Economy

China's Long-Game Strategy For The Caribbean Sea

The U.S. has long enjoyed hegemony over the 2.7-million sq km Caribbean basin. But whether Washington likes it or not, Beijing is showing that it too wants a piece of the pie.

In the Caribbean Sea, a geostrategic move for China
In the Caribbean Sea, a geostrategic move for China
María del Pilar Ostos Cetina

-Analysis-

MEXICO CITY — China's geostrategic expansion toward the Caribbean Sea says a lot about the deeper interests feeding tensions between the world's biggest players. We see, most notably, how the United States, the hegemonic power of our region, is squared off against China and the Russian Federation, two emerging powers determined to challenge U.S. preeminence in the Caribbean and thus redraw the map of regional geopolitics in the early 21st century.

"In our infancy, we bordered upon the Atlantic only; our youth carried our boundary to the Gulf of Mexico; today, maturity sees us upon the Pacific," U.S. strategist Alfred Thayer Mahan wrote in 1890. Nearly 130 years later, his statement remains relevant, and imperial disputes over distant possessions or islands are still crucial to U.S. foreign and defense policies.

China's ascent through strategic alliances has not, therefore, gone unnoticed in Washington. One such alliance is with Russia, in the framework of the Shanghai Cooperation Organization. If this were to prove resilient, it could become a veritable obstacle to America's expansion-and-control plans worldwide. It would force the United States to boost spending and investments at strategic points in the world, including the Caribbean, where it will want to maintain an active presence.

In this context, China's ascent is renewing the importance of the Caribbean and may turn it into an authentic, geopolitical pivot within the century.

A paradise of strategic importance — Photo: Pablo García Saldaña

Chinese interests regionally revolve around a number of countries and islands bordering the 2.7-million square kilometer basin. This stretch of sea linked to the Atlantic includes territories administered by the European Union, such as Martinique, Guadeloupe, or French Guyana, as well as islands considered tax havens. In the cases of the Dominican Republic and Costa Rica, their geostrategic value lies in their farming and food production, while Trinidad and Tobago, Cuba, and Venezuela are important for oil and gas.

China's ascent is renewing the importance of the Caribbean and may turn it into an authentic, geopolitical pivot within the century.

In addition to the sea's vast natural resources, the Chinese also have their eyes on several small islands and states with votes in the United Nations. Closer ties with those islands could help boost Beijing's global influence. The Caribbean is therefore again becoming a focus and corridor of human activities, as seas like the Mediterranean were throughout history. It illustrates the mobile nature of geopolitical axes over time, in keeping with the shifting rivalries of major powers and the directions in which they project their strength and aspirations.

In this context, it's worth considering the position of Mexico as a country adjacent to the United States and located at the very heart of the basin. Its geographical position, proximity to the United States, and colonial past could give it a pivotal role along both the North-South and East-West axes, although, this time around, we shouldn't expect to see galleons on the horizon like in the days of Hernán Cortés, as China is envisaging other ways of sailing to this side of the world.

China has already "landed," for example, in Panama, where the government broke ties with Taiwan and recognized the People's Republic as the "Chinese government." The result, needless to say, was closer Chinese-Panamanian relations. Expect more such moves as China seeks to expand its presence and influence in the so-called "American Mediterranean."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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