China — an indispensable and worthy partner
As our economy makes its way out of the economic recession, it continues to encounter economic headwinds such as a high debt to GDP ratio, a paucity of economic opportunities, and low productivity. Since the new deal with International Monetary Fund we have successfully passed all prescribed tests of which the minister of finance, Peter Phillips, and his team must be commended. It appears that the economy is heading in the right direction, a positive sign. Our objective is to get the economy from low-gear to medium-gear momentum. To do so, the imperative, based on pro-investment strategies, is to aggressively woo international investors to our shores, triggering a fresh wave of investment.
Presently, China's economy is the fastest-growing economy, and circa 2030 will be the largest economy, its inexorable rise to the top. China's latest trade figures show it probably has overtaken the US as the world's largest trader. According to information culled, China has billions of dollars to invest globally, the primary beneficiaries are USA and Australia. Of importance, Jamaica should position itself to have China as an indispensable and worthy partner through increased business investments as we seek to improve the economy.
Recently, The Bahamas received US$3.5 billion from Chinese investors, an estimated 40 per cent of its GDP, investment in the form of a new hotel with 2,200 rooms. Three banks, a fire station, and a police station, viewed as obstacles in the footprints, were relocated to new facilities. Even the prime minister's office, once located at the entrance to Baha Mar, has been removed and is now ensconced in a nearby leased building. West Bay Street, which ran right through the middle of the project, was re-routed and a new half-moon-shaped boulevard, called Baha Mar, was carved out to serve the resort. The Bahamas Government claims that it is transformation because its economy is heavily dependent on tourism. Interestingly, I wonder how Jamaica would respond to this type of investment under those conditions.
China evidently is becoming the white knight for many economies of the world. Globally, it has invested heavily in USA with the most recent investment by Beijing-based Goldleaf Jewelry paying US$665 million for a 95 per cent share of Houston, Texas-based ERG Resources. Chinese billionaire Li Ka-Shing has acquired the Israel-rooted company for about US$1 billion, now the most active foreign investor in Israel. Billions of pounds have been pumped in UK towards the development of Manchester airport, London railway system and the real estate market. In Africa, investment is huge, with the latest one valuing US$2.1 billion in Egypt and, likewise, Brazil has received its fair share of investment.
On the issue of tourism, in 2012 the Chinese has overtaken Americans and Germans as the world's top international tourism spenders, taking 83-million foreign trips and spending US$102 billion. By early 2015, according to the United Nations World Tourism Organisation, Chinese globetrotters, the burgeoning middle class, will take more than 100-million overseas trips. By 2020, the figure will almost double to an incredible 200 millions, making "Chinese tourism" the most lucrative tourist market. Certainly, this phenomenon has the potential of augmenting tourist arrival and providing myriad business opportunities among our small and medium-sized businesses. Additionally, it would also reduce the dependence on European and North American tourist traffic. A suggestion is that our policymakers need to formulate strategies to capitalise on this trend.
China has changed dramatically over the last five years, turning from a rule taker to a rule maker, said Geoff Dyer, journalist of Financial Times. Moreover, he stated that: "I don't think China is doing anything that's different from what other big rising countries have done in the past." Currently, the Chinese consider themselves not only as replicative entrepreneurs setting up small businesses much like other small businesses, but also as innovative entrepreneurs who upset and disrupt the existing way of doing things, making them the game-changer of the world. China's citizens are now focusing their attention abroad; sniffing out business opportunities because of tight policy measures by their Government, all aimed at cooling off the country's overheated real estate market.
Fuzzy thinking among some Jamaicans has harvested a myopic discernment of Chinese, fuelling a mélange of xenophobia and anxiety, although both countries have a strong relationship over the years. Undeniably, the trajectory is that most investments will be coming from the East -- China -- rather than from the West -- USA. Economic growth and business activities are necessary conditions for job creation, development and prosperity. We need to understand what stimulates Chinese investors -- a culture driven by avarice.
Of concern, anticipated to become the catalyst for economic growth is the proposed logistics hub; a US$1.5-billion investment, estimated 10% of GDP, that has been mired into endless kerfuffle rather than a move towards conclusion. Doing business in a world characterised by cultural diversity and competence in cultural intelligence is sine qua non to attract global investors, being geocentric rather than ethnocentric in attitude.
Across the world, the indispensability of China as a worthy partner is increasingly becoming a reality because of its deep pockets and its search, globally, for economic opportunities.
Can Jamaica afford not to have China as an indispensable and worthy partner?
James McNish is a lecturer at the University of Technology, Jamaica. Comments: firstname.lastname@example.org