China Moves Into Cuba as Venezuela Fades, Trump Looms

China Moves Into Cuba as Venezuela Fades, Trump Looms
February 14, 2017 8:30 PM
Reuters

HAVANA —
From buses and trucks to a $500 million golf resort, China is deepening
its business footprint in Cuba, helping the fellow Communist-run state
survive a crisis in oil-benefactor Venezuela and insulate against a
possible rollback of U.S. detente.

Cuban imports from China reached a record $1.9 billion in 2015, nearly
60 percent above the annual average of the previous decade, and were at
$1.8 billion in 2016 as the flow of oil and cash slowed from Venezuela
because of economic and political turmoil in the South American country.

China's growing presence gives its companies a head start over U.S.
competitors in Cuba's opening market. It could leave the island less
exposed to the chance U.S. President Donald Trump will clamp down on
travel to Cuba and tighten trade restrictions loosened by his
predecessor, Barack Obama.

China may double down in Cuba

A deterioration in U.S.-China relations under Trump could also lead
Beijing to dig in deeper in Cuba, some analysts say.

"If and when the Trump administration increases pressure on China ...
China may decide to double down on its expanding footprint in the United
States' neighborhood," said Ted Piccone, a Latin America analyst at the
Brookings Institution think tank.

China, the world's second-largest economy, sells goods to Cuba on soft
credit terms. It is Cuba's largest creditor and debt is regularly
restructured, though amounts and terms are considered state secrets.

While Cuba does not publish investment data, the state press has been
abuzz with news of Chinese projects lately, covering infrastructure,
telecoms, tourism and electronics.

Yutong buses, Sinotruk trucks, YTO tractors, Geely cars, Haier domestic
appliances and other products are prominent in Cuba, where the main U.S.
products on display are cars dating back to the 1950s, thanks to the
ongoing economic embargo.

Wi-Fi hot spots a big draw

Cubans flock every day to hundreds of Huawei-supplied Wi-Fi hot spots,
and the firm is now helping to wire the first homes.

"Business is really booming, more than we could have ever imagined,"
said the manager of a shipping company that brings in Chinese machinery
and transport equipment and who asked not to be identified.

The Foreign Ministry in Beijing described China and Cuba as "good
comrades, brothers and partners," and said the relations "were not
influenced by any third party," when asked whether U.S. policy was
encouraging China to deepen its presence.

"We are happy to see that recently countries around the world are all
expanding cooperation with Cuba. I think this shows that all countries
have consistent expectations about Cuba's vast potential for
development," Chinese Foreign Ministry spokesman Geng Shuang told reporters.

The U.S. State Department and White House did not immediately respond to
requests for comment.

Increased investment

Over the past two decades, China has become a major player in Latin
America and the Caribbean, second only to the United States in
investment flows and diplomatic clout.

But the Asian giant was reluctant to invest in Cuba because of the poor
business climate and fear of losing opportunities in the United States,
according to Asian diplomats in Havana.

That began to change after Obama moved to normalize relations two years
ago and Cuba sweetened investment rules, sparking new interest among
U.S. businesses and competitors around the world.

China was well-placed because the local government preferred doing
business with long-term friends offering ample credit to work with
state-run firms.

In return, Cuba has shared contacts and knowledge about the region, and
taught hundreds of Chinese translators Spanish.

A report on the government's official Cubadebate media website last
month said the two countries agreed to strengthen cooperation in
renewable energy and industry, with 18 Chinese firms taking part in a
three-day meeting in Havana.

Computer assembly plant opens

Plans for several projects were signed, including a joint venture with
Haier to establish a renewable energy research and development facility,
the report said.

A few weeks earlier, Cuba opened its first computer assembly plant with
Haier with an annual capacity of 120,000 laptops and tablets, state
media reported.

Other projects include pharmaceuticals, vehicle production, a container
terminal in eastern Santiago de Cuba, backed by a $120 million Chinese
development loan, and Beijing Enterprises Holdings Ltd. venture for a
$460 million golf resort just east of Havana.

Shanghai Electric is providing funds and equipment for a series of
bioelectricity plants attached to sugar mills.

Source: China Moves Into Cuba as Venezuela Fades, Trump Looms -
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