Guyana, China sign Gy$940M grant for projects

–Jagdeo urges Caribbean leaders to pursue partial scope agreement with China

Guyana and China have inked a Gy$940 million (30 million yuan) grant agreement that would see funding for several projects which are yet to be decided on. Finance Minister Dr. Ashni Singh signed the agreement on behalf of Guyana, while Minister of Commerce of China, Chen Deming, signed on behalf of his country.

The signing took place at the Business Conference of the Third China-Caribbean Economic and Trade Cooperation Forum, held in Port-of-Spain, Trinidad and Tobago on September 12 and 13.

Guyana was represented by a delegation of government ministers led by President Bharrat Jagdeo.

There were also 30 local business executives in attendance.

Speaking at the forum at the Hyatt Regency Hotel, President Jagdeo called on the Caribbean to pursue with China a non-reciprocal trade agreement or a partial scope agreement similar to the one that exists between Guyana and Brazil. He told the government and business leaders that, because the combined regional economies was small relative to that of China, the top 30 or 40 export commodities of the region could be given an ease from attracting duty on import into that Asian economic giant.

According to him, while this loss of duty would have little effect on China, it would generate significant wealth for the region.

Meanwhile, Jagdeo cautioned against the expectation that the two-day forum would provide the solutions the region seeks. He warned participants not to get caught up in rhetoric without tangible results. He called for a trade regime that would encourage value-added activities in the region, which he posited would narrow the trade gap that exists between China and the Caribbean.

Several key issues must be identified, he said, and then, by timetable, all must work to ensure that they are implemented, and practical changes are made visible before the time of the fourth economic forum, four years hence.

President Jagdeo also urged that more practical results be sought for the problems of the region. He said the forum was merely a catalyst of what is to be achieved, and there must be a structured engagement with China moving forward. He also urged regional governments to ensure that such an agreement is driven by private enterprise.

Over the past two decades, bilateral trade between the Caribbean and China has grown a hundredfold, from US$20 million in 1990 to US$2billion in 2008.

In attempting to rationalise his reasoning, Jagdeo pointed out that much of the long-term growth in global demand in the commodity markets will come from the Asian country, and that China’s role as a portfolio investor and as a source of foreign direct investment in the global financial marketplace will increase considerably, along with demand for goods and services by increasingly affluent Chinese corporate and household consumers.

“These are the realities that will shape the future of the world economy, and they must inevitably be taken into account as we in the Caribbean define our own domestic and collective regional strategies for growth and development,” Jagdeo posited.

In defining the relationship going forward, the Guyanese head of state said, “The opportunity we must seize now is one that goes considerably beyond merely forging business relationships and concluding business agreements and transactions for today.

“The opportunity before us is also to forge a model for long-term, mutually beneficial engagement between a large global economic giant on the one hand, and some of the world’s smallest and most vulnerable states on the other hand, based on a close alignment of shared interests and built on reciprocal respect and warm friendship.”

Advantages

He spoke of several other advantages that the Caribbean has, which should be mobilised to advance shared goals. These, he noted, are: the region’s geographic location, which provides certain natural advantages for Chinese companies seeking to establish a base to serve any part of the Americas, and even Europe; its rich natural resources, which remain for the greater part untapped on any significant scale; its attractive regulatory and operating environment; and its competitive and non-discriminatory fiscal incentives regimes, which have a clear policy to welcome investors from overseas. President Jagdeo believes that much of China’s engagement with the region has been government- to-government, and, as such, grants and soft loans are given to governments.

“How could we get some of this wealth to go to private companies?” he asked.

A lending mechanism that keeps the Chinese money safe but finding its way into the hands of the private sector, particularly in an environment where the cost of capital is very high, is part of the answer Jagdeo recommended.

Similarly, he believes that if the framework is fixed, this can be achieved.

President Jagdeo pointed to the imbalance in the decision-making and governance structures of the international financial institutions, in which the regional states have very little say, as the catalyst for regional states’ reliance on the emergence of China and other economic superpowers. The mentioned imbalance can be turned around with emerging economies having a greater say at the International Monetary Fund (IMF) and at the World Bank. President Jagdeo said such emerging economic superpowers can create policies that are more sympathetic to developing states.

Much to the delight of those gathered, the Guyanese head of state declared that the pursuit of increased trade with emerging economic giants such as India, Brazil, Russia and China is integral to the future development of the Caribbean.

He noted thus: “We in this region have warmly embraced China’s rise in the world. I say this largely because this situation is not mirrored in the developed countries of the world”. He noted that the region is not wary of China’s rise, and looks forward to its continued growth, as he insisted that China’s development is critical to that of the people of the Caribbean. This, he believes, will also serve to break the traditional hold that known economic powers have on countries such as those in the Caribbean.

Important relationship

Meanwhile, Jagdeo expressed hope that the business conference would signify that the Chinese government clearly views the Caribbean as important to both its national political and economic security, given the partnership between Caribbean private companies and the government of China.

He also called for the forum to be used to foster a better understanding of the way that China works.

Guyana’s high-level team at the forum included Finance Minister Dr Ashni Singh; Agriculture Minister Robert Persaud; Transport and Hydraulics Minister Robeson Benn; Foreign Affairs Minister Carolyn Rodrigues- Birkett; Tourism, Industry and Commerce Minister Manniram Prashad; Culture, Youth and Sport Minister Dr. Frank Anthony; and Director General of the Ministry of Foreign Affairs, Ambassador Elisabeth Harper.