China set to invest massively in Latin America and the Caribbean

China set to invest massively in Latin America and the Caribbean

Published on May 25, 2017 –

Caribbean map – click to enlarge

MIAMI, USA — Historically, Latin America and the Caribbean have long looked to the US for support in terms of trade and investment, yet have often been left wanting. Now good times seem to be on the horizon, thanks to the promise of truly massive Chinese investment and trade that will completely overhaul and regenerate both regions in the coming years.

For more than a century, the nations of Latin America and the Caribbean have gazed hopefully at the United States and its vast wealth, hoping for solid investment and consistent trade that would elevate those regions out of the realms of the “Third World” and instead to a level on par with the US and Europe.

However, while the US would consistently be the main trade partner with most South American countries, investment would be often be minimal, and almost always self-serving (the United Fruit Company being a prime example). In recent decades, US investment in Latin America has dwindled, and areas such as the Caribbean were left to their own devices, with near catastrophic results.

How St Kitts and Nevis Saved Itself

A case in point would be the Caribbean islands of St Kitts and Nevis, which by 2007 was virtually bankrupt, and its people almost destitute. In 1984, the island had established the very first citizenship by investment (CBI) programme, in which an investor could become a St Kitts and Nevis citizen and passport holder in return for an investment into the islands, normally in the form of a real estate purchase. While the program had proved initially popular, successive governments had failed to bring it up to date, and its popularity had dwindled.

In 2007, the then government of St Kitts and Nevis gave their CBI programme a much-needed overhaul, allowing investors the cheaper option of a non-refundable charitable donation to the island as well as the option of a real estate purchase. With some canny promotion, the CBI programme became a huge success. Investors flocked to the islands, galvanizing the economy — the banking sector in particular.

St Kitts and Nevis soon established itself as a tax haven with favourable banking, bringing even more investment to the islands, yet it was its CBI program that remained its greatest asset. Today the islands are thriving, there is work for everyone, tourism is at an all-time high, and thanks to the impending major Chinese investment for the Caribbean, things look set to get even better.

China to become the no.1 investor in Latin America and the Caribbean

At a major international investment conference held in China in 2016 and attended by representatives of CELAC (La Comunidad de Estados Latinoamericanos y Caribeños, translated as “the Community of Latin American and Caribbean States”), Chinese President Xi Jinping announced his nation’s intention of investing US$250 billion over the next ten years into the Latin America and Caribbean zones, expressing his belief that this move will stimulate China’s economic relations with the CELAC region, resulting in two-way trade to the tune of $500 billion within a decade.

The announcement was one of the largest of its kind in history, and represents by far the greatest financial commitment to Latin America and the Caribbean.

President Xi Jinping told the leaders of the Caribbean countries in attendance that China will work with each and every country in the region, and on every level, including energy, infrastructure, construction, agriculture, manufacturing and technological innovation.

Historically Latin America and the Caribbean have long looked to the US for trade agreements, but America has been less forthcoming of late. Now it seems that it will be China that will become the saviour – and beneficiary — of the region, and allow several South American nations that are teetering on the brink of destitution to become economic powerhouses – a prime example being Nicaragua.

Nicaragua is one of the poorest nations in Central America, but thanks to the proposed construction of the Nicaragua Canal, within a decade the country may become the most prosperous in the region. A Chinese consortium is set to foot the $40 billion cost of the Nicaragua Canal – which will be twice as big as the Panama Canal. Construction is set to begin in 2017, and the canal could be handling the world’s largest supertankers and container ships by 2021. The new canal will be a financial godsend to the long-suffering Central America region.

Chinese investment in Latin America is nothing new; from 2005-2012 , China invested around $40 billion into The Bahamas and Jamaica, money which was mainly used to support road and coastline reconstruction projects, as well as the building of transit ports and logistics centres in Jamaica to benefit from the expansion of the Panama Canal.

Why is China so keen to invest in Latin America and the Caribbean?

Much of the world has reached its full potential, so logically it’s not surprising that China is so keen to invest heavily in Latin America and the Caribbean, and establish itself there. Latin America in general is a continent of vast – and almost untapped — economic potential, with an educated yet underpaid and long-suffering workforce and an established infrastructure.

While China commendably is also looking to help develop areas of Africa, that is a project in which they are virtually starting from scratch, and will take decades to fulfil. By comparison, Latin America has everything already in place for economic success, and major Chinese investment will kick-start that economy and fire it into the 21st century.

The location of the Caribbean islands — right in the middle of the North and South American trade markets – makes them hugely appealing to Chinese investors. Many of the islands are under-populated, yet rich in natural resources, and perfect for economic development. Already islands like Antigua and Barbuda have benefited greatly from major Chinese investment.

Thanks to its natural assets, be they breathtaking beaches, deep rainforests or mysterious volcanic islands, the Caribbean lends itself extremely well to tourism, not to mention first class accommodation and services, and vibrant nightlife. Each year, more and more Caribbean countries invite Chinese companies and investors to view what they have to offer, and each year those investors are deeply impressed.

Latin America and the Caribbean have historically been known for their vivacious, vibrant people, their beautiful landscapes and beaches, but too often also for their political issues and struggles against poverty. Now, thanks to the help of what will soon be the world’s largest economy, Latin America and the Caribbean finally look set to enjoy a quality of life and standard of living to rival North America and Europe.

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