China: Cuba’s latest benefactor

Ever since its founding as a communist nation in 1959, Cuba has been economically dependent on allied nations. First came the Soviet Union (USSR), then Venezuela, and now it has a new benefactor – China.

The main driver of this new alliance is the crisis in Venezuela that has left the island drastically short of crude oil. Trade between the two countries is down 70% since Venezuela’s crisis began, according to the Cuban National Statistics Office (ONEI).

In 2017, the last year for which official statistics are available, Venezuela-Cuba trade was worth more than US$2.2 billion, equivalent to 12% of GDP that year. In the past two years, Havana has received less than half the 100,000 barrels of oil per day that Caracas exported from 2002 onwards.

With the dip in crude imports, the Cuban economy went into shock. Now, one of the Cuban government’s main priorities is to strengthen bilateral ties with China, a task for president-elect Miguel Díaz-Canel.

Díaz-Canel: a symbolic Cuban president

Cuba’s unicameral national assembly elected Díaz-Canel as president in early October, enabled by February’s constitutional reform. The new president visited Beijing November of last year to follow up on economic accords signed in recent years.

China’s Xi Jinping recently wrote to counterpart Raúl Castro, who is still the first secretary of the Communist Party, the highest public office in Cuba: “I have the willingness to maintain close communications with you as together we write a new chapter of Chinese-Cuban friendship in the new era.”

Castro also presides over the council of ministers, meaning the election of Díaz-Canel is more symbolic and does not imply a change to one-party rule.

“I sincerely vote for the ceaseless progress of the Cuban Communist Party, the prosperity of the Republic of Cuba and the eternal friendship between both countries and parties,” Xi added.

China and Cuba: a historic relationship

In 1960, 11 years after the birth of the People’s Republic of China, Cuba became the first nation in Latin America and the Caribbean with which it established diplomatic ties.

In recent years, the relationship has strengthened through China’s Belt and Road Initiative (BRI), a network of Chinese-financed maritime and land infrastructure and communications projects aimed at facilitating trade between China and the world.

Cuba opted to join the BRI in 2019, hoping it would be a boon to its troubled economy.

China already became Cuba’s main trading partner in 2017. That year, the two countries exchanged around US$1.8 billion worth of goods. Cuba imported US$1.35 billion, mostly electrical products, and exported $379 million, with raw sugar and nickel accounting for the majority.

“We hope to get involved in this project in the most committed way possible, and that this means the Chinese business sector participates more actively in the process of updating our economic model,” Orlando Hernández, president of Cuba’s Chamber of Commerce, said of the BRI.

Cuba provides its archipelago to be [China’s] command post in the Americas

Bruno Rodríguez Parrilla, Cuba’s foreign minister, has reiterated that Chinese policies on trade and investment in Latin America are “highly appreciated” because they are “respectful of international law, and the independence and sovereignty of countries”.

Gladys Bejerano, vice president of the State Council who represented Cuba at the Silk Road forum on transparency, part of April’s second Forum on the Belt and Road Initiative, said she will help the initiative “grow robust, with efficiency, transparency and ethical honesty”.

While Cuba will be the one who derives the most notable benefits from this relationship, China will have access to an “open door to our economy and find additional business opportunities,” said Foreign Minister Rodríguez Parrila.

Mutual benefits

China intends to take advantage of Cuba’s development in biomedicines. Several Chinese companies specialising in biopharmaceutics and renewable energy have begun settling in the Mariel Special Development Zone, a budding investment hub.

“Cuba has advantages over other nations in the region in that area and we want to expand ties,” said Ren Zhiwu, deputy secretary general of China’s National Development and Reform Commission, its top planning body.

Several joint projects are already underway. These include the transition from analogue to digital television and the expansion of mobile broadband, led by Chinese telecommunications giant Huawei, and the creation of an artificial intelligence centre.

Last summer, Beijing donated Chinese-made trains to Cuba as a means of solving the problem of interprovincial transport on the island.

Oil drilling company Gran Muralla (Great Wall) also helps Cuba’s national Cupet explore deposits in shallow waters, a task that, without Chinese technology and expertise, had proved impossible.

China’s foothold on the island

In 2011, China wrote off US$6 billion of Cuba’s debt. Esteban Morales, a political scientist, said “this cancellation has more weight in the relationship of both governments than even the political ideology they enact.”

The gesture is not insignificant. In the last 18 years, only a handful of countries outside Sub-Saharan Africa have been relieved of debt.

According to the World Bank, the cancellation of debts to developing countries brings short-term benefits, but maintaining sustainable levels requires sustained economic growth, access to markets and diversified exports, which Cuba still lacks.

Raul Brito, an economist, said China’s gesture to Cuba has a geopolitical benefit:

“China helps Cuba out of its economic crisis with some subsidies and Cuba provides its archipelago to be its command post in the Americas.”

Correction: The original version of this article wrote that Díaz-Canel would visit China this week. That trip occurred last year.