Cuba looks to China for inspiration

6 July 2012 Last updated at 11:29 GMT

Cuba looks to China for inspiration
Sarah Rainsford By Sarah Rainsford BBC News, Havana

Cubans didn't know their President was going to China and Vietnam until
after he left Havana. The visit was announced with a few lines in the
Communist Party paper Granma, with no details.

But Raul Castro doesn't travel much, so his decision to spend almost a
week abroad is a sign of the significance he places on Cuba's
relationship with its communist allies.

The timing of his visit is no accident.

Cuba has begun introducing measures intended to kick-start its
inefficient, unproductive planned economy.

It is a tentative start: The word "reform" is never used, nor "private
enterprise" - instead, Cuba says it is "updating" its economic model.

Like China and Vietnam before it, the island's aim is to protect and
prolong its socialist political system by introducing elements of market
economics.

So it seems Raul Castro is in Asia looking for inspiration.

"The visits are very important for the President to really feel the
advances there. Unlike Eastern Europe, these countries have undergone
deep reform whilst maintaining their socialist characteristics,"
explains Omar Everleny, director of the Centre for the Study of the
Cuban Economy.
Things to learn

He points out that the Chinese and Vietnamese economies are both growing
at a rate of about 10%; Cuba's growth rate is less than 3%.

"I think they did it through great pragmatism, and by using more and
more market instruments. Through gradual advances, not shock therapy.

"We should not copy them, but there are things to learn from both
models," Mr Everleny believes.

There is also, as Cuba has just discovered, more immediate economic gain
from the visit: China has announced it will extend funds in an
interest-free loan and a credit line to the island. Neither side has
given details.

Both China and Vietnam began their reforms in agriculture, in the latter
case transforming the country from a rice importer into a major exporter
and key supplier for Cuba.
Cuba national flag in front of the Monument to the People's Heroes, at
Tiananmen Square in Beijing Cuba hopes to increase its growth rate

Here, the state has begun allowing farmers to lease land and to sell
produce directly to the market but harvests - like this year's potato
crop - still underperform and Cuba is forced to import most of its food.

And in the field of foreign investment - something encouraged in China
and Vietnam - Cuba still lags well behind. A number of projects that
have been planned for some time - including high-end tourist
developments - remain on hold and tough terms mean the overall number of
foreign joint ventures is falling.

Economist Omar Everleny suggests a lesson Cuba might learn from its
Asian allies is the potential for investment from its own diaspora.

"Today some 70% of investment in China is by Hong Kong Chinese," he
points out. "The diaspora contributed to the reconstruction in both
countries. I think that's something to study."
Key support

More than a million Cubans currently live in the United States. Once
condemned as "traitors" they are not permitted to invest openly in the
island.

But since Cuba began opening up its economy - allowing citizens to buy
and sell cars and houses, and open larger, privately run restaurants -
much of the money to fund that has been sent to Cubans from relatives
abroad.

Most of the economic ties between Cuba, China and Vietnam are in trade.

China is the island's second biggest trade partner after Venezuela.
Bilateral trade rose to $1.9bn (£1.2bn) in 2010 from $996m in 2005;
trade with Vietnam totals $269m.

Today, the streets of Havana are full of Chinese "Yutong" buses; some
government ministries have traded in decrepit Russian Ladas for Chinese
Geely cars and most of the domestic appliances in hard-currency stores
are made in China.

After the Soviet Union collapsed, plunging Cuba into crisis as vast
subsidies disappeared, China was a key support for the island.

Now there are new challenges.

Immense task

Cuba is being forced to consider a possible future without the economic
prop of Venezuela, a vital supply of cheap oil, as Socialist President
and close Castro-ally Hugo Chavez fights for re-election after two
rounds of treatment for cancer.

Foreign firms exploring off Cuba's north coast have so far failed to
strike the fuel that would hand the island's government an economic
lifeline.

The task for Cuba is immense, and many complain the changes so far are
too hesitant and too piecemeal.

There is clearly resistance within the Communist Party and the vast
bureaucracy.

And there is no declared overall vision for a future Cuba, indicating
how far the reforms will ultimately go.

But the "guidelines", as they are known, were only approved at the Sixth
Party Congress last April. Vietnam began its reform in the 1980s.

The process here is in its infancy.

So as he visits two countries that succeeded in transforming their
cumbersome command economies into success stories, Raul Castro will have
a lot to see and consider.

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