THE arrival of Zhang Baowen, the vice chairman of the Standing Committee of the 12th National People’s Congress (NPC) of the People’s Republic of China, is an important sign of China’s planned continued long-term engagement with the Caribbean and particularly Jamaica. As head of its top legislative body, Baowen is effectively China’s number two man after the General Secretary/President Xi Jinping, who currently combines both roles.

China’s economy at end of 2014, at roughly US$10 trillion, is a little more than half the size of the United States, projected at just under US$18 trillion. In purchasing power parity (PPP) adjusted terms, however, based on what a consumer can buy is his own country, China is reckoned by the IMF World Economic Outlook of October 2014 to have output of US $17.6 trillion, slightly above America’s US $17.4 trillion.

As last year’s summit between President Obama and Chinese leader Xi Jinping indicated, the world has narrowed to a clear G2, the US and China, in terms of the top table of economic clout. The combined European Union economy is actually larger than the US, but this is not a single political entity, and cannot therefore be regarded as a superpower in the same manner as a politically unified emerging China.

In his book, Dragon in the Caribbean, subtitled China’s Global Re-Dimensioning Challenges and Opportunities for the Caribbean, one of the region’s most respected diplomats, the IDB’s Ambassador Dr Richard Bernal, provides a searching analysis of the relationship, reflecting his experience as former Jamaican Ambassador to the US, and head of the Caribbean Regional Negotiating Machinery.

In a book that should be required reading for all prime ministers, ministers of finance and foreign ministers in Caricom who have to deal with China (meaning all of them), Bernal analyses the implications of China’s rise as a global power, and delves deep into its implications for development assistance, trade and foreign assistance for the region, including extensive details of the country visits, agreements and projects between China and the Caribbean.

Bernal notes that, despite its small size and limited markets, the Caribbean presents an unusual opportunity for China due to its preferential market access to the US, Canada and the EU. When combined with the advantage of our geographic location, soon to be strengthened by the expanded Panama Canal, this should allow Caribbean economies to be considered as possible export production platforms to these markets or for a niche in global value chains. He gives the example of apparel and textiles in Africa, driven by the EU’s Everything but Arms Agreement and the US’s African Growth and Opportunity Act. He cites Huajian, one of China’s largest manufacturers of shoes for export, as investing in Ethiopia to take advantage of lower labour costs and preferential access to EU and US markets.

To date, as Bernal notes, most of China’s firms operating in the Caribbean have been to provide construction services, mainly to governments, funded by preferential loans from state-owned banks, with the Chinese Development Bank being the most important.

However, according to Shanghai-based McKinsey director Martin Orr, Silicon Valley is now visiting China to learn from Internet-enabled businesses. In short, China’s Alibaba, last year’s biggest ever IPO, was no accident. Beyond the Internet, Orr notes, hundreds of midsize companies in the Chinese industrial sector are creating their own version of the German Mittelstand (the legendary medium sized, family owned, quality obsessed niche exporters that drove Germany’s post-war economic recovery), providing ever more serious competition to Fortune 1000 competitors. They deliver great value, listen to what customers want, and develop products of remarkably high quality. Orr observes, “Biotech, pharmaceutical, consumer electronics, medical tech, drones, graphene, and telecommunications equipment are just some of the sectors where aggressive Chinese midsize companies lead the way in their field, often privately owned by a founding chairman or CEO who has a true passion to become a global leader. “

One of Jamaica’s most forward looking thinkers, Stanford emeritus Professor Donald Harris, believes we should be seeking to capture a larger share of China’s outward-investment boom. Looking at another one of China’s leading industries, he observes: “Beyond existing Chinese investment projects in Jamaica, a key new area of focus should be in the area of solar energy and wind farms where China has made significant strides in developing new, cheaper, small-scale technologies adaptable for use in homes, small business and our hotel industry. The objective here should be, not only to gain the direct investment and employment effects, but also to maximise the local spillover effects to be gained from technology transfer and expansion of local business in alternative energy services.”

This suggests that rather than focusing entirely on megaprojects with state-owned companies, Jamaica’s politicians need to be thinking about asking what it would take to make Jamaica the marketing, sales and even servicing base for the Western Hemisphere for China’s privately owned emerging innovators. As Bernal also notes, the region has not yet even tapped the opportunities for Chinese investment in luxury real estate and tourism, as shown by the multi-billion Bahamar project in The Bahamas.