Communist Allies Strengthen Ties

Cuba and China

By Daniel P. Erikson and Adam Minson

Cuba’s international relations have changed remarkably in recent years, with old alliances unraveling and new partnerships emerging. Since 2001, Cuba has experienced its most important realignment of foreign relations since the collapse of the Soviet Union in the early 1990s. The European Union remains an important economic partner, but diplomatic relations soured following Cuba’s crackdown on dissidents in 2003. When European embassies responded by inviting opposition leaders to important embassy receptions, the Cuban government cut all contacts with European ambassadors and refused EU aid. Only days after an official rapprochement was announced in January 2005, Fidel Castro told reporters that “Cuba does not need Europe.”

Cuba’s relations in Latin America are also in flux. Governments in Argentina, Brazil, and Uruguay have moved left-of-center and increased diplomatic engagement with Havana. The election of leftwing indigenous leader Evo Morales in Bolivia continues this trend. Meanwhile, Cuba’s once staunch alliance with Mexico has verged on total breakdown during the term of President Vicente Fox, who has backed successive UN resolutions condemning the state of human rights in Cuba. Without question, the rise of Venezuela’s Hugo Chávez led to the most dramatic change in Cuba’s hemispheric relations. Chávez and Castro have forged a strong political alliance that has sparked anxiety in some quarters. More than 30,000 Cuban medical and other highly trainedspecialists have been dispatched to Venezuela in exchange for 90,000 barrels per day of preferentially-financed petroleum. The efforts of the two leaders to counter US influence in the region have ensured that simmering tension with Washington will not abate anytime soon.

Against this backdrop of shifting geopolitical alliances, China’s renewed interest in Cuba has been the subject of considerable intrigue. Of course, Cuba’s relations with the People’s Republic of China are hardly novel; the two countries first established diplomatic ties more than 45 years ago. In recent years, however, China’s stunning economic growth and increasing global power have cast a new light on this historic bond. Since 2001, China has emerged as an increasingly relevant actor in Latin America, and Cuba is an important part of this panorama. Beijing’s renewed interest in Cuba has produced more frequent high-level meetings, rapidly expanding levels of economic cooperation, and numerous exchanges in the areas of science, technology, and defense. Most critically for Cuba, China represents a vital new lifeline for the island’s flagging economy. Trade between the two countries has surged to the point that China is now Cuba’s second largest trading partner after Venezuela. The Chinese have also pledged hundreds of millions of dollars in investments in nickel, petroleum exploration, and agriculture. If those investments materialize, China could become Cuba’s top foreign investor.

Early Ties

On September 1, 1960, Fidel Castro severed diplomatic ties with Taiwan in favor of a relationship with the People’s Republic of China. The two countries formally established relations on September 28, 1960, making Cuba the first Latin American country to recognize Mao’s China. However, Cuba’s close alliance with the Soviet Union took shape against the backdrop of the Moscow-Beijing rivalry, which stymied any deeper alliance with China. In fact, Castro became openly critical of Mao’s China in the 1960s, and condemned the country’s invasion of Vietnam in 1978. Relations began to improve in the 1980s, as the Chinese and Soviet governments inched closer to a détente and a new generation of leadership took the helm in Beijing.

In December 1984, China dispatched resident military attachés to Cuba, initiating a series of friendly military contacts. Four years later, China and Cuba ceased to require passport visas of citizens traveling between the countries. The two countries signed a trade protocol in 1988 under which China would buy nearly 100,000 tons of Cuban sugar largely on barter for Chinese products. By 1990, annual Cuba-China trade topped $600 million, and China became second only to the Soviet Union in trade with the island. Among the bartered goods were the famous Chinese bicycles that replaced many of Cuba’s automobiles during the country’s post- Soviet economic crisis, known as the “Special Period.”

Havana was one of the few capitals to express support for Beijing’s brutal repression of protestors in Tiananmen Square in 1989, when the Cuban foreign minister commended Chinese authorities for “defeating the counterrevolutionary acts.” The response signaled Reports increasing closeness between the governments. State relations reached a milestone in 1993 when President Jiang Zemin became the first Chinese head of state to visit Cuba. Two years later, Castro reciprocated with his first visit to China. While his itinerary included perfunctory stops at the Great Wall of China and Mao’s Tomb, he also visited Shanghai and Guangzhou, two cities at the epicenter of China’s capitalist experiment.

At the time, Castro was reported to be quite taken with China’s “market socialism,” and speculation abounded that the increasing trade and diplomatic ties would lead to a Chinese-style opening in Cuba. But the island was entering a severe recession caused by the end of Soviet subsidies, and trade with China dwindled, in part due to the collapse of Cuba’s sugar industry. Trade relations began a slow rebound in 1996, when China agreed to begin paying for Cuban goods with hard currency, but Cuba’s conservative central planners increasingly distanced themselves from the Chinese economic model.

The Wonder Years

A 2001 visit to Cuba by Chinese President Jiang Zemin played a crucial role in reinvigorating the commercial links. During this trip, the two countries signed an economic and technical cooperation agreement, which granted Havana a $6.5 million line of interest-free credit and an additional $200 million loan to modernize and expand Cuba’s telecommunications at the local level. Another $150 million credit was given for Cuba to import Chinese televisions.

