In 1972, a small group of technicians from China set off on a globetrotting journey to Georgetown, Guyana. Their task was to build China’s first foreign aid project in the Western Hemisphere—a now defunct brick factory aimed at alleviating a widespread housing shortage in the country’s Demerara region. Back then, China barely resembled the superpower it is today, but the factory was an important gesture to one of its first allies in the Western Hemisphere. The same year, Forbes Burnham, Guyana’s first Prime Minister, became the first Anglophone Caribbean leader to offer Beijing diplomatic recognition in a Cold War climate that brought considerable political risk.
The China-Guyana relationship has deep roots, but will face new challenges and opportunities given Guyana’s rapidly changing circumstances. In 2015, the international oil giant Exxon discovered over five billion barrels of oil off Guyana’s shores—a number still growing, that will jettison the country from one of the hemisphere’s poorest into a global oil producer. The International Monetary Fund (IMF) has generously forecasted Guyana’s economic growth from four percent in 2019 to 86 percent in 2020. The potential “rags to riches” story is welcome news for the nation of less than a million people, but its institutions will be challenged to turn oil revenues into sustainable development while avoiding a resource curse that so-often plagues developing nations.
China has positioned itself to play a major role in Guyana’s future with far-ranging implications on Beijing’s growing influence in Latin America and the Caribbean. Chinese companies have already established a growing role building up Guyana’s lagged infrastructure, and further cooperation under the framework of the Belt and Road Initiative (BRI) is a potential “win-win” for both countries. Guyana stands to benefit from Chinese built-roads connecting its far-flung frontiers to domestic economic centers and global markets, while Beijing sees Guyana as a potentially valuable gateway between the Panama Canal and Brazil-bound Chinese goods.
Politically, a closer Guyana-China partnership will squeeze U.S. influence from a corridor where Beijing remains one of Venezuela and President Nicolás Maduro’s dwindling supporters. However, like elsewhere in the developing world, China’s growing role in Guyana has brought controversy. A symbiotic relationship with China will require Guyana’s government to safeguard its own interests against a potentially overwhelming Chinese presence.
A special relationship
Long before China’s BRI began to transform Caribbean nations, Guyana saw the People’s Republic of China (PRC) as an American alternative to help develop its fledgling economy following independence in 1966. By the end of the 1970s, Guyana, under Forbes Burnham, accepted $70 million in aid from Beijing and Chinese workers helped build a brick factory, a textile mill, and a hospital. The relationship sputtered throughout the 1980s and 90s as China focused on economic development at home, but in the first decade of the new millennium, Guyana was part of Hu Jintao’s, Xi Jinping’s predecessor, “Going out Policy.”
In 2004, two years into Hu’s stint as head of the Communist Party of China (CCP), Beijing offered Guyana a $32 million loan—most of it since forgiven—to rehabilitate a sugar factory. Later, in 2006, a grant totaling $12 million for the building of the Arthur Chung Conference Center. China’s interest in Guyana has been at least partially motivated by its rich natural resources, which predated the most recent discovery of oil.
China has long been a purchaser of bauxite—the valuable mineral that aluminum is derived from—and in 2007, the Chinese company Bosai Minerals purchased $60 million in bauxite mines. In 2014 the China Geological Survey pledged to help Guyana map their mineral reserves, and in 2016, China became the largest destination for Guyanese timber, its vast Amazon forests of rare wood helping meet China’s appetite for rosewood furniture. Additionally, the Chinese state-owned company CNOOC owns a 25 percent stake in Guyana’s oil at the Starbroek block.
But for all the good that comes out of this partnership, there’s risk allowing China, and its mixed environmental record, unfettered access to Guyana’s natural resources. Guyana has plans for a “Green State Development” vision by 2040, that harmful logging or mining practices could compromise. The Chinese lumber company Bai Shan Lin is one such extreme example, the company has been accused of flouting local laws, tax evasion, and raiding Guyanese forests without delivering on a promised lumber processing facility.
