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China and the Cuban Economy

By Adrian H. Hearn

As the balance of global power shifts East, the Cuban economy appears to be heading less toward the free market policies of Washington DC and more toward the state capitalism of Beijing.

Since officially taking over from his brother Fidel in 2008, Raúl Castro has introduced reforms in Cuba to begin what some hope will be a period of economic liberalization. But these reforms are not necessarily moving the island nation in the direction sought by the United States for half a century. Instead, as the balance of global power shifts East, the Cuban economy appears to be heading less toward the free market policies of Washington DC and more toward the state capitalism of Beijing.

For critics of these reforms, Cuba’s commitment to “updating the socialist system” is seen as justification for maintaining the 50-year-old status quo. Unlike China’s economic transformation, they argue, “nothing much will change.” Others view the Cuban government’s initial steps to unleash market forces as “a significant realignment of the paternalistic relationship that has existed between the state and its citizenry since the revolutionary period began in 1959.” As in China, the goal appears to be a mixed economy in which citizens follow their entrepreneurial dreams while generating tax revenue under the “supreme guidance of the state.”

Cuba’s new economic path is not the one espoused by Western policymakers, who have long urged countries like Cuba and China to scale back their intervention in economic affairs. The 2008–2009 global financial crisis threw into question two decades of this advice. Today, China’s rise has institutions from the International Monetary Fund to the U.S. government questioning the appropriate balance between the state and the economy.

This global shift has made China’s experience relevant to the new Cuban economy. While the Chinese government may be Communist in name, it looks outward with a brand of pragmatism unknown to Cold War contenders. Its relations with Cuba demonstrate this pragmatism: for over a decade China has been advising the island to embrace private entrepreneurship, and to buy Chinese manufactured products. From refrigerators and televisions to public transport and hospital equipment, China’s impact touches the daily lives of most ordinary Cubans. China is now the island’s second largest trading partner, with bilateral trade reaching $1.83 billion in 2010.

Click here to read the full article at AmericasQuarterly.org.

Adrian H. Hearn is convenor of international relations at the University of Sydney China Studies Centre. He is a co-editor of China Engages Latin America: Tracing the Trajectory (2011).

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