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How a Chinese Billionaire Got Invested in Nicaragua's Canal Plan
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Summary:
The idea of a canal across Nicaragua, easing transit flows between the Pacific and the Atlantic, is as old as the country itself. But despite numerous surveys and plans across the centuries, no Nicaraguan canal has ever been shown to be economically viable for the investors. The United States, European and numerous Asian countries and companies have explored both “wet” and “dry” canals — the latter utilize rail between ports on both sides of the isthmus.
Lately a Chinese businessman has been exploring the idea. His efforts have raised similar questions to previous attempts: Is a canal in Nicaragua economically sound, environmentally responsible or even necessary, particularly given the near completion of the widening of the Panama Canal? The answers are mixed and often depend who is doing the assessment and from what perspective. The man behind the attempt, Wang Jing, may no longer be sure of the answers himself.
Analysis:
Questions aside, the Nicaraguan government has approved the plans and is promoting the construction and affiliated investment. As the man at the forefront of the operation, Wang is preparing not only to have the canal dug (and managed) but also to build the affiliated infrastructure — port expansion and telecommunications projects as well as tourism and real estate deals along the canal route. Money is already flowing, environmental studies are underway, Western public relations and accounting firms have been hired, and early assessments and visits are being made to determine the cost and difficulty of buying up land along the route, often meeting opposition from locals. All the while, the cost estimates for the canal construction continue to rise; they are currently at upward of $50 billion and by some estimates are likely to reach $100 billion.
Money spent upfront on surveys and even early moves to purchase land do not mean the canal will be completed, just as the economic and environmental obstacles do not necessarily mean the canal will stall out before completion. The world is littered with hero projects that, in retrospect, perhaps would have been better left unbuilt or at least proved more costly for their investors than anticipated. But the construction and plans have raised numerous questions about who is really behind the canal project.
The Investor
Wang Jing, chairman and CEO of the Hong Kong Nicaraguan Canal Development Group (HKND), which has the contract to build, develop and manage the Nicaraguan canal, is one of China’s richest men, worth some $6.6 billion according to Forbes. He has been involved in telecommunications and mineral operations, though by most accounts he owes his fortune more to good luck and timing than through connections with Beijing.
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