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

By José Luis Rodríguez

The joint enterprises have played a significant role in the economic relations between Cuba and China, and in that context, already in 1995, signed an agreement for the reciprocal protection of investment that was subsequently updated in 2007. It was also signed a document to avoid double taxation in 2001.

In the scope of joint investments, a first peculiarity is the existence of the organizations of greater economic weight in the territory of China.

It is, firstly, of the ChangHeber joint venture, established in the year 2000 between the CIGB and a Chinese pharmaceutical to produce interferons. The entity expanded its activity in 2013 with the launch up another plant to produce vaccine Hib against Haemophilus influenzae, which are associated Heber Biotec, Cuba and China Institute of biotechnological products of Chanchung and Jilin Boyce Technology.

ChangHeber manufactures currently over 180 products and is one of the five main distributors of interferon in China.

In the same line of work also in 2000 was created the joint venture Biotech Pharmaceutical Co. Ltd to produce monoclonal antibodies. It is formed by the center of Molecular Immunology of Cuba and the International Center of China.

Also in the field of health were created in 2006 the joint Ophthalmic Hospital friendship China-Cuba in Xining and the following year the joint Ophthalmic Hospital friendship China-Cuba in Zhijiashuang. In both cases they involved the Cuban medical services company and the Ministry of health of China. These centers were created originally foreseeing an expansion of up to 50 installations in the same category in different regions of the country.

On the other hand, the joint venture Shanghai Suncuba, integrated by Cubanacan and the Chinese company Suntime International was established in the year 2002. From this society was erected in Pudong, Shanghai, a five star hotel, 28 floors and 685 rooms.

In total, the Cuban investments in China-based joint ventures were estimated at 40 million dollars around 2010.

The investment of Chinese companies in Cuba began in 1997 with the creation of the UCC-Fujian company, which had as its counterpart different entities from the then Ministry of the light industry for the production of clothes and sports shoes.

In 1999 came the Taichi Company for the production of rice, in partnership with the Ministry of agriculture. A year later created Grand Kaiman Teleco S.A. (GKT) between the Chinese Corporation Grand Dragon and the Group of the electronics of the Ministry of communications of Cuba. Finally, a project for the construction of a hotel in Cuba for the Havana Suncuba mixed company, established in 2002, did not materialize.

In short, Chinese investments in joint ventures in Cuba were estimated at 50 million dollars towards 2010.

A balance of economic relations between Cuba and the Asian giant until the signing of the most recent agreements shows important performance in regard to trade, the consolidated China as the second partner of our country, even when in the last three years can be seen a decrease in both directions. The flow began to recover in 2013 and this year must exceed the maximum reached in 2007, when he came to 2 446 million pesos.

In terms of the composition of trade, China has played a key role in the recapitalization of automotive and rail transport, as well as in the supply of machinery and equipment of various kinds for sectors such as the production of oil, raw materials, medicines and food, which have significant weight in the economy and the country’s consumption.

By Cuba, the value of exports in the middle of the past decade focused on 83% nickel, 16% sugar and 1% in other products, which demonstrates the need for a greater diversification into products and services such as tourism and others of higher added value.

From 1999 the trade has been developed on the basis of commercial loans for which Cuba has received favorable conditions and whose payment has been honored consistently, especially from 2003. This has created the premises indispensable for postpones with a view to the liquidation of overdue debts when it has been requested.

In terms of the structure of joint investments, it is atypical because, on the one hand, have been a significant presence of the Cuban pharmaceutical industry of high technology in China. However, it is clear that the presence of Chinese investment in Cuba has been below their potential, although this trend also shows a change now.

(To be continued)

* The author is an advisor of the center of research of the global economy (ICES, Havana)

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