Puerto Rico Hopes Chinese Tourism Will Bail them Out of Economic Doldrums
I’m a bit skeptical of this strategy, since the Chinese can invest (and they have) in non-bankrupt, non-high crime Caribbean states like the Bahamas, but I guess anything is better than a bailout from Washington:
Over the years, Puerto Rico has wooed visitors and investors with beaches, sun, tax breaks and splashy public works. Now the Caribbean island wants to add an outpost of Chinese culture, complete with graceful pavilions and regional cuisine.
The same territory that racked up more than $70 billion of debt has a new plan for spurring its long-suffering economy: have private investors build a $200 million China-themed center in Arecibo, on a former sugar-cane field about an hour outside San Juan. The investors, assembled by a Chinese law and development firm, plan to break ground in May and envision 39 structures to highlight foods, music and entertainment.
The plan, which must overcome both China’s new restrictions on foreign investment and the commonwealth’s checkered history of ambitious development, is part of a wider strategy to lure foreign money to a territory that defaulted and in May tumbled into bankruptcy. A decade-long recession has left the economy and infrastructure in dire condition, but years of excessive borrowing to fill budget gaps has shut the commonwealth out of the municipal-bond market.
“Puerto Rico really cannot at this point go to the market and issue bonds and borrow money for public investment,” said Manuel Laboy, the island’s secretary of economic development and commerce. “It has to be based on private investment.”
That backing doesn’t equal automatic success: The island needs more than a booming cultural park to reverse its slump. And Puerto Rico has a history of spending on jinxed projects. The Tren Urbano, a $2.25 billion commuter line that runs through San Juan, sells only a third of the rides that it needs and loses $50 million a year; an experimental nuclear plant operated only about four years before shutting down in 1968; and after years of development, the Port of the Americas in Ponce doesn’t operate enough business to repay about $226 million that it owes.