METIS INSIGHTS: China sets its sights on the Tropics: Sino- Caribbean and Central American relations are reshaping maritime infrastructure investment

How is China expanding its maritime influence in the Caribbean and Central America?

What role does China's Belt and Road Initiative play in Caribbean infrastructure?

Why is Chinese investment in Caribbean and Latin American ports raising geopolitical concerns?

How does China’s involvement in the Panama and Nicaragua canals impact global trade routes?

What are the economic and political implications of China’s partnerships with Caribbean nations?

• China is facilitating maritime development in the Caribbean and Central America through loans and grants and the contracting of Chinese companies to construct port infrastructure. 

• Stronger bilateral cooperation and investment by China in infrastructure projects are establishing long-term strategic relations and economic dependencies. 

• Concern over growing Chinese influence has been raised, regarding maritime and land claims, political influence, and proximity to US naval facilities. 

China sets its sights on the Tropics: Sino- Caribbean and Central American relations are reshaping maritime infrastructure investment 

China has set its sights on the Caribbean and Latin America as part of its growing international integration aims, placing Sino-relations and investment as a driving force in International South development. In doing so, Beijing has renewed its interests in the region, providing investment in infrastructure, logistics, tourism and trade while raising concerns among political actors and financial experts about growing dependencies, ideological integration, and growing geopolitical tension.  

Through financial lending and grants, and the contracting of Chinese construction and managerial firms, China has directly influenced maritime activity through investment in port and transport infrastructure to increase China-Caribbean/Central American trade. It has also provided loans, launched infrastructure projects, and boosted diplomatic and strategic relations to strengthen regional ties within the Caribbean and Central America.  

The Belt and Road Initiative  

The recent surge in Chinese investment in the Caribbean and Central America, particularly from the 2010s onwards, is closely tied to China's Belt and Road Initiative (BRI). This ambitious policy, also known as Xi's 'One Belt, One Road', is the cornerstone of China's foreign policy in the 21st century. It aims to expand Chinese influence and investment in foreign infrastructure, logistics, and industry. Beijing sees the increased participation of Caribbean and Central American states as an extension of the BRI, creating a 'maritime silk road' that complements its existing land-based objectives. Since 2017, three Caribbean (Trinidad and Tobago, Cuba, and Jamaica), three Central American (El Salvador, Costa Rica, and Panama), and additional neighbouring states (Venezuela, Guyana, and Suriname) have joined the BRI extension. This alignment with China is consistent across Latin America, with 22 countries becoming BRI signatories and ongoing efforts for greater participation.  

As of July 2024, Brazil and China have acknowledged their intent for Brazil to become a BRI signatory, fostered by the alignment of China's economic policy and Brazil's domestic development strategy. Ongoing efforts to maintain regional relationships across the Caribbean and Latin America signify China's persistence in obtaining and maintaining an enduring regional foothold. 

Figure A: Belt and Road Initiative Signatories (Source: Green Finances & Development Centre, 2023) 

Growing BRIC interest 

China is not alone in adopting a regional shift towards the Caribbean and Central America, with BRIC states (Brazil, Russia, India, and China), primarily Russia, following suit. Russia has increased its presence of military vessels in the Caribbean region, most recently in June 2024, when three vessels and one submarine conducted exercises in Cuban waters. The exercise was the first of its kind since 2019, testing air and naval drills, warranting close US Air Force surveillance.  

Russia's presence in the Caribbean has been attributed to growing Russia-US tensions following the 2022 invasion of Ukraine, with Russia employing regional action as a means of projecting power beyond its territory. The activities of Russia and China in the Caribbean in recent years indicate a growing interest among both parties in securing a regional foothold and strongly suggests a desire to become the second most influential country in the region behind the US.   

Lending and investment 

In 2023, direct investment from China across the Caribbean and Latin America was an estimated $8.7 billion, comprising 10% of all foreign direct investment entering the region. Chinese investment in the maritime sector has been funnelled into around 40 ports across Latin America and the Caribbean. This investment growth accompanies increasing trade volumes, with an estimated $208 billion in imports and $204 billion in exports exchanged between China and Latin America/the Caribbean in 2023. Subsequently, China has earned a position as a key economic player in the region, underpinning financing and trade as the region's second-largest trading partner, following the US. 

Financial dependencies 

The expectation of assistance and loans from China among Caribbean and Central American nations, established over the past few decades of increased exchanges, has intrinsically linked Beijing with regional economic development. South-South cooperation, lending from an emerging economy to developing economies in China’s case, has been increasingly credited as effective due to its avoidance of strict stipulations and measures. Although this form of lending has been criticised as a pathway to the ‘debt trap’, there is no evidence supporting this belief. Rather, Chinese loans create more favourable conditions for developing economies compared to the alternatives offered by Western states and international organisations.

