THE BAHAMAS LOOKS HOPEFULLY TO CHINA TO SPUR

C O N F I D E N T I A L NASSAU 000041 STATE FOR WHA/CAR E.O. 12958: DECL: 01/22/2019 TAGS: ECON EFIN BF SUBJECT: THE BAHAMAS LOOKS HOPEFULLY TO CHINA TO SPUR ECONOMIC DEVELOPMENT Classified By: CDA Zuniga-Brown for reasons 1.4(b) and (d) ¶1. (U) SUMMARY: Amid the recent economic downturn The Bahamas has turned to China for a crucial infusion of liquidity to finance investment and capital projects. The two governments recently signed the agreement to proceed with the construction of the national stadium - China's gift to The Bahamas for it's 33rd anniversary of Independence. Chinese business persons are also in negotiations with representatives from a major resort project in Nassau to discuss possible funding for the stalled project. High level discussions were conducted in The Bahamas January 20-22 (delegation list included in para. 5). There is great expectation here that the Chinese may fill the investment void from the U.S. End Summary. -------------- CHINESE PRESENCE IN THE BAHAMAS -------------- ¶2. (U) Chinese investments have been present in The Bahamas for decades; however, diplomatic ties between the two nations have only existed for 11 years. Hong Kong-based giant Hutchison Whampoa launched a major project in Freeport in 1994 and has recently invested one billion USD over the course of the last ten years. Its subsidiary, Hutchison Port Holdings, owns 50 percent of Freeport Harbour Company, the Freeport Container Port, the Grand Bahama International Airport Company and the Lucayan Harbour Cruise Facility (Freeport is reportedly the 72 largest container facility but has the highest trans-shipment incident rate in the world and services container processing to the Eastern Seaboard). In a newspaper interview on January 8, Chinese Ambassador to The Bahamas Hu expressed his country's interest in deepening its relationship with The Bahamas to expand culture, economic and political exchanges. Local economist Rupert Pinder said Bahamian government officials are please with this announcement and hope that investment from China will assist with The Bahamas' economic recovery. ¶3. (U) In early 2008, the CGOB upgraded and expanded The Bahamas Embassy in Bejing and appointed Senator Elma Campbell as the first resident Ambassador to China. The Chinese Government publicly thanked The Bahamas for its support of the "One China" policy over the years. -------------- CHINA/BAHAMAS TRADE RELATIONS -------------- ¶4. (U) Bilateral trade between The Bahamas and China exceeded $240 million in the first ten months of 2008 and the GCOB continues to negotiate for increased Bahamian exports to China. Officials of the Baha Mar Resort will meet with a Chinese delegation, including representatives from China Exim Bank and China State Construction, later this month to discuss financing to restart the resort project. The original partner, Harrah,s, pulled out of the project last year under pressure from the global downturn. In addition, The Bahamas has signed an agreement with China to begin construction on the National Stadium, which was presented as a gift to The Bahamas. The agreement permits the stadium to be constructed by Chinese labor and has caused some negative feedback from Bahamians. Joy Jibrilu, Director of Investments at The Bahamas Investments Authority, told us that the Chinese Embassy recently had the criteria for the investment approval translated into Mandarin to better assist Chinese nationals seeking information on doing business in The Bahamas. ¶4. (C) In a private meeting with Ambassador Siegel prior to his departure, Craig Symonette, brother of Deputy Prime Minister Brent Symonette, and John Bethel, prominent Bahamian developer, confirmed that Baha Mar Resort was in advanced negotiations with Chinese investors. They further noted that without financing from the Chinese the project will remain stalled. ¶5. (C) An official Chinese delegation met with Baha Mar and CGOB representatives January 20-22. The delegation included Xiaofeng Chen, Weiguag You, Yan Wei, Baolin Guo, Shao Di, Chung Nam Yip, Yue Li, Zhanping Zhao, Keping Xue, Guocai Chen, Wenjie Sun (Delegation Lead),and Ning Yuan. -------------- BAHAMAS COURTS CHINESE VISITORS -------------- ¶6. (U) In hopes of increasing Chinese travelers to The Bahamas, the Bahamian Embassy in China was recently expanded. A consular division was added to facilitate a simple, expeditious process for obtaining Bahamian visas. Additionally, a recent visit by the Minister of State for Finance, Zhivargo Laing, reopened discussions started over a year and half ago on direct airline service from China to The Bahamas. With tourist arrivals from The Bahamas' number one tourist supplier source, the United States, down considerably, Minister of Tourism Vincent Vanderpool Wallace announced recently that The Bahamas would target China as part of its new tourism strategy. While The Bahamas does not expect an increase in direct travel from China, it hopes to capitalize on Chinese tourists traveling to the U.S. ¶7. (C) Comment: The Bahamas is exploring a number of alternatives to increase foreign direct investment as a result of economic recession. China has expressed willingness to assist in investment projects, which would simultaneously increase China's presence in the western hemisphere. To date, however, tourist arrivals from China are less then 1,000 visitors per year, which raises question about the viability of a strategy aimed at China. Particularly given the global economy, The Bahamas is actively seeking alternative sources of foreign direct investment. Senior GCOB officials privately express that China is not their preferred partner and acknowledge that negotiations are difficult. If agreement is reached on Baha Mar it will be the second large Chinese investment in The Bahamas. End Comment. ZUNIGA-BROWN