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OPINION: Guyana and China: Reigniting an Old Flame?

Last Updated on Wednesday, 23 August 2023, 13:06 by Denis Chabrol

R. Evan Ellis, Latin Research Professor at the U.S. Army War College.

by R. Evan Ellis, Latin Research Professor at the U.S. Army War College.

Introduction
The embrace of the People’s Republic of China (PRC) by Guyana President Irfaan Ali during his July 2023 visit to the country highlights a renewed wave of Chinese engagement and influence in a country that has transformed in just a few years from one of the region’s poorest and US-ambivalent, to its fastest growing, and a vital U.S. partner.

In his meeting with Xi Jinping during the 31st ‚ÄúWorld University Games‚ÄĚ in Chengdu, President Ali expressed his ‚Äúappreciation‚ÄĚ of China‚Äôs new strategic framework for advancing its ‚Äúcommunity of common destiny‚ÄĚ: its Global Development Initiative, Global Security Initiative, and its Global Civilizational Initiative.¬† Ali, whose government had in February 2021 announced intention to open a Taiwan commercial office before PRC pressure obliged it to back down within hours, reaffirmed Guyana‚Äôs fealty to the PRC‚Äôs ‚ÄúOne China‚ÄĚ policy. In commercial matters, Ali announced Guyana‚Äôs intention to deepen its July 2018 participation in the China‚Äôs¬†Belt and Road Initiative¬†by¬†negotiating signing of China‚Äôs ‚ÄúBRI Cooperation plan,‚ÄĚ including linking¬†Guyana‚Äôs 2030 development strategy to BRI.¬† Ali also committed to the establishment of a¬†Guyana-PRC ‚ÄúInvestment and Economic Cooperation Working Group‚ÄĚ for advancing Chinese projects in the country, and agreed to¬†expand educational cooperation¬†beyond the Confucius Institute¬†already at the University of Guyana.

Prior PRC-Guyana Engagement
The discovery and development of over 25 billion barrels of recoverable oil in Guyana’s territorial waters by an Exxon-Mobil led consortium fueled GDP growth of more than 25% per year, and brought a flood of new resources from both the oil sector and outside investors.

Even before Guyana‚Äôs oil windfall, which brought China National Offshore Oil Company (CNOOC) as a 25% partner in the Exxon-led consortium, the PRC was already deeply engaged in Guyana, including a ‚Äúsouth-south‚ÄĚ cooperative ties symbolized by PRC construction of a brick factory in 1972 in the then newly independent Republic.¬† Key Chinese in Guyana when the currently governing People‚Äôs Progressive Party (PPP) was last in power, include Bosai Minerals Group, which acquired a bauxite mine near Linden, Guyana in 2007, and later expanded to manganese mining operations; China Railway Road, which was once positioned to build the 165 MW Amaila Falls hydroelectric power plant before the project was derailed in 2013 by the withdrawal of the system integrator Sithe Global; China Harbour Engineering Corporation (CHEC), which initiated a major upgraded to the Cheddi Jagan International Airport; the Beijing Construction Group, which built the Georgetown Mariott hotel; Huawei, which was contracted in 2017 to build a national broadband system and install 100 surveillance cameras throughout Georgetown, and China National Electronics Import and Export Corporation (CEIEC), which played a role in the country‚Äôs electricity system and the ill-fated Skeldon Sugar Plant.

Key China-connected businesses in Guyana today, including Eddie Boyer’s National Hardware, Jason Wong’s China Trading, and Che Jian Ping’s New Thriving restaurant, have all been active in the country since the last time the PPPC was in office.

In the security sector, the PRC long made donations to Guyana’s security services, giving a Y-12 military transport aircraft to the Guyana Defense Force, followed by 31 vehicles and other items donated in 2017.  That same year, the PRC gifted $2.6 million in police cars, motorcycles and other equipment to the Guyana Police Service.
The New Wave of Chinese Engagement
Although the PRC has emphasized the growth in trade with Guyana, the latter’s new oil affluence has thus far been in reflected more in purchases from the PRC than sales to it.  According to the International Monetary Fund (IMF) Guyana’s $17 million in exports to the PRC in 2022 were actually $4 billion lower than in 2019, the year before its petroleum began coming online.  Its imports from the PRC during that time, however, almost doubled from $218 million in 2019 to $372 million in 2022.

