China’s relationship with Cuba sours as island’s dictatorship refuses to enact much-needed economic reforms

From our Bureau of Shattered Romances with some assistance from our Bureau of Annoyed Sugar Daddies

According to an article in Financial Times, China has grown weary of Castro, Inc.’s dysfunctional policies. As a result, Cuba no longer has a “comprehensive strategic partnership” with China, as do many other Latrine American nations, such as Venezuela, Brazil, and Mexico. So, apparently, China is as angry at Castro, Inc. as the Cuban people themselves. The end result is that China is now refusing to invest in a sinking ship.

From Financial Times

It is the only communist nation in the Americas, was the first in the western hemisphere to recognise the People’s Republic of China and is described by Beijing as “good brother, good comrade, good friend”.

But despite their shared political legacy — and what Washington says is a history of Chinese spying activity from Cuba — the island’s economic collapse has hurt commercial ties with China just as Beijing’s strategic rivalry intensifies with the Caribbean island’s arch-enemy, the US.

Chinese trade with Latin America has grown more than tenfold over the past two decades and continues to surge: China has become the second-largest trading partner for the region, after the US. But the import of Chinese goods to Cuba fell from $1.7bn in 2017 to $1.1bn in 2022, the last year for which Cuban data is available.

The two countries do not release data on Chinese investment in Cuba, but Cuban economist Omar Everleny said it amounted to a “laughably small” proportion of the roughly $160bn Beijing invested in Latin America and the Caribbean between 2005 and 2020.

Chinese companies involved with state-backed deals were owed large sums by the Cuban state, said people briefed on the debts. Major Chinese companies such as Huawei and Yutong “are owed hundreds of millions of dollars each”, said an overseas businessperson who trades with the island.

Scant raw materials and an unproductive economy leave the island with little to export to China, while imports have diminished in recent years as hardened US sanctions severely aggravated Havana’s chronic late-payment problems and dried-up credit lines.

Since the Covid-19 pandemic, sugar production on the island — once a critical industry — has plummeted to its lowest levels in more than a century: there is barely enough sugar to cover domestic requirements. That has resulted in the scrapping of a long-standing agreement to export an annual 400,000 tonnes of sugar to China.

“China is not Cuba’s sugar daddy,” said Fulton Armstrong, former US national intelligence officer for Latin America. “It’s mostly a relationship of solidarity statements. It’s not a strategic relationship for either country.”

Cuba today does not even feature among China’s top-tier allies in Latin America. Beijing has what it calls “comprehensive strategic partnerships” with Argentina, Brazil, Chile, Ecuador, Mexico, Peru and Venezuela, all major commodity exporters, but not with Cuba.

China publicly supports Cuba’s right to choose its own path to economic development “in line with its national conditions”, but privately Chinese officials have long urged the Cuban leadership to shift from its vertically planned economy to something closer to the Chinese model, according to economists and diplomats briefed on the situation.

Chinese officials have been perplexed and frustrated at the Cuban leadership’s unwillingness to decisively implement a market-oriented reform program despite the glaring dysfunction of the status quo, the people said.

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