For example, China loaned Jamaica an estimated $2.1 billion between 2005 and 2021. Repayments for these loans are financially feasible, as Chinese loans only amount to 4% of Jamaica’s loans owed and are unlikely to push the state into the ‘debt trap’. When these loans become too big of a financial burden, the PCR has demonstrated ongoing leniency with other SIDS (Small Island Developing States) through term renegotiation. Cases like Jamaica present a strong case for the longevity and economic sustainability of strategic partnerships in effectively fostering development and strengthened industry.

Extending control: Panama and Nicaragua Canals 

Chinese efforts to become involved in constructing and controlling a trans-continental canal in Central America are fuelling concerns about the motives behind Chinese regional participation and maritime/land claims. Unsuccessful efforts to construct a canal bisecting Nicaragua and ongoing involvement in the construction, management and oversight of the Panama Canal reflects Beijing’s desire for greater regional control beyond that facilitated through existing intergovernmental and commercial partnerships. 

1. Panama Canal: Since 1999, the canal’s management has been under a joint US-Panamanian organisation, the Panama Canal Commission, after being transferred from Panama’s government alone. Construction and logistic contracts awarded to third parties for management, electricity and other logistical services allow Chinese organisations a pathway for potentially greater control over one of the world’s most significant shipping chokepoints. China retains various levels of managerial control through concession agreements for ports located at each end of the canal - Panama-Colón Container Port (PCCP), the Port of Balboa and Puerto de Cristobal. Across these projects, construction contracts have routinely been awarded to Chinese firms, including $1.4 billion to the China Communications Construction Company (CCCC) and the China Harbor Engineering Company (CHEC) for the Panama Canal’s fourth bridge. Complementary industries have also benefitted from investments in the construction of electricity generating and water management facilities. Across all sectors, an estimated 40 Chinese companies are operational around the Panama Canal. 

1. Proposed Nicaragua Canal: The Nicaragua Canal was a project put forward that aimed to link the Pacific and Atlantic Oceans through Lake Nicaragua, with ports to be constructed at each end. The contract for the canal’s development was awarded to the HKND Group of Hong Kong in 2013 as a 100-year concession. The project aimed to allow for greater mobility for larger vessels restricted by the depth of the Panama Canal. Construction officially began in 2014 following a ‘breaking of ground’, however no major work was subsequently completed on the project. Widespread backlash and a series of protests occurred due to the environmental damage and displacement of local people that the project would incur. Work on the canal halted in 2016 and ceased two years later when HKND dissolved its regional operations, with the failure being credited to unforeseen risks and challenges. Despite these failed efforts, Sino-Nicaragua relations remain steady, with a new Free Trade Agreement initiated on 1 January 2024 and the establishment of a new trade route from Corinto Port, Nicaragua to the Chinese port of Tianjin. 

Figure B: Map and cross-section of the proposed Nicaragua Canal compared to the Panama and Suez Canals (Source: Research Gate, 2016) 

Bicontinental access through the Americas holds instrumental power, as control over a key maritime chokepoint would enable the restriction of vessel movements and trade flows. China’s continued involvement in the Panama Canal and unsuccessful attempts to recreate and leverage the chokepoint in Nicaragua signal its ongoing prioritisation of the region as a long-term trade focus. 

Implications: Infrastructure development and industry 

Sino-Caribbean/Central American relations are directly changing the infrastructure and industry landscape across the region, supporting development and improving trade networks. China has successfully enmeshed itself through direct industry support, like investments in Guyanese oil or the tourism industry in Barbados, through contracting Chinese companies for development and infrastructure projects or gaining managerial control over existing businesses in sunset industries. Construction, logistics and infrastructure have not focused singularly on any single sector, rather encompassing sectors including transport (roads, ports, bridges), healthcare (hospitals), tourism (stadiums, hotels, event centres) and the public sector (government buildings and embassies) among many other examples.  

