By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The top US and Chinese diplomats in The Bahamas yesterday exposed the increasing geopolitical tensions set to impact this nation after the latter encouraged it to sign on to Beijing’s multi-billion global infrastructure initiative.

Yan Jiarong, the Chinese ambassador to The Bahamas, used her Bahamas Business Outlook conference address to urge this nation to join her country’s Belt and Road project “at the earliest date” while pointing out that it is the only Caribbean country with diplomatic ties to Beijing yet to do so.

However, she was followed at the same event by Kimberly Furnish, charge d’affaires at the US embassy, who in a thinly-veiled address warned that “other countries may offer investment with nefarious strings attached” and employ “methods” that are contrary to “international best practices”.

While Ms Furnish called no names, there is little doubt that one of the countries she was referring to is China, and she repeated the assertion that permitting such investments by these countries threaten to “undermine the sovereignty and long-term stability” of both the US and The Bahamas.

Ms Jiarong, though, also took a swipe of her own at the US and the incoming Trump administration’s threat to impose “protectionist” tariffs of up to 60 percent on imported Chinese goods.

Warning that this will likely raise prices for Bahamian consumers, given the significant quantity of Chinese-made goods imported into this nation, she positioned Beijing as a strong defender of the multilateral global trading system and rules-based trading in contrast to the US.

Touting the benefits of China’s ‘Belt and Road’ initiative, the ambassador pointed to 200 ongoing infrastructure projects throughout the Caribbean and Latin America. She also pointed to nearly one million jobs that this is said to have created, with projects involving roads, railways and light railways; 100 schools and hospitals; nearly 100 bridges and tunnels; and more than 30 power plants.

“At present all countries, all countries in the Caribbean region that have diplomatic relations with China have joined the Belt and Road initiative except The Bahamas,” Ms Jiarong said. “We look forward to The Bahamas joining the Belt and Road initiative, the Belt and Road family, at the earliest date and sharing better the development opportunities.”

Critics, especially in western countries such as the US, have repeatedly argued that the Belt and Road initiative is nothing more than an effort to suck in poor, developing countries and ultimately make them dependent on Beijing through the underlying terms and conditions attached to what are billed as concessional loan financing.

Ms Furnish, though, lost no time in countering. “Our shared values, geographic proximity and culture ties make us natural allies,” she said in the presentation immediately following Ms Jiarong’s. “US investment comes with a commitment to transparency, to good governance and to mutual benefits for both of our countries.

“In contrast, other countries may offer investment with nefarious strings attached or with methods that contradict international best practices and undermine the sovereignty and long-term stability of both our countries. I’ll repeat that: Which could undermine the sovereignty and long-term stability of both the US and The Bahamas.”

Both diplomats took care not to name each other’s country by there can be little doubt as to who each was referring to. Their addresses, though, illustrate the rising tensions that The Bahamas will have to navigate when Donald Trump reclaims the US presidency on Monday as it seeks fresh foreign direct investment (FDI) dollars to drive its economy and create jobs.

For this nation, like many others, faces being ensnared by the growing rivalry and competition between China and the US for global and economic domination. The Bahamas is an especially valuable prize, particularly for Beijing, given its proximity to the US east coast.

Ms Jiarong yesterday said China’s trade with The Bahamas had more than doubled in the 11 months to end-November 2024, increasing by 172 percent year-over-year to around $1.24bn. However, she later conceded that this figure is “very exceptional”, and had been inflated by The Bahamas’ importation of an oil production vessel that may no longer be present in this nation.

Disclosing that “normal” goods trade volume between China and The Bahamas is around $500m annually, she acknowledged that this was “not a very high percentage” of this nation’s roughly $3.5bn annual import bill and asserted there are opportunities for trade and investment co-operation between the two countries to be “further strengthened”.

“We’ve learnt the barriers to deepening Bahamas-China trade co-operation,” Ms Jiarong said. “First of all, it’s the long distance, the high transport costs, and time consuming and inconvenient travel between our two countries.

“Secondly, it’s because The Bahamas is not a member of the World Trade Organisation (WTO). The Bahamas is not a member of the WTO, so that makes the tariffs on Bahamian products exported to China very high. For example, both Jamaica and Barbados are WTO members, so their lobster export tariff to China is 7 percent but, for The Bahamas, the export tariff is 70 percent.”

Suggesting that there need to be discussions between China and The Bahamas at the policymaker level, the Chinese ambassador said that for this nation to become a full WTO member will require “very complicated” negotiations with other countries. She also hinted at uncertainty over “whether the Bahamas can sign a [bilateral] free trade agreement with China.

All these elements were recognised in The Bahamas’ National Trade Strategy. “Alhough most countries do not make a distinction in their tariff treatment (and other import regulations) between imports originating in WTO member countries and other countries, including The Bahamas, some important economies do make this distinction, in particular China,” it said.

“For example, China imposes a duty of 70 percent on crustaceans from The Bahamas compared to an MFN (most favored nation) rate of 7 percent. Accordingly, Bahamian exports to China are quite limited.

“Chinese tariffs on other Bahamian export products are also above the MFN rates. For example, taking some others of the most important exports in 2019, the differences are as follows: Polystyrene 45 percent versus MFN of 6.5 percent; heterocyclic compounds, 20 percent versus MFN 6.5 percent,” the Bahamas National Trade Strategy continued.

“These differences are very substantial and constitute an impediment to export to China. Considering the massive difference in access to the Chinese market for crustacean exports, and tight competition with Brazil, Cuba and other exporters already exporting sizeable volumes there, The Bahamas is likely to find it difficult to enter that market in the absence of WTO membership or a bilateral trade agreement with China.”

Ms Jiarong, meanwhile, argued that it was “urgent” for The Bahamas and China to explore the possibility of direct shipping between the two countries given the threat posed by the incoming Trump administration over increased tariffs on Chinese goods - many of which transit through North America before reaching The Bahamas.

And, describing China as a “mega market” ripe for exploitation by Bahamian entrepreneurs, the ambassador also urged this nation to target the 100m Chinese who travel abroad every year. She suggested that this nation seek to negotiate an extension to existing direct Chinese flights to Cuba, which stops over in Madrid, as a way to break into this business.

Ms Furnish, meanwhile, called on The Bahamas to improve its ease of doing business and associated transparency, and to further diversify its economy, if it is to drive foreign direct investment (FDI) inflows to new heights.

“It’s essential to create a business environment that’s competitive, rules based, efficient and transparent,” the US charge d’affaires. “We must reduce bureaucratic hurdles and streamline processes for investors here.

“This includes streamlining business registration and work permit applications, improving access to credit and enhancing property rights. These steps will make The Bahamas an even more attractive destination for investors from around the world, including the US.

“Further, transparency and good governance are cornerstones of a healthy investment environment. By adopting modern financial reporting, internationally accepted procurement procedures and transparent business practices The Bahamas can stem corruption and promote good governance,” Ms Furnish added.

“These measures will protect US investments, which will give investors confidence that contributes to the overall business climate. It will draw more US investment, it will make The Bahamas an even more attractive destination for all foreign investors.”

Calling for a renewed focus on further diversifying the Bahamian economy way from tourism, Ms Furnish added that this was “essential for long-term stability and growth here in The Bahamas”.

She urged this nation to target sectors such as renewable energy, financial services, infrastructure and digital assets. The US charge df’affaires added that The Bahamas could establish itself as “leading the way in the Caribbean” by embracing infrastructure and advanced technology, including the introduction of fifth generation (5G) technology.

Ms Furnish said such investments would also help the Government to achieve its objectives of establishing Freeport as a technology hub, while driving its Bahamas Innovate 242 goals.