Over the past decade, the China dragon has stampeded into the hemisphere, buying up ore, crude oil and soybeans, building dams and railways and breathing fire into the region’s economies.
But that wandering dragon now looks weary, anemic, even feeble, hobbled by an economic slowdown back home. China’s rising influence in the hemisphere seems more modest today than it did only eight months ago.
It takes only a quick look at the massive Baha Mar resort and casino complex to see how far off the rails the Chinese dream has gone. Bahamian authorities once believed the dazzling, 2,200-room gaming and entertainment complex would account for one-eighth of the island nation’s economy and create thousands of jobs.
A Chinese export-import bank and construction company bankrolled much of Baha Mar, and thousands of Chinese laborers toiled around the clock to build what was touted as an ultra-chic resort with four world-class luxury hotels and 40 restaurants. The resort ran an international ad campaign and started accepting reservations. But money ran out last year, and the project, said to be 97 percent complete, is at a standstill.
A chain-link fence surrounds the unfinished $3.5 billion complex. Grand openings were postponed twice last year as Baha Mar tried unsuccessfully to file for bankruptcy in a U.S. court and then was placed in receivership in late October.
Some 2,000 employees were laid off and it’s unclear when the resort will open.
“We are swimming in the wilderness, and are beholden to a Chinese bank,” Dionisio D’Aguilar, a former member of the Baha Mar board, told the Nassau newspaper The Tribune. “This is not a happy ending; it’s a fiasco.
“Everybody is finding out what we already knew: That dealing with a Chinese bank that is state-owned, government-controlled, is not an easy undertaking,” he said.
Now, amid reports that the plumbing system is not functional, top business leaders ponder what was once unthinkable — that the project may become a blight.
“We do not want to see it turn into an eyesore because of lack of maintenance,” said Edison Sumner, chief executive of the Bahamas Chamber of Commerce and Employers’ Confederation. “As in the case of any building, if it sits for too long without live bodies in it, without proper levels of maintenance and care, it can become a deteriorated project.”
“It really is a storybook disaster,” said Leonard Sands, head of the Bahamas Contractors’ Association. Workers from local firms hired by a subsidiary of China State Construction Engineering Corp. said “they were looking at stuff on site and saying, ‘How is this going to pass code?’ … You could flush something on the ground floor, and on the first floor it would back up.”
Baha Mar is not the only Chinese-backed plan under a cloud in the hemisphere.
While China’s economy has been cooling for several years, signs of real trouble arose in mid-June with gyrations on the Shanghai Stock Exchange. Within a month, a third of the value of its leading shares evaporated. Aftershocks hit in late July and late August. China in the third quarter posted its slowest growth in six years. Last week, China’s stock market and currency once again rattled investors around the world.
Among those who have been hit by the turmoil was Wang Jing, a telecommunications tycoon whose Hong Kong company in 2013 won a 50-year concession to build and operate a canal across Nicaragua to rival the Panama Canal. In June, Wang’s net worth peaked at $10.2 billion, according to Bloomberg’s Billionaires Index. But the plunge of the Chinese markets hit Wang hard. Forbes lists his net worth today at $3.1 billion.
Whether Wang can raise the money to finance the cost of a canal that has a $50 billion price tag is in doubt. Wang has close ties to the People’s Liberation Army, but Beijing asserts that it has nothing to do with the project. Only a symbolic groundbreaking has taken place.
Shock waves from China’s slowdown now ripple across South America, where dependence on Beijing’s once-gargantuan appetite for commodities has left the region with a severe hangover. Eight nations of South America list China as their No. 1 or No. 2 destination for exports. Brazil saw its trade with China climb from $1 billion in 2000 to $40 billion in 2014, only to watch it head off a cliff.
The Chinese slowdown has undercut prices for copper, iron ore and other metals. Throughout 2015, China posted a decline in its imports, leaving South American economies wincing.
The commodities shock is a big reason why the International Monetary Fund sees Latin America and the Caribbean falling into recession, shrinking region-wide by a projected 0.3 percent in 2015.
