Cooperativismo y Desarrollo, January-April 2021; 9(1), 137-154
Translated from the original in Spanish

La cooperación comercial entre Cuba y China. Perspectivas actuales para el desarrollo sostenible de estas naciones

Cooperação comercial entre Cuba e a China. Perspectivas atuais para o desenvolvimento sustentável destas nações

Bowen Ding¹; Soleidy Rivero Amador²

¹ Universidad de Estudios Internacionales de Beijing. China.
https://orcid.org/0000-0002-9447-8405
belen_2006@163.com

² Universidad de Pinar del Río "Hermanos Saíz Montes de Oca". Pinar del Río. Cuba.
https://orcid.org/0000-0001-9015-4748
soly@upr.edu.cu

Received: 15/11/2020
Accepted: 9/03/2021

ABSTRACT

In a context of reconfiguration of the international order, China emerges with a more open and pragmatic policy. Its trade and collaboration relationships have increased, over all with Latino-America and The Caribbean in the last decade. In this period, China and Cuba have established a close cooperation on the base of their shared values and perception on national and international issues, beyond their ideological affinities This article clarifies certain issues related to the current situation of China-Latin America and the Caribbean relations, with emphasis on Cuba. It is carried out a qualitative analysis of the matter through a bibliographic review of the scientific literature and the information official sources, using Documentary analysis technique. With the objective of analyzing Chinese- Cuban trade relationships, it is necessary the study of these nations sociopolitical context and their specific features. The study covers the dynamics of these cooperation relationships in the present international scene, as well as sets a look at the evolution of China-Cuba economical relationships. It is evident that both countries have to face challenges that demands big efforts to encourage joint investments, advance in the mutual realities dominion, in the training and professionalization of the factors that intervene in the negotiation arduous process in a constant changing environment.

Keywords: cooperation; Cuba; China; trade; Latin America and the Caribbean

RESUMEN

En un contexto de reconfiguración del orden internacional, emerge China con una política más abierta y pragmática. En la última década, se incrementan sus relaciones comerciales y de colaboración, sobre todo con América Latina y el Caribe. En este periodo, China y Cuba han establecido una estrecha cooperación sobre la base de sus valores compartidos y percepción de los asuntos nacionales e internacionales, más allá de sus afinidades ideológicas. En este artículo, se esclarecen determinadas cuestiones relacionadas con la situación actual de las relaciones China-América Latina y el Caribe, con énfasis en Cuba. Se realiza un análisis cualitativo de la problemática mediante la revisión bibliográfica de literatura científica y de fuentes oficiales de información, utilizando la técnica del Análisis Documental. Con el objetivo de analizar las relaciones comerciales chino-cubanas, resulta necesario el estudio del contexto sociopolítico de estas naciones y sus características específicas. El estudio logra abordar las dinámicas de estas relaciones de cooperación en el contexto internacional actual, así como establecer una mirada al devenir de las relaciones económicas China-Cuba. Se evidencia que los dos países tienen ante sí desafíos que exigirán grandes esfuerzos para estimular las inversiones conjuntas, avanzar en el dominio de las realidades mutuas, en la preparación y la profesionalidad de los factores que intervienen en los arduos procesos de negociación en un ambiente en constante cambio.

Palabras clave: cooperación; Cuba; China; comercio; América Latina y el Caribe

RESUMO

Num contexto de reconfiguração da ordem internacional, a China emerge com uma política mais aberta e pragmática. Na última década, as suas relações comerciais e de colaboração têm aumentado, especialmente com a América Latina e as Caraíbas. Neste período, a China e Cuba estabeleceram uma estreita cooperação com base nos seus valores comuns e na percepção dos assuntos nacionais e internacionais, para além das suas afinidades ideológicas. Este artigo lança luz sobre certas questões relacionadas com a situação actual das relações China-América Latina e das Caraíbas, com ênfase em Cuba. Uma análise qualitativa do problema é realizada através de uma revisão bibliográfica da literatura científica e de fontes oficiais de informação, utilizando a técnica de Análise Documental. A fim de analisar as relações comerciais China-Cuba, é necessário estudar o contexto sócio-político destas nações e as suas características específicas. O estudo consegue abordar a dinâmica destas relações de cooperação no actual contexto internacional, bem como estabelecer um olhar sobre a evolução das relações económicas China-Cuba. É evidente que os dois países enfrentam desafios que exigirão grandes esforços para estimular investimentos conjuntos, para avançar no domínio das realidades mútuas, na preparação e no profissionalismo dos fatores envolvidos nos árduos processos de negociação num ambiente em constante mudança.

