Chinese polity advantage and disadvantage
Answers
Advantages
Looking at it from a long-term perspective, it's the right decision. China is an important trading partner for our country, with trade between the two nations at around US$ 2500 million a year. The performance of Dominican exports to that market has been declining in the period 2013-2016, as can be seen below (data from UN COMTRADE, in millions of dollars).
A trade deficit with China persists, which in the period between 2013-2016 yielded the following balance (in millions of US$): -1,641,299, -1,887,798, -2,199,061 and -2,219,513, respectively.
It is important to handle these figures, since China has been increasing its presence in Latin America, especially in the Caribbean. In this region, we are an important piece, since we have Free Trade Agreements with the United States (DR-CAFTA) and with Europe (EPA), which allows access to these markets under preferential conditions. As the AIRD has expressed it well:
"For the Dominican Republic these relations with China are very important because at this moment it can easily become an intermediary point in Chinese manufacturing towards the American market.
Another plus of this union is the potential for investment and tourism. Here is an excerpt from the government's official statement:
"More than 135 million Chinese tourists visit international destinations every year and the establishment of these diplomatic relations will allow part of that tourism to flow to our country in the near future.
I believe that local tourism will benefit as Chinese investments in this sector increase. The Chinese tourist, on the other hand, is another story. China's astonishing economic growth and development over the past three decades has allowed the emergence of a wealthy middle class, with purchasing power, tastes and consumer preferences similar to the booming Asian economies. This is a cosmopolitan tourist, whose main destinations are: Tokyo, Paris, Rome, Los Angeles, Sydney, London, Venice, Washington, New York, Florence and Frankfurt (World Federation of Tourist Cities, 2016).
Disadvantages
From the outset, the main blow is suffered by the cooperation and technical programs coming from Taiwan. Almost simultaneously with the signing of the Agreement between China and the DR, Taiwan announced that:
"The Government decided, with immediate effect, to interrupt diplomatic relations with the Dominican Republic, the total cessation of bilateral cooperation and the program of assistance and technical groups, and to evacuate embassy personnel.
We could not expect less, after a relationship of more than seven decades in which Taiwan has contributed on a wide variety of topics, including study grants, technical assistance for agricultural production, as well as funds for special programs, among others. This will force us to look for new sources of financing, in a context in which aid and international cooperation are reduced, as the DR is among the countries with high human development. Unless these components have been included in the package negotiated with China, many programs would run out of resources to continue. See full communiqué of the Taiwan Embassy in DR here.
The Bilateral Investment Agreement between the DR and Taiwan is another component that will disappear, very surely denounced by Taiwan itself. In any case, it was an instrument that served more to reaffirm diplomatic and friendship ties than to encourage mutual investment. Today, there is no significant investment from Taiwan. China will probably emulate it with its own Investment Agreement, which would be in our interest. But what we should avoid for the time being is an FTA with China, at least until our trade position with them improves.
In another order of ideas, it is also necessary to consider the geopolitical consequences and incidences that a greater rapprochement with China entails. The first thing we must bear in mind is that the context and environment is currently marked by the trade war between the United States and China. In a previous issue I analysed the conflict and its possible impact on us. It is good to bring up the country-position suggestions I made at that time:
"With China: Seek a "soft" approach that allows us to strengthen trade and investment ties without causing distrust from the U.S. or Taiwan (which is another element in the equation). China has just opened a company (precisely aluminum) with an investment that exceeds RD$ 500 million and 1,420 direct jobs. Both they and we know the advantages of investing in DR, with preferential access to European and US markets. DR-CAFTA facilitates access to the US market and prevents products from being attacked by protectionist measures. So we will see
Explanation:
Chinese polity advantages and disadvantages