http://havanajournal.com/business/entry/china_now_a_major_investor_in_cuba/

HavanaJournal.com: Cuba Business

China now a major investor in Cuba

Posted December 28, 2005 by publisher in Cuba Business.
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BY FRANCES ROBLES | MiamiHerald.com

The 200 Chinese buses with comfy seats, tinted windows and air conditioning now roll along Cuban roadways beside vintage 1950s Ford jalopies.

They join pressure cookers, light bulbs, refrigerators, TV sets and bicycles in the deluge of Chinese products flooding the Cuban economy.

From the export of household appliances to promised investments in Cuba’s nickel and oil industries, China is rapidly becoming a big player in the island—its second largest trade partner as of September, up from fourth place in 2004, according to Cuban Foreign Trade Ministry figures.

Just last week, Deputy Foreign Minister Rafael Dausá put the total bilateral trade for this year at $1 billion in announcing the future opening of a Cuban consulate in Guandong to support Chinese trade and investment in Cuba.

It’s a relationship driven more by simple economics than any shared communist ideology, experts say, comparing it to a marriage of convenience in which each newlywed benefits.

Still struggling to rebound from the breakup of the Soviet Union 14 years ago and the subsidies that came from it, Cuba has found new economic powerhouses to rely on. While Venezuela remains Cuba’s most generous economic partner—selling it up to 80,000 barrels of oil a day on easy financial terms—China-Cuba trade has soared from the $524 million that the Cuban government reported last year.

Although most of the total was Chinese exports to Cuba, Beijing also announced several projects for massive investments in key Cuban sectors that can help Chinese industries continue fueling the country’s boom.

‘‘We have never had so many and such important projects,’’ Cuban Foreign Investment Minister Marta Loma said last year.

Among the key deals:

• A month after Cuban leader Fidel Castro announced an oil discovery off Cuban waters early this year, the government signed a production-sharing agreement with Sinopec, China’s second-largest state oil company.

The deal involves drilling just a few dozen miles from Key West.

• After a 12-day tour of Latin America last year, Chinese president Hu Jintao announced his country would invest more than $500 million in Cuba’s nickel industry. Cuba, which holds one of the world’s largest nickel reserves, agreed to send 4,400 tons a year to China.

• The deal also included a 10-year postponement of payments on the debt to China that Cuba incurred between 1990 and 1994.

• China will sell 1,000 of the Yutong-brand buses to Cuba on easy credit terms, and has already delivered about 200, according to Cuban government announcements.

WORTH WATCHING

Cuba specialists say the Beijing-Havana relationship is worth watching.

‘It’s not that the Chinese woke up one day and said, `How can we do Cuba a favor?’ ‘’ said Philip Peters, a Cuba analyst at the Lexington Institute in Virginia. ‘They looked at a map and said, `Where is the nickel?’ ‘’

In a recent visit to Washington, D.C., Cheng Siwei, vice president of China’s Permanent Committee of the National Popular Assembly of China, said the deals with Cuba are part of China’s growing relationship with Latin America.

In the past five years, China’s trade with Latin America has grown at 42 percent annually, reaching nearly $22 billion last year.

`BUSINESS IS BUSINESS’

‘‘Cuba is not the largest customer with China,’’ said Cheng, who presides over an association that promotes friendship between China and Latin America. “Don’t be sensitive. This is a normal development. Our biggest trading partner is Brazil. I think in ideology maybe in some sense we are more close, but that is different from trade . . . Business is business.’‘

Some experts caution that many of the Cuba-China deals announced with much fanfare so far amount to little more than words. Chinese diplomats in Havana declined comment when contacted by telephone by The Miami Herald.

Tim Ashby, a former U.S. Commerce Department official who follows Cuba, said many of the big Cuba-China business announcements frequently involve little cash. And often, he added, the millions in U.S. dollars announced for deals are actually for Chinese trade credits or construction equipment.

SECURITY CONCERNS

There’s a security component to Beijing’s interest in Cuba, other analysts said.

A Chinese electronic eavesdropping facility in Bejucal, south of Havana, contains a cyber warfare unit that monitors some U.S. computer data traffic and a complex of antennaes mainly focused on intercepting U.S. telephone communications, University of Miami professor June Teufel Dreyer, a member of the U.S.-China Economic and Security Review Commission, has testified before Congress.

Such close cooperation is a big step for Beijing and Havana, which maintained cool relations for decades because of Cuba’s ties to the Soviet Union when Moscow saw China as its main rival in the communist world. Castro first visited China in 1995 and was there two years ago.

Now, while both countries have mentioned ideology when explaining their newfound closeness, experts widely agree that for the Chinese, it’s all business.

‘‘The Cubans see it as socialist solidarity,’’ said Daniel Erikson, a Cuba expert at the InterAmerican Dialogue think tank in Washington. “The Chinese are looking for return on their investment.’‘

Miami Herald staff writer Pablo Bachelet contributed to this report.

Member Comments

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On December 29, 2005, Chuck Bailey wrote:

Is China going to use the electronic surveilance equipment that Russia had been using or are they bringing in new ? Russia just called home the last 200 people watching U.S. since the missile crisis. 30 + years ago. Why should Russia have any more claim on assets in Cuba for sending them military equipment,then U.S.or Cuban refugees who didn’t stay and fight 50 years ago.