Bahamas must be friends with both superpowers
The trade war between the United States and China has markets rattled. Just a few weeks ago we all thought the dispute was coming to an end with a historic agreement to be signed between the world’s two largest economies.
Then it all fell apart.
The U.S. increased tariffs on $200 billion worth of Chinese goods to 25 percent. U.S. President Donald Trump even threatened more levies on nearly all Chinese exports to the U.S. He accused China of backtracking on pledges.
China responded in this latest round of escalation by raising tariffs on $60 billion worth of U.S. imports already subject to taxes, raising them to 10 percent, 20 percent or 25 percent from lower levels.
How will this end? No one knows.
Trump has a general election to fight next year. The Chinese economy has slowed. Trump’s chances of winning would diminish significantly if the trade war were to cause recession. The ruling Chinese Communist Party fears social unrest from tough economic times.
The trade war, however, is just a part of a much bigger struggle between the two.
The United States has dominated the post-World War II era. It is the richest and most powerful country. With the collapse of the Soviet Union in the early 1990s, it was the only superpower.
China’s growth the past three-plus decades made it America’s new rival. The Chinese Communist Party’s embrace of state capitalism precipitated extraordinary economic growth.
China now has the second largest economy. And with a population of 1.3 billion it is expected to surpass the U.S. as the richest and most powerful country this century.
The ascended power (the U.S.) wants to slow the rise of the ascending power (China). The trade war is part of that process.
The U.S. is The Bahamas’ major trading partner. Tourism is our main industry and the vast majority of our tourists come from America.
In the past two decades since recognizing China, The Bahamas has forged close ties with the power from the east. Chinese money built Baha Mar, the track stadium, the Airport Gateway Project, the port in Abaco and is building The Pointe.
Being on the doorstep of the U.S., China sees the potential to make money in The Bahamas, while also growing a presence just off the coast of its rival.
The Bahamas must maintain friendship with both powers. It is not an either-or proposition. We need investment and visitors from the U.S. We need investment and visitors from China.
Our foreign minister is right to state that we should stay out of their fight.
“We are friends with both nations. We are friends with both China and the United States of America,” said Minister of Foreign Affairs Darren Henfield.
“A large platform of our economy comes from foreign direct investment, and we consider foreign direct investment anywhere it comes from in the world. If it is good for The Bahamas, we would look at it seriously and consider whether or not we accept it.”
The governing party and opposition agree on this point.
“There are geopolitical forces at work in the world where there are tensions… between the second largest economy in the world, which is the People’s Republic of China, which is about $12 trillion and the United States of America on the other hand, which is the first economy in the world which is about $20 trillion,” said Fred Mitchell, the Progressive Liberal Party (PLP) chairman and former foreign affairs minister.
“They are trying to sort out what their relationship is going to be going forward. And there is an old expression, you know, ‘when the elephants fight the ants get trampled’.
“So we are not in that fight.”
The rivalry between these two countries is an open-ended matter. What we all should hope is the trade war ends soon. The Bahamas has experienced record growth in tourism. That will not continue if the trade war causes global recession.
We need our two friends to see the wisdom in reaching a settlement. It took us a decade to emerge properly from the Great Recession. No Bahamian wants to go back to those harder times.