Favourable trade and logistical treatment  

Greater bilateral cooperation between China and regional partners aims to foster better trading conditions, benefiting all involved parties. While China has engaged with this to varying degrees across the region, recognising the geostrategic gain of the Bahamas, it has continuously fostered ongoing relations underpinned by infrastructure development and assistance in times of crisis. The Preferential Maritime Agreement between the two countries, established in 2003, allows for greater unrestricted trade flows. With the Bahamas-flagged vessels receiving a 28% discount on standard fees, expedited customs processes, the loosening of docking formalities, and the declaration of ‘most favourable nation’ status, this has facilitated greater ease of trade but also encourages greater reliance on China. More recently, thirteen medical and aid deliveries from China were supplied to the Bahamas in the aftermath of Hurricane Dorian in 2019 and throughout the COVID-19 pandemic.  

The correlation between Chinese maritime infrastructure investment and increased political privilege in the Bahamas is evident, with Hong Kong's Hutchison Whampoa winning a bid in 2001 for the Freeport Container Terminal, only a few years following the Bahamas' formal recognition of China. Hutchison's control over key transport infrastructure persists, retaining operational control over Freeport’s cargo port and cruise ship terminal and only losing control over the international airport following damages from Hurricane Dorian. In repairing the airport, greater consideration has been afforded to Chinese construction companies. Ongoing structural changes will likely facilitate a privileged position for Chinese companies while encouraging strengthened trade exiting and passing through SIDS. 

Geopolitical tensions 

With investment channelling through to at least 40 ports in the Caribbean and Latin America, Chinese involvement is a clear sign of Beijing trying to establish a regional foothold in the Americas, and with it, the ability to leverage this geo-strategically significant positioning. Growing Chinese involvement is raising concerns in the US as strategic considerations arise from the increasing presence of Chinese naval authorities, companies and vessels in a region where the US has long been the dominant power.  

In speaking to Dialogo, US Air Force General Glen VanHerck stated that the increasing Chinese presence in the Caribbean and Central America could facilitate direct observation of US Navy testing and training facilities and afford the PRC direct insight into US-dominated maritime spaces.  Although no immediate strategic risks to the US have arisen to date, a pathway for greater monitoring and maritime activity by China in the region has been established. 

Purchasing political currency, legitimacy and ideological authority  

Unable to establish substantive strategic alignments with developed states, China has developed strategic partnerships with Caribbean SIDS. These partnerships afford them greater discursive power in shaping the economic and political priorities and agenda of the region – a power previously held primarily by the United States of America and European states. China has engaged with states that will overlook China's illegitimate conduct and territorial claims in the South China Sea and East China Sea, choosing to align with states prioritising their own regional development. Sino-Caribbean diplomatic efforts specifically clarify that relations are founded on respect for the sovereignty of the state and the authority to claim and govern territory. In turn, China affords these states preferable partnership terms and support. 

An ongoing signal of allegiance is Caribbean states' severance of partnerships with Taiwan in favour of Beijing's One-China policy; 10 of the 15 CARICOM (Caribbean Community) states have ceased diplomatic ties with Taiwan. Chinese Foreign Minister Wang Yi has since stated in 2024 that the success of regional strategic partnerships demonstrates greater prospects, underpinned by a strategic partnership founded on the prioritisation of recognition, independence and sovereignty. Seeking relations with smaller, developing nations positions China in greater authority, restricting the ability of states to push back on China's ideological groundings with parties accepting diminished sovereignty and autonomy in exchange for partnerships. 

Figure C: Chinese port projects and proximity to military bases in the Caribbean and Latin America (Source: Diálogo Americas, 2023) 

The longevity of China’s interest in regional development and trade 

As investment improves across maritime and related industries in the Caribbean and Latin America, a greater enmeshment of China is likely to proceed through strengthened economic relations and strategic partnerships, ultimately reshaping regional dynamics. The region will remain a key strategic vantage point of influence over North America and South America, as well as a point of direct access to the US. China’s growing diversification of investment in industry and trade has successfully enmeshed itself in the region’s financial and economic future - a dependency has been established within partnerships ensuring long-term viability as receiving parties rely on the provisions and privileges afforded by access to Beijing.  

The funding of ports and other maritime infrastructure, including the establishment of new trade routes, ensures the longevity of Caribbean/Latin American trade with Asia, encouraging greater global linkages beyond a primary reliance on the US. Regardless of the origins of funding, investment in infrastructure and logistics will positively improve the ease of trade through the region, with canal development efforts demonstrating the realisation of global development and Chinese expansionist objectives. 

 The geopolitical prioritisation of the region through investment in maritime infrastructure and a greater military presence is likely to raise more pronounced interest by other countries such as Russia, which also seek greater influence on the US’s doorstep. Given the widespread investment in the region, global interest in development supporting maritime logistics and trade is unlikely to wane, positioning the Caribbean and Latin America as a region in need of greater long-term scrutinization.