for Cuba - the Chinese Are Coming
by Tom Whitney
Two socialist nations intent upon expanding their productive capacities
recently arrived at agreements that portend a future of expanding trade relationships
and cooperation over a range of mutually beneficial endeavors. Cuba is seeking
out alternatives to dependency on the capitalist global economy and ways to
lessen the impact of the U.S. economic blockade. China fills the bill.
The Chinese contingent was nearing the end of a two- week Latin American
tour that had already yielded trade accords with Brazil, Argentina, and Chile.
Hu Jintao and his entourage participated in the Asia-Pacific Economic Cooperation
Forum held in Santiago, Chile.
In mid November, Chinese President Hu Jintao and a delegation of 200 Chinese
businesspersons took part in the first Cuba – China Investment and Trade Forum
in Havana. Ministerial and trade representatives of both nations signed 16
agreements covering Chinese investments, trade arrangements and credit, joint
ventures, and cooperative projects in non- trade areas.
Cuba pledged to supply China with 4000 tons of nickel each year through
2009. China will invest over $500 million to finish building a Soviet-abandoned
nickel plant in Eastern Cuba, and agreed to prospect for nickel throughout
the island. Cuba has large reserves of nickel, a metal essential for making
stainless steel, one in short supply throughout the world. For five years,
Cuba has supplied China with half of its nickel requirements. Interestingly
enough, for metal products to gain entry into the United States, they must
be certified as free of Cuban nickel.
The two nations agreed that China would manufacture refrigerators, washing
machines, and air conditioners in Cuba for the Cuban market. China will send
one million television sets to Cuba, donate supplies for Cuban hospitals and
cloth for school uniforms worth $12 million. Plans were announced for Chinese
lessons in Cuban schools and for university- level educational exchanges.
China granted Cuba a ten-year extension on repaying large interest-free loans.
The accords covered joint ventures in biotechnology, telecommunications,
light industry, and tourism. Trade with China already makes up 10% of Cuba’s
foreign exchange total and generated $600 million in the first nine months
of 2004, a 36% rise. China is now Cuba’s third largest trading partner - after
Venezuela and Spain.
The build-up of Chinese trade with Cuba is part of a campaign of expanded
trade relations throughout Latin America. Chinese state owned enterprises
(SOE) plan to invest over $10 billion in Argentine mining and transportation
operations. The Brazilian state oil company will sell to China, its third
biggest customer, 50,000 barrels of oil per day, and China will buy vast quantities
of Brazilian bauxite, iron, zinc, soy, and lumber. In 2004, Chinese SOE’s
put $1.04 billion into Latin American economies, 36.5% of all foreign direct
investment in the region. At the Santiago Forum, Hu and his colleagues predicted
$100 billion worth of investments in Latin American economies over the next
Venezuelan President Chavez made his third visit to China in late December.
Under eight bilateral agreements, China gained access to Venezuelan oil and
natural gas reserves, preferential terms for operating 15 oil fields, and
investment opportunities in new refineries. Venezuela committed itself to
shipping 120,000 barrels of oil per day to China.
A look at the prospect of China’s active trading role in Latin America
has the effect of shaking up a few stereotypes. The world’s head capitalist
and military chieftain, for example, may be losing out in its own back yard,
the Monroe Doctrine notwithstanding. And socialist nations are putting entrepreneurial
tools to good use - marketing, outreach, credit arrangements, and investment
planning. It appears too that international trade is useful for more than
just profiteering and national aggrandizement.
2005 is the 45th anniversary year of Cuba establishing diplomatic relations
with revolutionary China - the first Latin American nation to do so – and
mutual visiting by high-level government officials is anticipated. At ceremonies
honoring Hu Jintao, Fidel Castro said, "Relations between China and Cuba today
constitute an example of transparency and peaceful cooperation between two
nations that are sustaining the ideals of socialism."