Why has China snubbed Cuba and Venezuela? – The Economist explains

Why has China snubbed Cuba and Venezuela? – The Economist explains

XI JINPING’S first visit to Latin America and the Caribbean as China’s president, from May 31st to June 6th, took him tantalisingly close to Beijing’s strongest ideological allies in the region, Cuba and Venezuela. Yet he steered clear of both of them. Instead of visiting Cuba, as his predecessor Hu Jintao did on his first presidential trip to the region, Mr Xi stopped off in an English-speaking Caribbean nation, Trinidad and Tobago, which (as if to rub it in) is only a short hop from Caracas.

He then travelled to Costa Rica and Mexico (pictured)—two countries that are at least as much a part of America’s orbit as Cuba and Venezuela are part of the “Beijing Consensus”. Why this snub to two friendly nations that have been lavished with Chinese largesse in recent years, especially at a time when both are struggling to come to terms with the death in March of Hugo Chávez, the Cuba- and China-loving Venezuelan leader?

The short answer is: for simplicity’s sake. Visits to Cuba and Venezuela might well have raised distracting questions when Mr Xi meets Barack Obama in Southern California on June 7th, and neither socialist government was likely to express publicly any offence at being left off the itinerary. The beauty of having a chequebook as thick as China’s is that if you give your friends the cold shoulder, you can always mollify them with money. That may be why, on June 6th, Venezuela’s oil minister announced that he had secured an extra $4 billion from China to drill for oil, in addition to $35 billion already provided by Beijing. Not quite in the same league, but significant nonetheless, the Havana Times reported this week that China was also planning to invest in Cuban golf courses, the island’s latest fad.

However, as our story on Mr Xi’s visit to Latin America points out, he may have had other reasons for picking the destinations that he did. Firstly, he may be trying to respond to Mr Obama’s “pivot” to Asia by showing that China is developing its own sphere of influence in America’s backyard. China’s business relationship with Latin America gets less attention that its dealings with Africa, but in terms of investment, it is much bigger. According to Enrique Dussel, a China expert at Mexico’s National Autonomous University, Latin America and the Caribbean were collectively the second largest recipient of Chinese foreign direct investment between 2000-2011, after Hong Kong.

In terms of funding, Kevin Gallagher of Boston University says China has provided more loans to Latin America since 2005 than the World Bank and the Inter-American Development Bank combined. The visits to Mexico and Costa Rica may also represent a pivot of sorts in terms of the type of economic relationship China has with Latin America. Up until now, China has hoovered up the region’s commodities, importing soya, copper, iron, oil and other raw materials, particularly from Brazil, Chile and Venezuela, while flooding the region with its manufactured goods. But its relations with Mexico, a rival in low-cost manufacturing, have been frosty: China accounts for only about 0.05% of Mexican foreign direct investment, and it exports ten times as much to Mexico as it imports.

But as wages in China have increased and high energy prices have raised the cost of shipping goods from China to America, Beijing may be looking for bases such as Mexico and Costa Rica where it can relocate Chinese factories and benefit from free-trade agreements with the United States. This idea thrills the Mexican government, but does it pose an immediate threat to Venezuela and Cuba? Probably not: China will continue to need their staunch ideological support over issues like Taiwan, for one thing. But it does suggest that China’s economic interest in the region is broadening, especially along the Pacific coast. If that proves to be the case, Cuba and Venezuela, deprived of the charismatic Chávez to court Beijing on their behalf, will have to work hard to stay relevant.

Source: http://www.economist.com/blogs/economist-explains/2013/06/economist-explains-3

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Comments

  • Helen  On 06/07/2013 at 1:26 pm

    China is now the new U.S.A. She has ulterior motives for every penny invested in other nations and soon will be owning many of them.

  • Rosaliene Bacchus  On 06/07/2013 at 4:14 pm

    Thanks for sharing this article.

  • Clyde Duncan  On 06/08/2013 at 8:07 am

    China is part of BRICS – Brazil-Russia-India-China-South Africa and together they are doing an excellent job asserting themselves in the world, in general. Quite unlike the previous powers such as the European nations and USA with their divide and rule strategy; and hostile, imperialistic approach to dominating other countries militarily. Just recently they have come together to create an alternative to the IMF and World Bank: http://www.breitbart.com/Big-Peace/2013/03/30/China-Russia-Coalition-Creates-Alternative-to-IMF-World-Bank

  • Cyril Balkaran  On 06/08/2013 at 9:04 am

    China is a super power in Asia. She is powerful militarily and is armed with a full complement of Nuclear Arsenal. Her growing Economic power is seen as an expansion of her external economic base with countries in Africa, Latin America and the Caribbean Region. The President of China wants things to get better with the USA and Korea and so quiet diplomacy is being practised at all levels of socioeconomic development, On one hand billions of US$ are given in hand
    and on the other deals are signed to get the nations committed for a long period of time to realise the Economic development that can take place in each
    country so interested and which forms the China Economic Development Axis.

  • Clyde Duncan  On 06/08/2013 at 5:10 pm

    5 Minute Forecast: “This year is pivotal for the global economy,” the Financial Times reports. “In 2013, for the first time since mechanization led Britain down the path of industrialization in the 19th century, emerging economies will produce the majority of the world’s goods and services.”

    The tectonic plates are shifting. Rapidly.

    The citizens of the richer, more advanced economies, FT explains, “have long represented a small but powerful proportion of the world’s population. Today, though, they are less economically important than the mass of people living in the world’s poor and middle-income countries.”

    “The shift in the balance of global economic power is profound,” FT proclaims.

    Profound? Yes.

    Unexpected? Not quite.

  • Clyde Duncan  On 06/09/2013 at 4:15 am

    Financial Times commentary: http://www.ft.com/intl/cms/s/0/b0bd38b0-ccfc-11e2-9efe-00144feab7de.html#axzz2VgmOKiP2

  • Cyril Balkaran  On 06/09/2013 at 4:29 am

    Russia is Cuba’s Political and economic ally since the days of the USSR. John F Kennedy created the 1962 Missile Crisis in the Caribbean Sea and forced Russia from continuing their Anti Missile Program in Cuba.Nikita Kruschev the then leader of the Kremlin backed down and averted war in the Caribbean sea. The Chinese have not been known for any sound economic nicety to Cuba and even Venezuela. So the Chinese President was going to Washington without these two more additional baggages to deal with. One must assume that Venezuela is still a hostile country to the USA post Chavez era. Cuba has been given time to de-politizise its Communist Agenda and to free the political Prisoners in due course. The Chinese leadership was wise enough to practice Ping Pong Diplomacy!
    I wonder therefore whether the Caribbean Press was expecting too much of the Region from the great Chinese Leadership!

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