Chinese loans are cheap... and The Bahamas is borrowing... What's the catch?

The limitations of the Chinese love affair

thenassauguardian editorial




The Bahamas has fallen fully into the embrace of China. And the rising empire has been kind with its “gifts.”

The $2.6 billion Baha Mar project and the $70 million airport highway are being financed by China. Last week, the government announced that the China Harbour Engineering Company Ltd. will build the North Abaco Port and by-pass road; a bridge between Little and Great Abaco; a port and by-pass highway in Exuma; and the Eleuthera Glass Window Bridge and approaching embankments.

The airport highway money is a part of the $1 billion in loans set aside for the Caribbean by China. The Bahamas has been allocated $150 million of that amount.

Chinese loans are cheap. And The Bahamas is borrowing. What is tied to Chinese money in the developing world, however, is Chinese labor. When China lends or invests in poor countries, it sends lots of Chinese workers to construct the projects it finances.

For poor countries struggling to attract investment or to solicit financing, there is little resolve to make demands of the rising power.

Here in The Bahamas, Sarkis Izmirlian and Baha Mar needed financing. Baha Mar received that financing from China and it also received 8,150 foreign workers (who mostly will be Chinese).

The government borrowed cheap money from China for the airport highway and it received 200 Chinese workers. How many hundreds of Chinese will be forced on The Bahamas to build the Family Island ports and infrastructure upgrades announced last week?

What Bahamians must understand is that when China lends, and it contracts its workers to do the work, a significant amount of the money borrowed goes back to China with the workers who build the project. They pay their workers with money we borrow.

In addition, The Bahamas gets the bill for the loan. Over the years, the interest and principal payments also go to China.

The Chinese also keep their workers on self-contained on-site camps when they are sent abroad. We barely even get them to visit our stores to spend the money we borrowed when they are working in our countries.

The Bahamas should embrace Chinese investment. Without Baha Mar, our near future would look less bright. But The Bahamas must be careful regarding the relationship it develops with China regarding the labor issue.

We lose a significant chuck of the value of these investments when our uneducated laborers are denied work because Chinese get these jobs.

China brilliantly creates unequal trade relationships. China’s manipulated currency has helped it suck a significant portion of manufacturing from the West. It then loans the cash it has made back to countries such as the United States to buy more of its products.

China is now the second largest economy in the world and in the near future it will displace the United States as the world largest economy.

Much debate is needed among our policymakers about the Bahamian-Chinese embrace. We must find ways to continue to attract Chinese money that comes with fewer Chinese workers attached.

We think Chinese investment should be welcomed. We also think a reasonable number of Chinese workers should be accepted. However, China building most of our infrastructure projects and commercial projects almost solely with Chinese labor is not acceptable.

If China does not budge to the representations of a small place such as this, or a small region such as ours, we then have to do some analysis to determine if it is wise to borrow as much from China as opposed to other commercial lenders who do not set similar labor requirements. This issue is not simple.

Bahamians have thus far been okay with China’s involvement in The Bahamas. But as the numbers of Chinese coming to country get larger and larger with each announced project, the attitude towards China in The Bahamas will change. When a country has a double-digit unemployment level, its citizens get upset when foreigners get lots of jobs in their country.

Our political parties must be careful with this relationship. More concessions on the labor issue are needed from a China that does not like to compromise.

3/15/2011

thenassauguardian editorial

Bahamas Blog International