Worrell: Import more from China

One senior economist wants to see Barbados and the rest of the region importing more products made in China.

Former Central Bank Governor Dr DeLisle Worrell put forward the idea in his newsletter this month, saying such a move would be financially beneficial because of the affordability of Chinese products.

In fact, Worrell said regional economies could import between six and ten per cent more than if they bought from less affordable, non-Chinese sources.

“The main benefit that small economies in the Caribbean derive from commerce with China comes via imports,” he said.

“The logic of the geography of the Caribbean dictates that the region should export and sell services, including tourism, mainly to the Americas and Europe. We should use the foreign currency earned from those markets to import products made in China, which are more affordable than goods and services of comparable quality sourced from traditional suppliers.

“The Caribbean’s balance on current transactions with China will continue to be in deficit for the foreseeable future, and that is a very good thing,” he added.

It is not clear what percentage of goods are currently imported from China to Barbados or the Caribbean, and there is often debate about the longevity of Chinese-made products.

However, Worrell argued that items made in China could offer better value for money.

“That benefit derives from the fact that Chinese productivity has increased faster than the world average. As a result, Chinese-made products offer better value for money and the consumer’s dollar goes further. The more Chinese products and services we use, the better off we are, for any given amount of income and spending,” the economist argued.

He said the fact that the Caribbean produced “very little” that competes with products made in the East Asian country, “if we hadn’t imported Chinese products, we would have had to buy more expensive items of comparable quality made elsewhere”.

“We would not have been able to import as much as we did,” he said.

The economist said that, as it stands, Caribbean exports to China and Chinese visitors to the Caribbean were so limited that their contribution to foreign currency inflows was hardly noticeable.

“What is more, the payoff that can be expected from efforts to increase exports to China, or to attract tourists from that country, is not substantial,” he said.

Worrell suggested, therefore, that the region continue to look to traditional source markets for tourists while looking to ramp up the trading of goods with China.

Stating that there was no shortage of demand from traditional tourism source markets, Worrell said the region was still able to fill hotels and “sell everything we produce in those markets as long as we match the US dollar prices of goods and services of comparable quality”.

“Producers from the small countries of the Caribbean have access to markets of unlimited size in Europe and the Americas, markets which are near at hand,” he said.

“There is every reason that the Caribbean should seek customers in China for its quality rums, luxury resorts and other exclusive and niche products. But we need not go after middle-income Asian tourists when we have such very large untapped markets in North America, Latin America and Europe.”

Worrell argued that what was limiting the region’s foreign exchange earnings was not a shortage of customers but “limited capacity, inappropriate pricing, inadequate marketing, and failure to offer value for money”. (MM)