Cuba, China and the significance of their economic ties (I)

_1-yutong_0 (Yutong)

By José Luis Rodríguez

As it has been reported, during the recent visit of the Chinese President, Xi Jinping, to Cuba, signed 29 agreements covering a set of areas of significant importance for our country. It is not the first occasion that highlights the significance of our economic relations with the Asian country. However, there are few jobs that allow to have a more complete idea of these relationships. Hence the desirability of making a brief recount to assess their current prospects.

From the establishment of diplomatic relations, Cuba China trade developed rapidly and in favorable conditions between 1960 and 1965. However, the errors associated with the Cultural Revolution in the Asian nation led to a reduction in the profile of relations with the island, a phenomenon that would extend until the beginning of the year 80.Ya since 1988, with the creation of the ® Intergovernmental Commission for trade and economic relations, would begin a new stage for the development of these ties.

Thereby, during the 1990s the trade with China took second and third places in Cuban imports and weight in the total trade of the country rose from 4.7% in 1990 to 8.2 per cent in 1995, and remained at 7.6% in the year 2000.

Additionally, in this difficult period the Asian nation agreed to postpone payment debt in 1995, and continued offering commercial loans for the imbalance of Exchange throughout the Decade, which happened to be held in a currency freely convertible into 1999.

From the year 2000 the commerce continued being developed, staying China in the second place, when growing its participation to 10.2% of the Cuban foreign trade in 2005. As it leaves from the impulse for this relation, in 2004 the Joint Work group Cuba-China for the Cooperation in the Biotechnology was created.

During the second half of the year 2000, the trade with China reached a peak in 2007, when it came to represent 17.8% of the total and 25.2 per cent of Cuban exports – basically composed of sugar, nickel, and medications, including products of biotechnology, while imports reached 1 518 million dollars, 15.1% of the total.

From 2004 were important commercial loans that promptly allowed to fast forward in economic and social activities of importance to Cuba.

In this sense, the island has benefited from a credit of $ 200 million to expand telecommunications, which would have bearing on the possibility of extending telecast by a greater number of channels, and the other for $ 150 million to produce the ATEC-HAIER televisions in the country.

Within the framework of this expansion – and particularly in referred to the purchase of effects the electric home appliances like part of the process known like Revolution Energetics, designed for the saving of electricity in those years a Memorandum of Understanding subscribed in 2006 by means of which a ceiling of funding with a view to covering commercial operations was created with short, medium and long term by 1 800 million dollars.

As it leaves from these resources were possible to begin the process of recapitalization of the transport of passengers, first with thousands Yutong omnibus for long distances and later for the urban transport, until reaching 5 348 vehicles for 370 million dollars. To it one would add to the initial purchase of 12 locomotives, as well as transport specialized and of overhead.

Also it is possible to aim that in 2004 a postponement by ten years for the payment without interests remembered the pending debt of liquidation of years 1990 to 1994.

A similar proportion in the commerce of Cuba with China and its growth stayed until 2010. However, between 2011 and 2013 a tendency to the reduction in the weight of Cuban exports to China is appraised, those that diminished 32.6% until 2012, whereas the imports increased 1.1%, which took to an increase in 236 million in the Cuban trade deficit.

An analysis of the most recent stage would not be complete if not also discussed the peculiarities of foreign investment in relations with China and its impact for both countries.

(To be continued)

* The author is an advisor of the center of research of the global economy (Havana). In the analysis of relations between Cuba and China in the economic field, relies on several works produced by Dr. Julio Díaz Vázquez on the subject, published inter alia in the Observatory of china policy. Casa Asia and http://www.politica-china.org.
– See more at: http://www.cubacontemporanea.com/en/news/cuba-china-and-significance-their-economic-ties-i#sthash.8qKJUc1P.dpuf,

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