Palavras-chave: cooperação; Cuba; China; comércio; América Latina e Caraíbas

INTRODUCTION

At the end of the 20th century, China began its diplomatic strategy based on models of bilateral and multilateral cooperation in Asia and other regions of the world in order to expand its presence and develop its economy. Therefore, its foreign policy was based on the discourse of peace and security, although, on the other hand, this responded to the need to lessen the media crusade initiated by the United States and followed by Western countries around the alleged "Chinese threat" represented by the economic, political, military and cultural rise of that Asian country (Portador García & Solórzano Tello, 2019).

Over the past 15 years, relations between Latin America and the Caribbean (LAC) and China have been growing rapidly in the areas of trade and finance, as well as in political, cultural, educational and security ties. As a result, LAC found a new market for its exports, which allowed it to obtain significant income, and the People's Republic of China obtained the raw materials it needed for its rapid growth and a market for its manufacturing production. These relations have been characterized essentially by the economic complementarity between the two parties and, from the political point of view, by the convergence of essential interests. These have been factors that have influenced the complex and controversial relations of these regions (Legrá Brooks, 2020).

In the scientific literature, approaches can be found that characterize the relations between China and LAC from various favorable or unfavorable criteria. In this regard, it can be noted that these relations have been characterized as new South-South cooperation relations, dominated by reciprocal assistance between countries and symmetry in the common construction of an agenda for overcoming the problems of underdevelopment. The benefits they have brought to these regions prevail, but both China and Latin America and the Caribbean must face important challenges (Portador García & Solórzano Tello, 2019).

It is important to clarify that the Latin American region faces the greatest challenge, not only because it has been the least favored, but also because it is the most responsible for achieving harmony resulting from this economic cooperation. China has shown that it has a well-defined long-term strategy towards LAC that responds to its national interests. LAC, however, does not have a regional strategy to confront the Asian giant and take advantage of its benefits and, in most cases, the countries of the region do not have a policy of cooperation with China that would allow them to avoid and correct the resulting deformations. It is clear that China is not LAC's problem; the region cannot wait for an external actor to solve its problems and must become aware of its weaknesses in order to act on them in order to take advantage of the benefits it has (Molina Díaz & Regalado Florido, 2017).

In this scenario, Cuba has proven to be a country with a global and strategic foreign policy that demonstrates that small countries can not only participate, but even shape the international agenda in the face of their challenges. The largest of the Antilles has played a leading role in South-South cooperation and, in its resistance to the U.S. superpower, has stood out in its foreign policy principles, among them: anti-imperialism, self-determination, solidarity and international justice (Romero, 2017).

From a historical point of view, Cuba was the first country in the Western Hemisphere to establish diplomatic relations with China. When the Cuban Revolution triumphed in 1959, relations between China and the Soviet Union were in conflict, which affected the development of Sino-Cuban relations. The situation had hardly changed until the early 1990s with the implosion of the USSR. With the historic visit of then Chinese President Jiang Zemin to the Caribbean island in 1993 and the visit of Commander-in-Chief Fidel Castro to China in 1995, bilateral relations opened a new page. It can be said that the two countries share similar views on many international issues and have a long and traditional friendship.

Trade cooperation between both parties is essential to further deepen friendly relations between the two countries and promote common economic development. Trade exchanges between Cuba and the People's Republic of China date back to the 1960s. At present, China is Cuba's second largest trading partner and Cuba is the largest trading partner of the Asian country in the Caribbean, but with an unsatisfactory total trade volume. The purpose of this article is to analyze the Chinese-Cuban trade relations through a bibliographic study. Documentary analysis of official sources is used to address the main factors that hinder trade cooperation between Cuba and China and to be able to distinguish the main future prospects of such cooperation.

MATERIALS AND METHODS

This research uses the Documentary Analysis technique to describe the current panorama of international cooperation between China and Cuba, with emphasis on trade relations in the period 1999-2017. In addition, it addresses the nuances of cooperation between these two countries, in the context of China-Latin America and the Caribbean cooperation.

Brief notes on China-Latin America and the Caribbean collaboration in the current context

Economic relations between China and LAC have been characterized through the incidence of three fundamental channels: Trade, Foreign Direct Investment and infrastructure construction. Trade in goods between China and LAC has grown dramatically in the last ten years to over US$300 billion in 2018. This has made China the most important export market for South America and the second for LAC as a whole, while LAC is China's fourth largest socio-trade (Ray & Wang, 2019; Salazar Xirinachs, 2020).

President Xi Jinping announced the strategy in international affairs, adopted by his country since 2013, when he expressed in his report to the National Congress of the Chinese Communist Party (2017): "China has experienced an increase in its international capacity to influence and shape the global governance system" ... "in 2050 it will stand among all the nations of the world".

