Editorial | Defining Jamaica-China relations

While he may indeed have been rebutting domestic critics of Jamaica’s economic relationship with China, Prime Minister Andrew Holness was likely to have also been addressing the United States. It was a measured affirmation of the island’s right to seek partnerships that are in its interest, but also assuring that Jamaica is not too deeply in the hock to Beijing.

In either case, this newspaper supports Mr Holness’ stance, including his implied declaration that, in pursuing its interests, Jamaica won’t be corralled into a geopolitical camp, or be party to a new Cold War in which China is deemed to be on the ‘other side’.

Importantly, from this perspective, despite criticisms of China’s economic activity in Jamaica – whether via bilateral loans or direct investments – there is little evidence of others lining up to provide capital for the buildout of its infrastructure, including highways.

LATEST DEFENCE

Mr Holness’ latest defence of his government’s China policy, after one period of seeming uncertainty, if not ambivalence, came last week at the opening of a 23-kilometre extension of the east-west section of the tolled Highway 2000. Built at a cost of US$188 million, the new bit of road was financed primarily by a loan from China. It was constructed by the Chinese builders, China Harbour Engineering Company (CHEC).

“Unlike those who would want to create a false impression about Jamaica and our international development relationship with China, it is false,” Mr Holness said. “Jamaica has taken a strategic approach to develop its infrastructure and we partner with those who want to help us, and we are willing to partner with all countries in the world that come genuinely to assist our development.”

He added: “We are ensuring that, when we partner with these countries, Jamaica gets the benefit. There is no Jamaican who can say this road is not beneficial to them.”

Neither, we would add, can it, or any other road which China has loaned money or invested in, be lifted up, packaged and carted off to Guangzhou, Shenzhen, Chengdu, Nanjing or some other Chinese city. On the apparently vexed issue of Chinese workers on Jamaican projects, Mr Holness disclosed that, of the 754 people who were employed during the construction of the road, 80 per cent (603) were Jamaicans.

Of pertinence, too, was Mr Holness’ disclosure that what Jamaica owes China was “approximately 4.5 per cent of our total debt” – an amount that, given the prevailing narrative, “may shock you”.

“Yes, what we owe to China is minuscule relative to what we owe to the rest of the world and international agencies,” the prime minister said.

Given Jamaica’s overall foreign debt of US$8.764 billion, Jamaica owes China around US$394 million. That, however, would be approximately 55 per cent of the island’s bilateral debt (US$717 million).

Most of the loans from China have gone into road construction, including the under-construction southern coastal highway, heading east from just outside of Kingston and through the parishes of St Thomas and Portland. China loaned Jamaica US$326 million for that project.

PAID DOWN

On the basis of the current debt, it would also seem that Jamaica has paid down some of its obligations to China from earlier projects.

In fact, the bulk of Jamaica’s debt, 57 per cent, or just over US$5 billion, is held by private bondholders. This is followed by multilateral institutions, such as the IDB and the World Bank, which are owed just shy of 35 per cent, or around US$3 billion.

China has not only loaned Jamaica money. Its state firms have also made direct investments in the island – in a highway, the sugar industry, and to purchase an alumina plant – mostly during the period after the Great Recession when foreign direct investment (FDI) had collapsed. Indeed, the estimated US$750 million CHEC spent developing the tolled North-South Highway, linking the island’s two most important economic regions, the commercial south and the tourism north, was Jamaica’s largest single investment.

There are now, of course, questions about the short-term efficacy of some of those investments. For instance, in 2016, Jiuquan Iron and Steel bought AC Rusal’s 1.65-million tonne capacity Alpart alumina refinery, apparently with the idea of upgrading the facility, with an eye on the US aluminium market. Changes in the geopolitical landscape that ushered in restrictions on aluminium imports from China have apparently helped to scutter that plan. Alpart has been mothballed since 2019. Similarly, CHEC’s idea of investing in a hotel(s) on the north coast to help drive traffic onto its highway appears to have foundered on these concerns.

Nonetheless, Mr Holness insists that Jamaica is not a victim of “an exploitive or abusive relationship (or) development partnership with our Chinese counterparts”.

“It is a mutually beneficial and respectful relationship,” he said.

Which ought to be the basis of international relations, whether with China or anyone else.