Wednesday, July 25, 2012

The Business of Sino-Cuban Relations

The Business of Sino-Cuban Relations
By: Scott MacDonald | Wed, Jul 25, 2012

NEW YORK, NY (KWR) July 22, 2012 - There is a delightful story about
relations between the People's Republic of China and the government of
Fidel Castro in Cuba. According to then Chinese ambassador, Wang
Youping, on the evening of October 18th, 1964 at the close of the day,
the embassy's reception clerk rushed to his office to inform him that
Fidel Castro and Emilio Aragonés (a member of the Secretariat of the
Cuban Communist Party) had stopped by. The ambassador met Castro, who
smiled and told Wang: "Today is Sunday, and we would like to have
Chinese food." Wang revealed in his memoirs that it was not unusual in
the early to mid-1960s for Cuban leaders, such as Fidel, Raúl Castro and
Che Guevara, to come to the Chinese embassy without warning to enjoy
Chinese cuisine. In response, the Chinese kept their chefs on duty, with
half-cooked dishes in case of a visit. Moreover, the Chinese government
was to eventually send two cooks from the famous Beijing Quanjude Duck
Restaurant to the Chinese embassy in Havana due to Fidel Castro's
fondness for Beijing duck.

Sino-Cuban relations have come a long distance since Fidel's visits to
Beijing's Havana embassy to eat duck. While Cuba has remained an
economic throw-back to the Cold War ways of statist communism, China has
emerged as one of the world's economic superpowers. China is still led
by the communist party, but its economics are unmistakably
market-oriented and its major trade partner and one of its most
significant places to invest is the United States. Cuba does not have
formal relations with the U.S. and its economy is less-than-robust.
Indeed, Raúl Castro spent part of July seeking greater help from China
and Vietnam. In Cuba, private enterprise has been discouraged; in China,
millionaires have been allowed to join the communist party. China has
thrived on expanding trade and opening up to foreign investment; Cuba
has grudgingly and incrementally accepted trade and investment. In Cuba,
periodic ventures using market economics were killed by Fidel Castro.

Despite their differences, China has become a significant long-term
strategic partner for Cuba. China in the past several years has made a
sustained drive in Latin America and the Caribbean, something pushed
along by its need for natural resources and markets. Brazil, Colombia
and Chile have all been major beneficiaries of this development. China
has also been more active in the Caribbean, stepping up to build
stadiums in the Bahamas and Dominica, a power plant and cricket stadium
in Antigua and Barbuda and provide loans to Jamaica. China has also
indicated an interest in constructing a new track and field stadium in
Grenada. China's motives for its strategic arrangements in the Caribbean
are economic as well as part of a desire to reduce the handful of states
that still recognize Taiwan as the Republic of China. Beijing regards
Taiwan as a rebellious province.

Cuba remains an older relationship, with the shared experience of
authoritarian governments with a revolutionary past, partially based
upon anti-U.S. policies. China, however, has pursued a more pragmatic
path and its relations with the North American country are complicated,
nuanced and generally cordial, as well as based on solid economic
linkages. Cuba does provide China with a friendly base in the Caribbean.
While the Caribbean country, with its eleven million people, does not
offer a large and affluent market for Chinese goods, there is the
possibility of oil in offshore areas where Chinese companies are
involved in exploration efforts. Cuba also produces sugar and
ferronickel and it needs help in infrastructure, transportation and energy.

From a Cuban standpoint, greater help from China could be coming at a
critical time - Fidel Castro is passing from the picture and Havana's
main regional ally, Hugo Chávez, could be dead within the year from
cancer. Fidel's eventual death could result in a faster opening of the
Cuban economy, something the regime, now under his brother Raúl, would
rather have China benefit from than the U.S.

At the same time, Venezuela's promises to help Cuba further develop its
refining capacity have been disappointing. If Chávez dies, Venezuela's
political support for Cuba becomes questionable, especially if the
opposition comes to power. Under this light, China increasingly looks
like a better deal. Chávez promised in 2007 to help Cuba build or expand
its refining capacity; China's state-owned China National Petroleum
Corporation (CNPC) signed a deal in 2011 to upgrade Cuba's Cienfuegos
refinery for $4.5 billion. Considering China's track record of usually
following through with its promises, the development of the Cienfuegos
refinery and offshore exploration would certainly anchor China in the
Cuba that is slowly emerging from the Fidel Castro era.

Sino-Cuban relations are heading into a new phase, in which Chinese
economic interests in the Caribbean island are likely to grow. For
China, there are business reasons as well as geopolitical incentives.
While the U.S. has sought to contain Chinese influence in the South
China Sea, a region China regards as its own backyard, the buildup in
economic interests in Cuba puts China as a more active influence in a
region that the U.S. regards as its own backyard. Looking ahead, Cuba is
likely to increasingly play the Chinese card as the mortality of its
aging dictator and his Venezuelan protégé become more evident. In turn,
the Chinese could well be developing a stronger thirst for rum, lime and
coke (Cuba Libre). This could offer something to wash down Beijing duck,
all the while reminding the United States that the geopolitical game of
penetrating one's backyard is not a game limited to Washington.

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