Rising Chinese FDI in Grenada’s Future

Dr. Scott MacDonald's picture

China’s interest in the Caribbean has increased considerably over the past decade. Most Chinese foreign direct investment (FDI) has been directed to those countries with natural resources or geo-strategic port locations—e.g., the Bahamas, Guyana, Suriname, and Jamaica. However, Chinese FDI has been active in other Caribbean countries as well, including Grenada, where it jumped from USD $4 million in 2006 to $14.5 million in 2013.

If plans being discussed about the island’s future development come to fruition, Chinese FDI should rise considerably. In December 2017, the Chinese Foreign Ministry announced the Grenada government had asked the China Development Bank (CDB) to help it draft a national development strategy. Under the CDB plan Grenada would undertake a major infrastructure upgrade, which would entail the construction of a highway connecting Grenada’s major towns, a railway line that circles the island, the construction of deep-water ports capable of accommodating a large number of cruise and cargo ships, a wind farm to replace diesel-fueled generators, and a modern airport with more longer runways. The CDB also recommends Grenada put more resources into developing an offshore tax haven for foreign companies or individuals. If Grenada adopts the plan, it would provide considerable business opportunities for Chinese companies. It also would expand China’s influence in the Caribbean, a development that would certainly attract the attention of the United States (US), which regards the Caribbean as its own geopolitical backyard. The CDB plan would take Grenada out of the US orbit and place it much closer to China, something that the Grenadian government will have to carefully consider. If nothing else, China’s growing engagement with Grenada reflects a changing international political economy, which is likely to become more challenging as countries, including those in the Caribbean, choose how to position themselves between China and the US.