Current economic travails only bring into sharper relief the in roads that China has made in the hemisphere over the past decade. Chinese state-owned companies have snapped up oil and mining concessions, built dams and highways, locked up resources and played banker to the region. In July, Chinese banks rescued Brazil’s scandal-tainted Petrobras oil giant with $7 billion in loans. China now provides more loans to Latin American than multilateral entities like the World Bank.
Political ties to Beijing run deeper than ever. Argentina, Brazil, Ecuador, Peru and Venezuela all have declared some form of strategic alliance with China. In Argentina’s remote Patagonia, Chinese workers put the finishing touches on a satellite-tracking facility, China’s first overseas space station. China has launched satellites for Bolivia, Brazil, Ecuador and Venezuela.
In places like Colombia, where trade with China is not so high, Chinese diplomats avidly court politicians of all ideologies, pragmatically seeking to build influence.
“They are regularly inviting senators, party leaders, academics and others from all the spectrum of Colombian politics to China,” said Benjamin Creutzfeldt, a sinologist at the CESA School of Business in Colombia’s capital, Bogota.
Nowhere else in Latin America is there a greater open door to China than in Peru, home to the region’s largest ethnic Chinese population. At least 1.3 million of Peru’s 30 million citizens boast Chinese ancestry, and some say it may be as high as 3 million.
Chinese Premier Li Keqiang made Peru one of his three stops on a swing through South America in May. Li said that China had begun a “new historical period” with Latin America in which it would not only buy raw materials but also build infrastructure. He offered $10 billion to support construction of a transcontinental railway to traverse Brazil and Peru, the first such east-west route across vast South America.
“Everyone knows how important China is now for South America, and for Peru specifically,” said José Tam Pérez, president of the Peru-China Chamber of Commerce.
The trade is far from balanced, however. Eighty percent of South America’s exports to China are commodities, while most imports are autos, electronics and manufactured goods.
Nearly a dozen Chinese brands of vehicles cruise Peru’s roads and highways. Drive for an hour and one can see Geely, BYD, Great Wall, Chery, Lifan and First Auto Works vehicles. It is similar up and down the Andean region.
China also holds the purse strings in countries like Ecuador and Venezuela. Both countries, ruled by autocratic leftists, are largely shut out of capital markets. China has loaned or pledged some $57 billion to Venezuela since 2007, locking up future oil shipments as payment. In 2014, according to state oil company PDVSA, China received an average of 630,000 barrels a day of Venezuelan fuel.
In the Bahamas, bitterness toward China has set in. On Oct. 30, the Export-Import Bank of China appointed the British professional services firm Deloitte as receiver of the Baha Mar project and will determine whether it can be completed, or whether it should be sold to the highest bidder. Other investors in the project have now been sidelined, including Sarkis D. Izmirlian, a Bahamian who invested some $850 million since dreaming up the project 13 years ago.
“It’s a disaster. What they are waiting for is a white knight to come in and say, ‘I’ll buy you out for 50 cents on the dollar,’ ” said Scott Smith, managing director of PKF Consulting, a tourism consultancy in Atlanta.
The massive project, the largest one-time tourism investment the Caribbean has ever seen, has taught Bahamian officials to avoid such mega-projects unless they are built in stages.
Some Bahamians simply shake their heads at the thought that Baha Mar, set on a precious stretch of beachfront, might not get finished.
“You can’t believe that all that would go to waste. It’s such a beautiful asset,” said Larry Smith, a native Bahamian who runs a website called Bahama Pundit.
Nearly 2,000 employees were hired early in 2015 and were being trained for Baha Mar’s opening.
“A lot of people are upset,” said Donnette Burrows, a 21-year-old handing out fliers along the main shopping street in Nassau, within sight of huge docked cruise ships. “They left the job they already had to go there. Then they are left jobless because it hasn’t opened.”
Miami Herald staff writer Mimi Whitefield contributed to this report.
This story and others on the growing Chinese influence in Latin America were supported by a grant from the Pulitzer Center on Crisis Reporting.
The reporter can be reached at email@example.com; Twitter: @timjohnson4