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China and Taiwan conflict divide the Caribbean Community (CARICOM)

Tuesday February 06 2007

The continuing dichotomy within the Caribbean Community (Caricom) over the Peoples Republic of China and Taiwan could begin to hurt the grouping which has been unable to establish a joint policy toward China, now the fourth largest economy in the world and growing fast.

Belize, Haiti, St. Vincent & the Grenadines, and St Kitts/Nevis continue to recognise Taiwan while the rest of the Caricom countries have diplomatic relations with China.

This division within Caricom has kept the development of a trade, aid and investment policy for China off the agenda of Caricom Heads of Government even though China is now involved with the region in a number of ways including as a lending member of the Caribbean Development Bank (CDB).

It is a favourable mark for China that even though it is unhappy about the continuing recognition of Taiwan by the four Caricom countries, it has not sought to block their use of its CDB funds.

The Chinese position is a stark contrast from the position taken by the US in 1979 when the New Jewel Movement seized power in Grenada and the US broke off diplomatic relations. Washington had laid down a condition to the CDB that Grenada could not access US funds.

The importance of China in the world and its potential value to Caricom countries was underscored recently by two events.

First, China's foreign exchange reserves, already the world's largest, have passed US$1-trillion.The central bank said its reserves stood at $1.0663-trillion at the end of December, up more than 30 per cent from one year earlier, making China the first country officially to top the $1-trillion mark.

Second, the World Tourism Organisation has announced that by 2020 China will be the fourth-largest source of global leisure travellers.

But with the mountain of money on which it is sitting and the need to spend it, the Chinese government has already begun easing currency controls. They will be looking for ways to invest and spend much of it.

Recently tourists from China have officially been allowed US$5,000 to travel, though Chinese officials say that the figure is higher than that. Now, it is likely that the government may increase the travel allowance permitting tourists to travel farther.

Several Caribbean countries have already been given ?approved travel destination? status. These are: Antigua & Barbuda, the Bahamas, Barbados, Dominica, Jamaica, and St. Lucia.

This gives them a head start in trying to grab a meaningful share of the market. But, they are up against serious competition from the United States, European Union countries such as the UK and France, Canada, Australia and South-East Asian nations who are already gearing for Chinese tourists.

To get a share of the market, Caricom countries will require not only joint Caribbean planning, marketing and alliances with airlines and tour operators in China, it will also need the help of the Chinese government to provide incentives and maybe even transportation.

It is the kind of help that would come out of a Joint Caricom-China Trade and Investment Commission that meets regularly to explore the potential for mutually beneficial relations and puts machinery in place to achieve it.

Incidentally, and not unimportantly, China could also be encouraged to contribute to the Regional Development Fund which is so important to the development of the Caribbean Single Market (CSM) that was formally launched by Caricom countries in 2006.

The Chinese government has shown no reluctance to be active in the Caribbean, and officials in China would undoubtedly welcome the opportunity to map out a joint strategy for China?s involvement in the region, as they have done in Africa.

In November 2006, China hosted a meeting with leaders of 48 African countries at which the Chinese president announced that by 2009 China will double the assistance given to Africa in 2006 in an effort to forge a new type of strategic relationship and strengthen co-operation in more areas and at a higher level.

The prospect of a similar summit between Caricom heads of government and the Chinese president is dim unless one of two things happen: either, the four Caricom countries that recognise Taiwan alter their policy and join the others in establishing diplomatic relations with China, or agreement is reached that the others are free to establish a Joint Trade and Investment Commission with China under the umbrella of Caricom but excluding the four if they so wish.

The continuing links by the governments of Belize, St. Kitts/Nevis and St. Vincent & the Grenadines to Taiwan is understandable. They have received considerable help from the Taiwanese who continue to invest in their economies ? particularly in areas where traditional donors and lenders have shied away.

But a structured regional relationship on trade, aid and investment with China, which is now indisputably an economic giant and which could offer much to the people of the Caribbean, ought not to be delayed.

Sir Ronald Sanders is a former Caribbean diplomat, now a corporate executive who publishes widely on small states in the international community. You may write to Sir Ronald Sanders at: ronaldsanders29@hotmail.com.