US embassy cable - 05KINGSTON1757

UNCLAS SECTION 01 OF 02 KINGSTON 001757 
 
SIPDIS 
 
STATE FOR WHA/CAR/ (WBENT), WHA/EPSC (JSLATTERY) 
 
SANTO DOMINGO FOR FCS AND FAS 
 
TREASURY FOR L LAMONICA 
 
E.O. 12958:  NA 
TAGS: ECON, EFIN, JM 
SUBJECT: JAMAICA STRENGTHENS ECONOMIC TIES WITH CHINA 
 
REF:  KINGSTON 386 
 
1. Summary:  Recognizing China's emergence as an economic 
powerhouse and the attendant benefits to be derived, the 
GOJ led by Prime Minister PJ Patterson has moved to forge 
closer and stronger ties with the Government of China. 
The fledgling economic relationship between both countries 
received a fillip in February when a delegation of Chinese 
government and business officials visited Jamaica, 
culminating in the island receiving approved destination 
status.  The economic ties were further strengthened in 
June when Patterson signed four bilateral agreements 
covering bauxite, education and technical cooperation 
during an official visit to China.  These agreements 
should augur well for Jamaica's economic development, 
particularly at a time when the country is losing its 
preferential trade arrangements.  End summary. 
 
2.  Although diplomatic and economic ties between Jamaica 
and China date back to 1972, there has only been a 
mushrooming of the economic relationship between both 
countries in 2005.  This is not surprising given that 
Jamaica's preferential trading arrangements have been 
coming under immense pressure, while China has been trying 
to extend its sphere of influence.  In February 2005, a 
Chinese delegation of government and business officials 
visited Jamaica for a four-day Trade Fair, the highlight 
of which was the granting of approved destination status 
to the island (REFTEL).  With outbound Chinese visitors 
reaching almost 30 million in 2004, Jamaica can expect to 
grow its share of Chinese visitors by the end of 2005. 
Numbers apart though, Chinese visitors are important to 
Jamaica's tourism because of their long length of stay. 
Jamaica and China also signed twelve bilateral agreements 
during the trade fair.  Buoyed by China's show of interest 
in Jamaica, the GOJ appointed its first resident 
ambassador to the People's Republic of China in April 
2005.  Seeking to capitalize on the country's renewed 
relationship with China, Prime Minister PJ Patterson, who 
currently chairs the Group of 77 of which China is a 
strategic member, made an official visit to China from 
June 19 to 24.  Patterson and Chinese President Hu Jintao 
signed four bilateral agreements covering bauxite, 
education and technical cooperation. 
 
3.  With Chinese demand for high priced aluminum on the 
increase, China Minmetals Corporation agreed to pursue the 
feasibility of establishing a bauxite and alumina refinery 
in Jamaica.  Due diligence and site visit for the 1.4 
million ton per annum refinery has already taken place. 
The GOJ-led delegation also signed a memorandum of 
understanding (MOU) with China to undertake the 
development of professional skills in various fields of 
education, technical assistance for Chinese training and 
to facilitate cooperation between institutions of higher 
learning in both countries.  The GOJ was also granted USD 
1.3 million in aid to be used for the implementation of 
economic and technical projects.  In a follow up to 
February's MOU, a Chinese delegation is set to visit 
Jamaica in July for further talks on the restoration of 
the rail service.  The team is expected to assess the 
routes from a technical and engineering point of view and 
determine a date for the possible resumption of service. 
Under the agreement China would provide passenger coaches, 
including cargo wagons and locomotives. 
 
4.  Patterson also held discussions with Chinese 
entrepreneurs on the redevelopment of a Chinatown in 
Kingston.  To this end, someone will be sent to work with 
Jamaica's Urban Development Corporation to see how the 
China Town concept could fit into the redevelopment of 
downtown Kingston.  Patterson also used the opportunity to 
woo Chinese investors, by highlighting a number of 
positives in Jamaica.  He pointed to Jamaica's stable 
economic climate as reflected in rising NIR, a stable 
currency and positive ratings by international rating 
agencies, which have culminated in increased foreign 
direct investment.  In citing Jamaica as the ICT center 
for the Caribbean, he stated that telecoms liberalization 
has opened the way for access to services such as 
broadband and Internet and fixed voice telephony.  He said 
the expansion of the island's port facilities through a 
partnership with the Port Authority of Jamaica and China 
Ocean Shipping Group Company would establish Jamaica as a 
distribution hub for the export of Chinese goods to the 
Americas.  Patterson also marketed a number of investment 
opportunities, chief among them the Highway 2000 project 
and a convention center in Montego Bay.  The Chinese 
government has already agreed to provide concessionary 
financing for the construction of the convention center 
and a multi-purpose stadium in the western end of the 
island. 
 
5.  Comment:  The visit of a Chinese delegation in 
February and more importantly the recent visit of 
Patterson to China could bring tangible economic benefits 
to Jamaica in the medium to long term.  In particular, the 
island should benefit from China's ever increasing demand 
for aluminum, food and tourism services.  Jamaica's 
already buoyant tourism industry should receive a further 
boost from the influx of Chinese visitors, with 
preliminary figures showing a jump in visitors from China 
since the approval of destination status.  If the Chinese 
interest in reviving Jamaica's moribund railway service 
should bear fruit it would also bring immense economic and 
social benefits to the country by way of cheaper 
transportation and reduced traffic congestion.  The 
possible establishment of a Chinatown would also provide a 
much-needed fillip for the stalled urban renewal effort. 
These developments should help to temper some of the 
dislocation expected from the dismantling of the island's 
preferential arrangements.  End comment. 
 
TIGHE