Chinese Investment in Puerto Rico

In 2017, Chinese press reported that a Chinese legal firm had gathered investors to create a China-themed resort in Puerto Rico.  Bloomberg further announced that it was a $200 million initiative. The plan envisioned 39 structures made with Chinese style architecture and highlighting Chinese food, music and entertainment. Construction was planned to begin in May of 2018.

Manuel Laboy, the island’s secretary of economic development and commerce at the time, said that “Puerto Rico really cannot at this point go to the market and issue bonds and borrow money for public investment.”  He added that Puerto Rico growth “has to be based on private investment.”

It is unclear why the development never occurred, although Hurricane Maria struck on September 20, 2017, soon after the article ran.

Subsequent reporting in February of 2018 nonetheless quoted Brian Su, President of Yingke Caribbean China Center, in praise of Puerto Rico for its investment opportunities.

“There is no better time to be in Puerto Rico. It is not only because of the tax incentives but because of the beauty of the country, its people, the tremendous business opportunities. In China we say, there are no opportunities without risk,” Su explained.

In 2017, the government of Puerto Rico held a conference for Chinese investors.Then-Governor. Ricardo Rosselló described the event as part of his efforts to show that “Puerto Rico is open for business.” He and others in his administration pointed out that China was poised to extend their influence in the Caribbean, and that Puerto Rico could be part of that market.

China has invested in many Caribbean nations over the past decade. China has also worked to persuade several Caribbean nations to shift their diplomatic relations from Taipei to Beijing.

China has offered attractive loans to nations like Jamaica, and some of these deals have worked out very well for China. The U.S. Agency for International Development describes it as “predatory financing.” Other experts point out that easy Chinese financing sometimes favors Chinese workers and Chinese exports in ways that may not be easy to identify ahead of time.

Puerto Rico, as a territory of the United States, cannot make diplomatic or trade deals with foreign governments. A recent offer from an Island leader to bypass U.S. tariffs on Chinese goods came to nothing.

But Puerto Rico might also present unique opportunities to China. For example, an end to the application of the Jones Act could open up ship transport by Chinese vessels from Puerto Rico to other U.S. ports. China’s ship transport is heavily subsidized by the Chinese government, which has ambitious goals for global market dominance.

There are also U.S. visas reserved for foreign investors, a perk which Bloomberg identified as a draw for Chinese investors.

 

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