Silk Road Headlines_1st August, 2019

East and Southeast Asia have long been the main stage for geopolitical competition between China and the United States. But as this competition intensifies and China keeps expanding its influence beyond its home region, other parts of the world are increasingly experiencing the effects of Sino-US rivalry. In a piece for East Asia Forum, Jared Ward writes that ‘how Caribbean nations choose between China and the United States will be less about spheres of influence and more about projects capable of jumpstarting economies’ [Caribbean countries turn to China’s Belt and Road]. According to Ward, the US ‘has become an absent steward’ over the region, with American aid decreasing and some ambassador posts at US embassies in the region remaining empty. As in many other developing regions, countries in the Caribbean are in great need of more and better infrastructure. This has created possibilities for China to expand its role in the region. Several Caribbean countries have signed bilateral memoranda of understanding with China to cooperate on the Belt and Road initiative. Still, in terms of actual projects for infrastructure development the impact of BRI remains limited. The largest projects so far apparently relate to road construction in Jamaica.

It is particularly striking that Chinese companies have not been involved in large-scale financing, construction or management of ports. Creating new transhipment hubs could potentially be beneficial for the region as a whole and also strengthen economic integration and diplomatic ties between the region and China. The main instances of port management in the region that are (to some extent) related to China are container terminals in the Bahamas (part of a deep-water port close to Miami in the US) and Panama (on both ends of the Panama Canal). These terminals are operated by Hutchison Ports, a Hong Kong company that is privately-owned. Hutchison’s involvement in the region predates the start of BRI in 2013. In other regions, such as in Europe and around the Indian Ocean, Chinese state-owned enterprises have become involved in regional ports. Last may COSCO Shipping Ports acquired a 60% stake in the port of Chancay in Peru. The company intends to spend US$3 billion to develop Chancay into a major multi-purpose port. This is COSCO’s first large investment in a Latin American port. It seems only a matter of time before Chinese state-owned enterprises will become more active in the Carribean region. This would contribute to a further spill-over of geopolitical tensions from East Asia into the rest of the world.

By Clingendael