CUBA-CHINA: Firm Friends and Excellent Business Partners

By Patricia Grogg --

HAVANA, Feb 20 (IPS) - Trade between Cuba and China is growing at a
breathtaking rate, and is the most visible expression of the close ties
between the two countries, which appear to have overcome past
differences and reached a high point in their relations.

The rise in commerce was further accelerated by the visit to Havana of
Chinese President Hu Jintao in November 2004. He was accompanied by a
delegation of 200 entrepreneurs and investors, avid for business to
further augment the fast-growing Chinese economy.

In the space of just one year, from October 2004 to October 2005,
bilateral trade increased from 551 million dollars to 775.3 million
dollars, moving the Asian giant up from fourth to second place among
Cuba's trading partners.

Venezuela continues to be Cuba's chief trading partner, selling this
Caribbean island nation 90,000 barrels of oil a day on favourable terms
of payment.

Trade with China is likely to climb quickly to the one billion dollar
level, and Cuban foreign trade experts call Beijing "the most dynamic
agent" in the economy of this socialist nation.

According to analysts, Cuba sees China as "a reliable, stable partner
that does not impose political conditions" on business deals.
Elsewhere, the international context is unfavourable to Cuba: relations
with the European Union are tense, and the United States has tightened
the trade embargo it put in place more than four decades ago.

China's support "is a big help in overcoming the economic crisis that
began in the 1990s, after the demise of the socialist bloc in eastern
Europe and the disintegration of the Soviet Union, but it is also a
decisive factor in propelling a return to the centrally planned
economy," a researcher, who preferred not to be named, told IPS.

In 2005, the government of Fidel Castro struck the latest blow against
reforms which were timid, but helped to keep the economy afloat after
the loss of Cuba's privileged relationship with Moscow in the 1990s. It
enacted a series of measures to recover state control of finances and
other strategic sectors.

"Our relations are based on mutual interest and devotion to peace, in
the context of cooperation and integration," Castro said on Feb. 16, at
the reception of another lot of Chinese-made buses which are intended
to improve intercity public transport services.

Castro announced that the purchase of 8,000 additional buses is being
negotiated with the mayor of Zhengzhou, in the eastern Chinese province
of Henan, where the Yutong factory is located. Other purchases for the
transport sector include railway engines and carriages.

Chinese exports to Cuba include domestic appliances, the machinery for
manufacturing bicycles, and equipment to modernise the country's
telecommunications, for a total cost of 200 million dollars.

Havana in turn exports sugar, nickel, tobacco, Biorat rat poison, the
medical drug interferon, high-technology medical equipment, vaccines
and shellfish.

So far, the two nations have entered into ten joint ventures, according
to the Ministry for Cooperation and Foreign Investment.

Official sources informed IPS that China has extended credit of 400
million dollars to pay for infrastructure and development exports.

Negotiations between the two countries are based on mutual advantage.
Beijing keeps politics out of business, in accordance with its market
economy, but insists on guarantees and strict fulfilment of contractual
obligations.

In this regard, Castro has ruled out any possible default on Cuba's
debts, not only with China but with other countries as well.

According to Castro's forecasts, Cuba will be able to pay off its debts
thanks to its "growing development," and to the energy savings he
expects from a massive plan to regulate domestic and industrial
consumption, which could amount to one billion dollars.

China's most important strategic investments are in nickel and oil, two
natural resources that are essential for its fast-growing economy.
According to specialists, these two resources are solid foundations for
developing long-lasting economic relations with Cuba.

The Chinese oil and gas corporation Sinopec, the second largest state
oil company and one of the top ten oil companies in the world, signed a
shared production agreement in January 2005 for prospecting and
exploiting crude oil, with the state Cubapetróleo company.

The prospecting area is on the coast of the western province of Pinar
del Río. Participation by the Asian giant in prospecting for oil in
Cuban waters in the Gulf of Mexico is also a possibility.

Investments of more than 500 million dollars are planned in Cuban
nickel, which is very important for the growth of Chinese steel
production. The island has one of the largest nickel reserves in the
world, and has agreed to sell China 4,400 tons a year.



Nickel-related investments are situated in two zones: the reserves in
the eastern province of Holguín, and an unexploited deposit in
Camagüey, also in the east.

The Chinese government views its ties with Cuba as part of its intense
and growing relationship with Latin America. Trade between China and
this region has increased at an annual rate of 42 percent for the last
five years.

Experts believe that Cuba is not only a growing participant in this
trend, but could become a platform where Beijing could establish
industrial parks - in fields like electronics and computers - within
easier reach of the Caribbean and Latin America. (END/2006)

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