Despite China’s appetite for natural resources, though, Guyana could follow the lead of other Caribbean nations and emphasize climate change as a paramount concern. China has made itself a champion by helping small islands in the region stave off climate change as a way to distinguish itself from the United States, and court allies from Taiwan. Guyana’s coastal cities, like Georgetown, will have to be bolstered and protected in coming years. A hallmark of Chinese development ideology is basing projects on local needs, which means, at the initiative of Guyanese politicians, China could become an engine for ambitious change. Unlike World Bank or IMF development dollars that come with often stringent oversight and conditions, Beijing is more likely to follow Guyana’s lead in assessing what projects it needs and where money should be spent. This means whether it be technical training in solar technology, as China has done in Jamaica, or climate resilient buildings as in Dominica. Guyanese politicians will have a chance to shape China’s involvement in their country.
Having alternatives to Western markets is beneficial for a nation of Guyana’s size. It creates an economy more resilient to downturns in international markets, while also tapping a previously closed off market of over 1.4 billion people. However, to get the most of the relationship, Guyana’s leaders will need to spend its new windfall of money prudently while building a diversified economy that stays resilient from contracting a “Dutch Disease,” where newly discovered natural resources help one sector while stunting the broader economy.
The challenges are exacerbated by Guyana’s political volatility. In March of this year, following a 2019 no-confidence vote, Guyanese will head to the ballot-box to decide whether to keep in power the incumbent coalition led by David Granger and the People’s National Congress (PNC), or the People’s Progressive Party (PPP) led by Irfaan Ali and former President Bharrat Jagdeo. It’s not likely that either party would significantly curtail China’s presence in the country, but the extent either candidate aligns with China will potentially have a major impact on the geo-politics of the hemisphere.
China’s BRI and the future of Guyana
Guyana and the BRI are a natural fit. Chinese companies have already signed contracts for massive infrastructure deals including the China Harbour Engineering Company’s (CHEC) $150 million expansion of the Cheddi Jagan International Airport, the country’s major airport, and a $500 million contract for the China Railway First Group to build a hydroelectric plant at Amalia Falls. China is also expected to undertake a road that will link the town of Lethem outside Georgetown to Brazil. Meanwhile, Guyana’s digital infrastructure will see a boost from a $37.6 million deal by the controversial Chinese Huawei, aimed at expanding broadband connectivity.
China’s largest projects in Guyana have already been mired in controversies. The CHEC expansion of the Cheddi Jagan Airport faced months of delays, and the promised hydroelectric plant has yet to break ground. Although BRI spending around the world has stayed strong, there’s some indication China is paring back on what’s considered risky investments. In the early 2000s, China agreed to take oil as payment from Venezuela on loans, for example, but political instability has brought into question how Venezuela will pay China back. Guyanese have also voiced anxieties that Chinese nationals that come to work on projects are squeezing out locals.
Contracts are awarded to Chinese companies in often-opaque processes and Chinese nationals are increasingly saturating areas of Guyana. In areas like Lenthem, locals have reported that Chinese nationals operate 20 of the town’s stores and control most of the commercial activities. In 2010, then president Jagdeo Bharrat of the PPP offered full citizenship to Chinese nationals that had been in the country for seven years saying they would “automatically receive citizenship.”
U.S. officials have warned Caribbean leaders of the perils of cozying too close to China, but talks of a new great game in Latin America and the Caribbean rehashes a painful past for Guyana that its newfound wealth and impending election hope to break free. Due to deep cultural and economic ties, it’s unlikely Beijing will supplant nations like Canada or the United States as Guyana’s largest trading partners. However, success for the BRI in the Caribbean would be a considerable victory as Beijing and Washington jockey for influence in places like the South China Sea. As Guyana watches its neighbor Venezuela unravel despite its oil wealth, Beijing holds up U.S. sanctions as another example of a meddlesome Monroe Doctrine that bullies its neighbors. Guyana stands at a political and economic crossroads and a closer relationship with China would signal a weakening of America’s standing in the Caribbean.
Jared Ward, PhD, is a lecturer at the University of Akron. He has a PhD in Chinese history and his research focuses on China’s relations with the Caribbean during the Cold War and today.
You can follow him at @JA_Ward_