The Organization for Responsible Governance (ORG) warned that the government must be cautiously aware of the number of Bahamian assets that the Chinese government, their various agencies and offshore companies, own.
The ORG said that The Bahamas should not put all of its "eggs into one basket".
The Chinese have key investments in The Bahamas. Besides the $3.5 billion Baha Mar megaresort, there is also the national stadium, the construction of 'The Pointe' and the purchase of the downtown British Colonial Hilton.
"China, like any other respectful foreign direct investor, should be welcomed to invest responsibly in our economy and development.
"However, it is imperative that any and all foreign investors in key industries maintain assets and operations at a high level and that these operations remain regionally and globally competitive in these industries," said the ORG.
The authors of a recent Inter-American Development Bank (IDB) report said The Bahamas and other Caribbean countries engaged in doing business with China should seek to enhance their bargaining positions, and at the same time be aware of potential trade offs.
The report stated that although financing from China is an alternative and flexible source for Caribbean countries, it tends to have "strings attached".
In the ORG's opinion, many assets in The Bahamas which are owned by Chinese government-driven entities, such as hotels, shipping ports, airports, terminals and real estate developments, are performing at sub-par levels which ultimately has a negative effect on the Bahamian GDP.
"In theory, Chinese government-driven entities could lower their rates to drive out competing businesses, making it virtually impossible for a privately owned company, from a free market nation to compete.
"The long term success of the Bahamian economy is dependent upon a strong and competitive environment for local businesses to exist alongside foreign development projects," said the ORG.
The IDB report also said that Chinese multinational companies (MNCs) have been criticized in several countries for not hiring local labor, and that some Chinese firms have been accused of being more lax in complying with environmental regulations.
The ORG stressed the importance of having control over foreign investments.
"Most developed nations have control over the number of assets being held by any one group through trade commissions.
"This is of great importance to ensure that its citizens are protected against unfair or underhanded dealings.
"Given its non-democratic structure, China and its offshore companies can act as one goliath company," said the ORG.
Xian Smith, Guardian Business Reporter
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