In October 2022, the PRC and Guyana signed an air services agreement paving the way for direct air flights by Chinese airlines to Guyana.
The most visible expansion of the PRC footprint in Guyana has been the projects its companies have won as Guyana has built out its commercial and public infrastructure.

In the construction sector, CHEC has become a dominant player, with a $100 million expansion of Guyana’s legacy Pegasus hotel, plus construction of a second Mariott property near Guyana’s airport, among other properties it has built. In May 2022, CHEC was further selected to build the $260 million, 2.65 kilometer long Demerara floating river bridge linking East and West Demerara, with work beginning in May 2023. CHEC has even been contracted to conduct mining work in the country.

In 2022, another PRC-based conglomerate long in the country, China Railway First Group, won a $184 million contract for expansion of the East Coast of Demerara rail and road system.  The company was also selected to build a resurrected $700 million version of the Amaila Falls hydroelectric plant, although in 2022 the Guyanese government terminated its contract due to its inability to fulfill contractual commitments.

Looking to the future, the Ali government has also been in negotiations with the PRC to fund as much as $600 million in various road projects, mostly near Georgetown.

Beyond road infrastructure, the Chinese are also interested in renewable energy projects, including the proposed Hope Beach wind and solar project on the East Bank of the Demerara River.  In addition, China State Construction and Engineering (CSCE) and China Dailan have looked at building a deepwater port in Berbice, in the east of the country, where facilities to support the petroleum sector have been built by the Canadian firm CGX.

In the oil sector, Chinese investment has been minimal beyond participation by CNOOC in the Exxon-led coalition developing the Stabroek block.  Still, the Ali government has invited PRC-based oil companies to play a role in 14 new petroleum blocks to be auctioned.  In the telecommunications and surveillance sectors, Huawei has established a dominant position in the country.  The Ali government has contracted it to expand its surveillance systems in Georgetown into a nationwide surveillance architecture, beginning with Guyana’s regions three and six, raising issues of data security and privacy for individual Guyanese.

At the government level, the PRC Ambassador to Guyana Guo Haiyan, has actively sought to build relations with Guyanese, including funding a ‚ÄúChina-Guyana Friendship Park‚ÄĚ on the West Bank of the Demerara River.¬† The PRC has also¬†expanded its training of Guyanese doctors¬†through the Chinese ‚Äúmedical aid teams,‚ÄĚ present intermittently in the country¬†for 30 years.¬† In April 2023, the PRC donated¬†$60 million in medical equipment¬†to Guyana.

The US and the Path Forward
In the context of the new wave of PRC engagement with Guyana, the US must continue to respect the government’s right to work with who it wishes in pursuit of its development.  Still, Washington should be sensitive to the deeply rooted Chinese ties in Guyana, which run through its businesspersons, the Chinese-Guyanese community, and political party structures.  Specifically, as China leverages those relationships to play an outside role in Guyana’s expanding economy, the US must be alert to the potential of those ties to steer the country’s priorities in a direction divergent from those of Washington.

The US-friendly Ali government does not seek to ‚Äúmake a choice‚ÄĚ between the US and the PRC.¬† Nor is the US in a position to ‚Äúoutbid‚ÄĚ China‚Ķalthough the important US-based Guyanese diaspora and the enormous if indirect US role in Guyana‚Äôs oil sector are important bases for influence. The US has a strategic interest in working respectfully, yet attentively, with Guyana as its newfound oil wealth continues to transform it, to preserve the vitality of Guyana‚Äôs friendship with the US, even as it engages with the PRC and others as well.

The views expressed by the author are his own and do not necessarily represent his institution or the U.S. government.

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