The strategic projection of the 2018-2022 five-year period projects a China that, in the international arena, is betting on protagonism, self-confident, with no doubts about using diplomatic pressure, economic power and soft power to achieve its objectives. China's diplomatic attention at the beginning of this five-year period has been focused on the "One Path, One Road" initiative, also known as the "New Silk Road" (NRS). It comprises a land strip (extending along six corridors) and a sea route (running along the East and South China Seas, the Strait of Malacca and the Indian Ocean, then branching off to East Africa and the Red and Mediterranean Seas) (Laufer, 2020; Malena, 2020).

This mega-undertaking is to promote trade and infrastructure construction across Asia, Europe, Africa and Latin America. It has no completion deadlines and is financially supported by the "Asian Bank for Infrastructure Investment" (BAII in Spanish) and the "Silk Road Fund", established by China in 2014 and 2015 respectively. Both institutions have available funds of US$100 billion and US$40 billion respectively (Asian Infrastructure Investment Bank, 2017).

In this context, although LAC is part of China's distant periphery, it has become a relevant area of Beijing's grand strategy. In a context of global hegemonic struggle, this subcontinent has become a geostrategic space of relevance for bilateral relations in diplomatic, economic, educational, cultural and scientific spheres. In the last ten years, China's most important partners in Latin America are, in order of importance: Brazil, Mexico, Chile, Argentina, Peru, Venezuela, Panama, Colombia, Costa Rica and Cuba (Bravo, 2020). The impact that this grand strategy has had on China's bilateral relations with these countries can be summarized as follows (Malena, 2020; Yu, 2016):

1. in the political arena, there was an actor that contributed to mitigating U.S. preeminence.
2. in economic terms, international partners were diversified.
3. in scientific-technical matters, the sources of technology transfer were renewed, even if it has not been possible to add sufficient value to local production
4. and in the cultural field, access was gained to the knowledge of a civilization.

The Caribbean states have welcomed the Chinese presence in a partnership based on the principles of equality and mutual respect. Although China is considered a developing country, it plays the role of a great power. China offers development aid to the Caribbean, providing attractive loans and financing packages that focus on priority areas for the Caribbean such as infrastructure construction, energy and mineral exploitation, transportation, tourism and the use of environmentally friendly technologies. The Asian Giant offers an alternative development paradigm and has the potential to change the current international order. The geographical, historical and cultural distance that exists between this country and the Caribbean states has acted at a subjective level, conditioning the way in which Caribbean people perceive relations with China as new, which favors their deepening (Legrá Brooks, 2020).

In the current context of a world affected by an unfavorable epidemiological situation, the concept of "Global Health Diplomacy", which has been debated in the academic and political sphere since 2007, has become a reality, based on the "Global Health Initiative". This event was convened in the city of Oslo by the foreign ministers of Brazil, France, Indonesia, Norway, Senegal and Thailand with the aim of ensuring that foreign policy takes into consideration global health issues, beyond emergencies or health crises. In confronting COVID-19, experience has shown that countries with political will, integration of sectors, organizations and institutions are more successful than countries that do not have these attributes and where mercantilist interests predominate in the public health sector (Gorriti, 2020).

"COVID-19 should not be considered a fortuitous, isolated, exclusively sanitary event with no future consequences" (Díaz-Canel Bermúdez & Núñez Jover, 2020). It is worth asking: How will cooperation among nations behave in the face of this more enduring phenomenon than something simply conjunctural? As Gorriti (2020) states, instead of the sovereign withdrawal of each state into itself, new forms of cooperation between them will surely germinate, as well as the installation of new ideological frameworks and common economic policies. The asymmetrical dynamics historically adopted by relations between central and peripheral countries should not disappear, but new forms of co-dependence and collaboration between countries will re-emerge, regardless of their form of social organization or type of ideology. In essence, it can be said that the COVID-19 pandemic is another catalyst that shows that the neoliberal globalization model is neither ecologically nor socially sustainable. It is necessary to generate new forms of collaboration between societies that can enhance the global whole, instead of diminishing and impoverishing it; in this task, governments have a fundamental role (Díaz-Canel Bermúdez & Núñez Jover, 2020).

In this scenario, Cuba and China have promoted "Global Health Diplomacy" as one of the foreign policy strategies (Tcyganova, 2020; Xiao Ya, 2017). Historically, economically and politically, the two countries have common points and interests: they drag the inherited sequels of colonialism, share the objectives of being developing countries, faced with the task of promoting the national economy and improving the standard of living of the two peoples, agree to work for a stable and conflict-free internal and international social order, strive to strengthen economic and technological cooperation on the basis of mutual advantages.

