How China’s Economic Success Contributes to Caribbean Prosperity (4)

One area with great potential for commerce with China is traded services other than tourism. These include legal, financial, marketing, design, communications and administrative services. Companies that have a global reach make strategic choices as to the location both of their production facilities and of the services that support production and worldwide distribution. Caribbean countries boast regulatory systems that are kept on par with international guidance from the IMF, World Bank, Basel Committee on Bank Supervision and other authorized bodies. The region’s financial systems are fully integrated into global financial markets through international hubs in London, New York and elsewhere. These are key elements in attracting traded services to the Caribbean, to support the activities of firms which produce and sell in many countries. Now that China has become the world’s second largest economy, and the world’s biggest market for automobiles and other items, there would seem to be a market for providing services to Western companies trading with China. This opportunity seems to be largely untapped.

Another exciting possibility for future Caribbean-Chinese economic linkage is in the area of financial technology. I believe that recent break throughs in financial technology will revolutionise the way the world effects payment and settles transactions, in directions that none of us have yet imagined. I have written a short article on this topic, which you may find on the website of the Bretton Woods Committee (www.brettonwoods.org). Chinese firms and entrepreneurs are world leaders in new payment technologies, and the Caribbean boasts a wealth of tech-savvy young entrepreneurs with an interest in this area. One Barbadian company is doing pioneering work in financial technology. Regional regulators should be pro-active in supporting and promoting these entrepreneurs, as they can have a greater presence in the new international market of ideas. Inevitably, this will bring us closer to China, and to Chinese approaches to the use of financial technology.

How may the Caribbean maximise benefits from China’s economic growth?

The basic message of this essay is that the Caribbean benefits from China’s economic success simply by following sound macroeconomic policies. The key elements of a sound macroeconomic strategy are policies to sustain external competitiveness and to maintain a balance of external payments with adequate foreign exchange reserves. The Caribbean, along with the rest of the world, benefits from the reduction in global inflation which has come about as a result of the growth in China’s production capacity. Sound policies ensure that countries reap full benefits. The Caribbean has an opportunity to accelerate a programme to switch to renewable sources of power, thanks to Chinese investment in solar PV and the coming surge in production of large-scale battery storage units. Caribbean countries have been slow to embrace the potential of renewable energy. Barbados is the only country to have announced a target of 100 percent renewables, and that vision is not yet reflected in a deliberate and internally consistent strategy. Here is an example of an opportunity that is now open to the Caribbean, in large part due to Chinese commitment to combat climate change; it is up to the Caribbean to institute domestic policies that take advantage.

My third point is that the Caribbean should take full advantage of every avenue for getting to know China better. The establishment of Confucius Institutes in the Caribbean opens a major avenue for Caribbean people to deepen their knowledge of China and the Chinese. The Chinese Global Television Network, CGTN, is highly recommended; for those who do not have cable TV access, CGTN programmes are available online. There are many opportunities for cultural exchanges, education and training, offered by Chinese national, state and municipal authorities. Chinese embassies in the Caribbean are collaborating with Caribbean institutions and Chinese communities to bring Chinese culture to our region. Joint programmes and collaborative research activities between Chinese and Caribbean academic institutions are other vehicles through which we can enlighten ourselves about the lives and world news of the world’s most populous nation. Forward-thinking Caribbean people are already on board, and discovering new realities about our world, from Chinese perspectives. Many who have done so are already benefitting, through access to Chinese products and services, networking, job opportunities, access to new technologies and investment opportunities. Sadly, by and large the region’s leadership has not yet caught the vision. This, to my mind, is our most urgent need: visionary leadership that takes a long view, and invests in deepening their understanding of China’s growing presence in our changing world.

I have had little to say about trade and investment. There is really no need to. If you think about it, there is no shortage of funding for Caribbean projects that are seen to be profitable, or for projects in infrastructure or renewable energy. So long as Caribbean countries maintain sound policies, Chinese investors will come knocking, along with those from the Americas, Europe and elsewhere. Equally, we can attract all the tourists we can accommodate, and export all the competitive products we produce, so long as we give value for money. Discriminating Chinese consumers will find our products and services, through appropriate networks and high-end global marketing.

Concluding remarks

Small open economies like those of the Caribbean are especially sensitive to the external environment in which they exist, and with which they interact. As many small nations have demonstrated, this does not diminish their chances of prosperity, compared to large countries. What makes the difference, in countries large and small, are policies tailored to the country’s circumstances. In the case of small countries, external circumstances loom much larger than in larger countries. The emergence of China as a leading global economic powerhouse is the most significant international development of the 21st century. The Caribbean, along with the rest of the world, already reaps benefits from Chinese production and exports. With sound domestic economic policies and strategies to accelerate the use of renewable energy, we can reap greater benefits. Furthermore, as we get to know China better, and Chinese investors and consumers learn more of the exceptional products, experiences and investment opportunities the Caribbean offers, new opportunities will open up, further enhancing the region’s growth potential. 

Confucius Institute Lecture, UWI Cave Hill, Barbados