In 2003, China made Cuba its first approved tourist destination in the Western Hemisphere. The World Tourism Organization projected that China would be the world’s fourth-largest supplier of tourists by 2020. However, China has since added nearly 40 new approved destinations, including several other Caribbean islands and South American countries. Although some visitors from mainland China can be spotted in Havana nightclubs, the island has not yet seen any large influx of Chinese tourists and the special designation remains largely symbolic. That may change if the much discussed direct flights from Beijing to Havana become a reality.

The first joint venture between Cuba and China was a plastic slipper factory in Cuba that opened in 1997. By last year, the two countries shared 10 operative joint ventures and three “cooperative production contracts,” many with higher-value production like pharmaceuticals and biotechnology. Sixteen cooperation agreements in nickel and mineral processing and Reports exploration were signed during President Hu Jintao’s visit to Cuba in 2004. In addition, China pledged to invest over $500 million in a new Cuban nickel plant in Moa, based in the Holguín province. This would make China the largest investor in Cuba’s flourishing nickel market. With the help of Chinese investment, Cuba could double its nickel and cobalt output, which is already the fourth highest in the world. Hu also offered credit for 1 million more Chinese “Panda” brand televisions, known in Cuba to be rewards for Communist Party loyalists. In 2005, collaboration between China and Cuba even reached into the island’s oil sector with a major contract for production with petroleum giant Sinopec.

Beyond trade ties, China and Cuba are close diplomatic allies. China has consistently opposed US sanctions on Cuba at the United Nations. In October 2004, China’s deputy representative to the UN Zhang Yishan rebuked the US for its decision to maintain the embargo and, in so doing, “obstinately stick to the wrong position and ignore the just demand of the international community.” In April 2005, China reiterated its longstanding opposition to US-led efforts to condemn Cuba for its repression of civil and political liberties. For its part, Cuba has strongly backed China’s goal of eventually reclaiming its “renegade province” of Taiwan under the “One China” policy. During a visit to Beijing in March 2005, Cuba’s Minister of Government Ricardo Cabrisas Ruiz vowed support for China’s widely condemned Anti- Secession Law, which contemplated military action against Taiwan. Some analysts even suspect that China is using its telecommunications involvement in Cuba as cover for espionage against the US. Indeed, there has been speculation that Beijing has taken over the Lourdes spy base after Russia ended its lease in 2001 and is operating another base, Bejucal, near Santiago de Cuba.

China and Cuba’s Future

Perhaps the most intriguing aspect of the Cuba-China alliance concerns the potential impact on Cuba’s eventual transition process once Fidel Castro leaves power. For many years, the United States has positioned itself as the single most important actor shaping Cuba’s post-Castro politics. While other countries – especially Canada, Spain, and others in Europe - conducted business in Cuba, they basically agreed with the U.S. objective of supporting the island’s evolution towards a market-oriented democracy, even though they disagreed with a sanctions- based approach. With the notable exception of Venezuela (and now Bolivia), Latin American countries have generally distanced themselves from the Cuban model since the 1990s. After the collapse of the Soviet Union, Cuba found itself with trading partners but no true allies interested in supporting Cuba’s communist system.

China, the emerging superpower, has now undertaken significant investments in Cuba and may have an interest in maintaining the island’s current political order once Fidel Castro leaves the stage. Chinese diplomatic engagement in Cuba is a consensus policy for China’s Communist Party. It suits two of China’s most important foreign policy goals: securing natural resources for a rapidly growing economy, and rewarding countries that uphold a “One China” policy, which precludes diplomatic support for Taiwan. History has shown that trade and commercial relations between China and Cuba ebb and flow in response to changing economic circumstances. China’s support of the Cuban economy could quickly diminish if its investments do not yield dividends or if China’s own growth slows, as some analysts have predicted. Although Cuba’s diplomatic relations with China are firmly rooted, its commercial ties have been cyclical, and this newest peak of trade and investment is by no means irreversible.

The Cuban leadership touts China’s friendship as an example of socialist solidarity, but the two countries are separated by an increasing ideological divide. China has progressively liberalized its economy, while Fidel Castro has condemned market forces at every turn. In his 2003 visit to Beijing, a bemused Castro told the head of the Chinese legislature, that “I can’t really be sure just now what kind of China I am visiting, because the first time I visited, your country appeared one way and now when I visit it appears another way.” By contrast, Cuba has resisted embracing the type of change that has fueled China’s enormous growth. In fact, as Chinese trade, aid, and investment have grown, Havana has recentralized control over its economy. Unfettered by concerns over free markets or human rights, China’s burgeoning ties with Cuba have helped to breathe new life into the most retrograde tendencies of Fidel Castro’s aging revolution.

Daniel P. Erikson is senior associate for US policy and director of Caribbean programs at the Inter - American Dialogue. He is the author of more than 20 articles on Cuban and hemispheric affairs, which have appeared in such publications as The Miami Herald, National Interest, and World Policy Journal.

Adam Minson is program assistant for the Caribbean at the Inter- American Dialogue. His writings and interviews on the Caribbean have appeared in the Baltimore Sun, Boston Globe, and Journal of Democracy.