www.imf.org/en/Publications/CR/Issues/2021/12/23/Suriname-Request-for-an-Extended-Arrangement-under-the-Extended-Fund-Facility-Press-Release-511294 Accessed July 16, 2024.

[35] Peter S. Goodman, “Trapped in the Crossfire of the U.S.-China Rivalry,” The New York Times, June 26, 2023. https://www.nytimes.com/2023/06/26/business/suriname-china-imf.html/ Accessed July 16, 2024.

[36] Leland Lazarus, “Red Flags Among Golden Passports: An Analysis of Chinese Influence In Five Caribbean Citizenship By Investment Programs,” Dialago Americas, July 14, 2023. https://dialogo-americas.com/articles/red-flags-among-golden-passports-an-analysis-of-chinese-influence-in-five-caribbean-citizenship-by-investment-programs/ Accessed July 17, 2024.

[37] Balford Henry, “Local contractors bemoan conditions allowing foreign firms to get most major projects,” The Jamaica Observer, January 27, 2019. https://www.jamaicaobserver.com/2017/01/29/local-contractors-bemoan-conditions-allowing-foreign-firms-to-get-most-major-projects/ Accessed July 16, 2024.

[38] Andrew Lumsden, “Jamaicans must read China’s record, not just its lips,” Council on Hemispheric Affairs, June 15, 2015. https://coha.org/jamaicans-must-read-chinas-record-not-just-its-lips/ Accessed July 16, 2024.

[39] Gemma Handy, “Antigua: sprawling 'Chinese colony' plan across marine reserve ignites opposition,” The Guardian, June 20, 2019. https://www.theguardian.com/world/2019/jun/20/antigua-yida-project-chinese-colony-controversy / Accessed July 15, 2024.

[40] Sherine Williams, “Gov't scraps Goat Island project,” September 23, 2016. https://jamaica-gleaner.com/article/lead-stories/20160924/govt-scraps-goat-island-project/ The Jamaica Gleaner. Accessed July 19, 2024.