In essence, it is not only the development of the Socialist Social System that unites these two nations (León Ortega, 2020). In several common spaces of cooperation and interaction, the parties have reaffirmed their commitment to common values and have discussed bilateral prospects, with the intensification of cooperation in the field of education and information technologies (Regalado Florido, 2018). This cooperation is based on principles, such as: the development of industries, open trade and the cultural and intellectual development of the countries. The latter promulgates the desire of both parties, to share their experience in the development of new technologies and collaborate in the use and development of intellectual potential (León Ortega, 2020).

The cooperation of these two countries stands out in the signing of agreements in various areas, such as finance, biotechnology, agriculture, infrastructure and renewable energy sources. In addition, China has approved several loans to Cuba for the modernization of infrastructure and, despite the small number of joint enterprises, the Asian country intends to invest in tourism and agricultural projects. Only a relaxation of sanctions and a partial lifting of the economic embargo would lay the groundwork for an unlimited number of projects by Chinese enterprises in Cuba. The Island has an important location because it is at the crossroads of North, Central and South America, in addition, it has the five best ports in the Caribbean; these two aspects constitute positive factors in the selection of Cuba by the Chinese government to develop economic cooperation (Caetano & Sanahuja, 2019).

Analysis of trade flows between Cuba and China in the context of Latin America and the Caribbean. Some relevant obstacles

China is a country that has a surplus in its relationship with the world, but trade with Latin America and the Caribbean is different. Since China joined the World Trade Organization (WTO) in 2001, trade with the region has increased considerably, with a slight drop in 2009 due to the negative influence of the international crisis (see graph 1).

Graph 1 - LAC-China trade flows (expressed in billions of US$)
Source: Prepared by the authors based on data from the National Bureau of Statistics of China

Between 1999 and 2002 China maintained a small surplus and between 2003 and 2010 the surplus shifted to Latin America and the Caribbean. And in the last decade, with the advance in China's science and technology and the development of new industries, China exports more high-end industrial products to Latin America and the Caribbean, has had an annual surplus of approximately 100 billion and the region's exports to China are mostly raw materials.

Within Latin America and the Caribbean, there is a general shift to the right. Countries such as Brazil, Argentina, Chile, Peru and Colombia have conservative governments. In addition, Panama and El Salvador recently established diplomatic relations with China, recently changed presidents and the newly elected ones show a clear pro-US attitude. Venezuela is going through very difficult times as is Bolivia. President Moreno of Ecuador is not as leftist as his predecessor. In this context, Cuba, as a socialist country, has a very special meaning for China, so bilateral relations expect an important strengthening for the economic destiny of these two nations.

Cuba and China signed trade agreements in the 1960s and the development of bilateral trade was relatively stable until the late 1980s. The disintegration of the Soviet Union and drastic changes in Eastern Europe dealt a blow to the Cuban economy and Chinese-Cuban trade began to decline.

In 2006, the volume of bilateral trade doubled, but the absolute value remained low. Then, in 2009, affected by the financial crisis, bilateral trade relapsed. Graphs 2 and 3 below show the overall figures of trade flows between Cuba and China.

Graph 2 - Cuba-China trade flows (expressed in millions of USD)
Source: Prepared by the authors based on data from the National Bureau of Statistics of China

According to graph 2, as regards China's trade balance with Cuba, the former maintains a surplus throughout this period. While Cuba has a smaller deficit in 2007, when exports to the Asian country reached 1.115 billion dollars. The heyday of the two decades was due to the increase in demand for nickel by China, although then the export growth was interrupted by the international financial crisis of 2008. In other words, exports and imports maintained a stable pattern until 2004, when both lines rose significantly.

Another point worth noting is that, before 2011, the deficit on the Cuban side varied between 200 and 400 million dollars. And as of 2012, the gap between the two lines expanded enormously, especially in recent years. This is due, among other factors, to the decrease in Cuban exports with the limited production caused by the U.S. blockade and the Venezuelan crisis.

Graph 3 - Cuba's participation in China's trade flows with LAC (%)
Source: Prepared by the authors based on data from the National Bureau of Statistics of China

Graph 3 shows that Cuba has been losing importance as a trading partner with China, compared to other Latin American and Caribbean countries, going from 1.89% of total exports in 1999, to a meager 0.31% in 2017 and imports from 4.4% to 1%. This drop in percentage deserves attention and measures should be taken to reverse this trend. In this regard, in this period of time, other countries are representative as trade partners with China, such is the case of Mexico, Brazil, Chile and Costa Rica (CEPAL, 2015).

