Chinese-Cuban Business Takes Great Leap Forward Via NY Transfer News * All the News That Doesn't Fit Chinese-Cuban Business Takes Great Leap Forward Analysis by MARC FRANK, Reuters source: South Florida Sun-Sentinel April 11, 2001 HAVANA -- Chinese President Jiang Zemin's visit to fellow communist nation Cuba, starting Thursday, will add momentum to the rise of his country's economic role on the Caribbean island, diplomatic sources said. Traditionally cautious in dealing with Cuba due to Havana's leaning toward Moscow amid old Sino-Soviet rivalries, China is nevertheless the island's fourth-largest trade partner after bilateral trade doubled since the mid-1990s. Over the last two years it has also provided hundreds of millions of dollars in soft credits to a cash-needy government. Cuba -- hit hard by the collapse of its benefactor, the former Soviet Union, and economic pressure from a U.S. economic embargo -- has had to rely almost exclusively on expensive short-term credit to get by over the past decade. For Havana, China represents a welcome counter-balance to the global dominance of its old enemy, the United States, while for Beijing, Cuba is a useful economic springboard into the region that could also provide it with a political foothold. A bit of China has even begun creeping into the Havana landscape, alongside the Spanish, U.S. and Soviet architecture that attests to those countries' past influence. Jiang, during a four-day stay that is part of a six-nation Latin American tour, will no doubt visit in Havana the recently-imported Chinese gate and wall that looms over the entrance to Havana's tiny `Chinatown.'' The gate, the largest such structure in Latin America, is just a few blocks from the Spanish colonial district and within sight of the replica of the U.S. capitol building served successive Cuban legislatures up to the 1959 Castro-led revolution. A mile north, where central Prado Avenue meets Havana's sea-front Malecon, a Chinese joint venture hotel is going up at one of the city's busiest intersections. Even Cubans' household appliances reflect the island's trade relations past and present. One million Chinese televisions will begin arriving this summer to replace the aging Soviet-era sets, which took the place of U.S. brands of the 1950s. CHINESE ENTREPRENEURS WORRY COMPETITORS Jiang and President Fidel Castro are expected to review the two nations' rapidly growing economic relations and sign an agreement that both governments have said will boost their economic ties. Helping fill a void created by the U.S. embargo that makes foreign investment on the island more difficult, Chinese and Cuban state companies have already formed telecommunications, pharmaceutical, electronics, hotel, rice farming, textile and other ventures. Cuba reported China was its fourth-largest trading partner in 2000 at $520 million compared with $481 million in 1999. Diplomats and businessmen said a pattern had emerged with the Chinese government backing its new entrepreneurs' aggressive move into the Cuban market, challenging Western competitors who entered during the 1990s. `China is the only government offering Cuba long-term credits to cover trade and investment, so they are pushing companies from other countries out,'' said an Asian diplomat and expert on Asian-Latin American trade. The Chinese television sets came with a $150 million low-interest loan from China's state-run export-import bank, and an agreement from manufacturer Nanjing Panda Electronic Co. Ltd. to assemble half the sets through a Cuba- based joint venture. Foreign-based television assemblers in Cuba said they were worried they could be elbowed out of the market. `The credits are better, the products cheaper, and the arrangement less vulnerable to U.S. pressure,'' Cuban Information and Communications Minister Ignacio Gonzalez recently told reporters when asked about Gran Caiman, a Cuban-based Chinese venture producing telecommunications equipment. Last year China provided a $210 million low-interest credit to Gonzalez's ministry to purchase Gran Caiman products. WHAT'S BEHIND CHINA'S LEAP INTO CUBA? Cuban government sources said there was a dramatic change under way in Chinese-Cuban relations. After the collapse of the Soviet bloc, throughout most of the 1990s China was reluctant to step in. Bilateral trade in the mid-1990s averaged half of what it is today, and Chinese credits were minimal. But now China is eager to expand its political and commercial influence in the Caribbean and Latin America, particularly in competition with Taiwan, which it views as a breakaway province. `Politically, the Cubans do not make a move without thinking of the United States, and the Chinese without an eye to Taiwan,'' said one diplomat. `At the same time Cuba sees China as a counter to United States influence world-wide.'' The Asian trade expert said China was pursuing a strategy of using Cuba as a base for an economic and political offensive in the region. Both theories were at least partially substantiated last week when the government of Taiwan expressed concern over Jiang's Latin American tour, and China announced its Latin American trade reached a record $12.6 billion. 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