Guyana, China to increase collaboration in trade and infrastructure

Aug 02, 2023 News

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Kaieteur News – Guyana and China have committed to expanding their collaboration in the areas of trade and infrastructure. The countries have resolved to deepen ties through continued partnership during a recent meeting between President Irfaan Ali and China’s President Xi Jinping.

Last Friday, President Ali met with President Xi Jinping in Chengdu, capital city of southwest China’s Sichuan Province.

According to a joint statement by the two countries, Guyana and China welcomed the signing of a Memorandum of Understanding (MoU) on the establishment of an Investment and Economic Cooperation Working Group. The two countries expressed satisfaction with the positive development of bilateral relations and reaffirmed their commitment to further strengthening bilateral relations and expanding collaboration in a number of areas.

According to the statement, Guyana and China also reaffirmed their respect for each other’s independence, sovereignty and territorial integrity, and support for their peoples’ choice of a development path suited to respective national conditions, based on the principles of mutual respect and mutual benefit, and in keeping with the purposes of the United Nations Charter and international law. Guyana has maintained its firm support for the one-China principle.

President Ali thanked President Jinping for China’s support in Guyana’s economic development, including in the area of infrastructure. Both sides committed to deepening economic ties, including enhanced trade and investment promotion, and to expanding cooperation in areas such as infrastructure development, agriculture, health, energy and education.

President Ali also applauded China’s proposals for the Belt and Road Initiative, the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative.

With reference to the MoU on Cooperation within the Framework of the Silk Road Economic Belt and the Twenty First Century Maritime Silk Road Initiative, signed between the two sides on July 27, 2018, Guyana expressed willingness to discuss and conclude the Joint Action Plan on Promotion of the Belt and Road Initiative with the Chinese side.

The Chinese leader applauded President Ali for the constructive role played by Guyana in regional and international affairs, especially on food security, regional integration and China-CELAC cooperation. President Ali emphasised that keen attention needs to be paid by both developed and developing countries in promoting food, climate and energy security for sustained development. Both sides noted that the Global Development Initiative was one framework that could support the implementation of this objective.

Notably, recognizing the positive role of infrastructure development in generating economic growth and alleviating poverty, both Guyana and China agreed to expand collaboration in this area.

Further, Presidents Ali and Xi agreed to investigate the prospects for collaboration in the development and construction of critical infrastructure projects, leveraging China’s experience, and expertise and finance capacity.

Both Guyana and China recognized the important value of trade and investment in deepening economic ties and committed to creating a favorable business environment to facilitate bilateral trade and investment activities. The countries agreed to explore the possibility of expanding trade in a variety of industries, including agriculture, energy, mining, manufacturing, and services.

Kaieteur News reported that during the discussion with President Ali last Friday, President Jinping, said that Guyana and China should be good friends who trust and count on each other.

Chinese media entity, Xinhua reported that President Xi said both countries should share opportunities, meet challenges, seek cooperation and promote development together.

Xi urged the building of a more close-knit China-Guyana community with a shared future. President Xi said China and Guyana, both developing countries, should strengthen communication and cooperation, firmly support each other, and advance bilateral relations steadily for the fundamental and long-term interests of the two peoples.

China has been one of Guyana’s biggest lenders.

As such, Guyana has often been warned by the experiences of other countries when it comes to borrowing loans from China and the foreign country funding local projects through procurement models that allow for transfer to the government at some point.

President Ali, however, is not threatened by those warnings and instead believes that China has an integral role to play in the development of Guyana.

Guyana has been borrowing majority of its bilateral loans from the People’s Republic of China.

On December 30, 2022, the Government of Guyana entered into a new contract with the China Export Import (EXIM) Bank for the US$172 million loan to help build the new Demerara River crossing.

Last year, it was reported that the bulk of the country’s loans were owed to the China EXIM Bank.

The Governor of the Bank of Guyana (BoG), Dr. Gobind Ganga in an interview with this publication had said the China Exim Bank accounts for 39.5 percent of the country’s total external debt.

Additionally, debt repayment to the China Exim Bank had accounted for 82 percent of debt repayments to bilateral creditors. In the first three months of the year, US$10.6M alone was paid to the Chinese lending institution, up by 1.4 percent. The increase, according to the Central Bank, was as a result of higher principal repayments during the review period.

At that time, Guyana’s total stock of public debt, which comprises both external and domestic debt stood at US$3.248 billion.

China’s Exim Bank was a major contributor to a loan Guyana had taken to modernise the Skeldon Sugar Factory. This plant was to boost the sugar production figures of the industry; to essentially rescue the sugar sector from its ailing state. Instead, it turned out to be a contributing factor to the poor health of the industry.

In 2017, this newspaper reported that the Ministry of Finance contracted two loans for the Skeldon project. These were from the Export Import Bank of China, the repayment period for which ends in 2025 and the Caribbean Development Bank, the repayment period for which ends in 2033.

On the two loans, the total amount that the Government is paying (principal and interest) is US$3.8M per year.

Another project that was completed and funded by loans from China is the Cheddi Jagan International Airport, Timehri.

The airport expansion contract was signed in 2011 under then President, Bharrat Jagdeo, and was passed through the truncated presidency of Donald Ramotar. However, when the David Granger administration took over in 2015, it said that the very defective plan needed adjustments and changes were made. The decade-old project was awarded to China Harbour Engineering Company (CHEC) for the sum of US$150M – $138M from the China Exim Bank and $12M from the consolidated fund – taxpayers’ money.

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• China Export Import, Dr. Gobind Ganga, loans, Presidents Irfaan Ali, Xi Jinpin

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