As for the composition of Cuban exports to China, they are mostly reflected in primary products, for example, nickel, sugar, seafood, citrus, scrap metal, tobacco, biotechnology products and rum. According to WTO data, in 2010 exports of nickel and sugar products accounted for 89.76% of the total volume, because nickel is used for the production of stainless steel, which is fundamental in the development of China's powerful metallurgical industry. China has a wide variety of exports to Cuba, mainly locomotives, buses, textiles, footwear and agricultural products. The trade structure of the two countries shows some complementarity and is conducive to further deepen economic and trade cooperation between the two countries (Montoro Carmona, 2011).

In the current context, Cuba is in the process of updating its economic model. Policies are being implemented to improve economic dynamism, such as the easing of restrictions on individual traders' operations and facilities for foreign investment. However, the planned socialist economy and the control of economic and commercial activities in the long-term national plans have been an unfavorable factor in the negotiations between Cuban and Chinese businessmen (Bravo, 2020). Similarly, the monetary and exchange duality that has been affecting the ability to pay in foreign trade of this Caribbean island is very unfavorable. In the current year 2021, Cuba is in the process of adjusting the country's monetary policy to favor international trade exchanges. This process is currently in full development.

The main factor that has had a negative influence on Sino-Cuban trade relations is the strengthening of the U.S. economic blockade of Cuba. This colossal obstacle has a negative influence on Cuba's economic dynamics and on the promotion of its investments, although it also affects Chinese businessmen and their relations in Latin America. However, with the anti-globalization, protectionist and restrictive policies of the U.S. government, they have reinforced Chinese intentions to contribute to the strengthening of cooperation and bilateral relations with Cuba (Regalado Florido, 2018).

The study carried out evidences that bilateral trade between these two countries has not behaved in correspondence with the cooperation actions carried out with intensity, in the last 10 years.

It is estimated that bilateral trade in goods is unlikely to grow greatly in the short term, while trade in services is likely to become a new growth point for Cuba-China trade cooperation. It is clear that both China and Cuba have the desire and demand to strengthen trade in goods, but the volume may not have a jump due to two reasons. On the one hand, Cuba implements a planned economy with strong currency control, which reduces the possibility of greatly increasing import from China. On the other hand, Cuba's exports to China are mainly based on mineral resources and agricultural products, the production of which is relatively stable. Although China has a strong import demand for these products from Cuba, production cannot be significantly increased in the short term.

The service trade has a more encouraging future, within which the health services industry has been an advantageous area for Cuba in recent years. Since the late 1980s, the government has been vigorously promoting the development of biotechnology. Cuba has many biomedical research centers and enterprises, with thousands of highly qualified researchers and advanced technology transfer in the biotechnology sector. In addition, it has experience in medical training and cooperates with more than 90 countries. Cuban doctors are distributed in almost all parts of the world and have worldwide prestige in various fields such as diabetes and cancer treatment. Chinese consumers also recognize Cuba's level of healthcare services. Therefore, there is great potential for both sides to deepen cooperation in medical services trade in the future.

The two countries can also cooperate in exploring third country markets. Cuba has a strategic location in the heart of the Caribbean Sea with a strong influence in Latin America. The main trading partners of this Caribbean island, besides China, are mainly Venezuela, Spain and Brazil. More than half of Cuba's foreign trade is concentrated in the Americas, signing trade agreements with Bolivia, Panama, Venezuela, Colombia, among other countries. Cuba is also a member of many regional organizations, in which it plays a very important role.

Both countries should take into account, in addition to the friendly relations they have always maintained, Cuba's limited domestic market and the shortage of foreign currency. Therefore, exploring third party markets through cooperation will be an effective measure to expand Sino-Cuban cooperation. As Cuba promotes the development of export processing and import substitution industries, Chinese enterprises can invest in Cuba to manufacture products, build small joint ventures, export directly to other countries in the region. This model will be mutually beneficial; on the one hand, it will favor the expansion of trade between China and Latin America and the Caribbean, increasing China's influence in the region; on the other hand, which is even more important, it will help consolidate Cuba's industrial base, increase Cuban exports and generate more foreign exchange.

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Conflict of interest:

Authors declare not to have any conflict of interest.

Authors' contribution:

Bowen Ding and Soleidy Rivero Amador: designed the study, analyzed the data and prepared the draft.

Bowen Ding: was involved in the collection, analysis and interpretation of the data.

Soleidy Rivero Amador: made a critical revision of the article with important contributions to its intellectual content.

Both authors reviewed the writing of the manuscript and approve the version finally submitted.