Cuba hopes for more investment as Chinese president arrives

Cuba hopes for more investment as Chinese president arrives

BY MARC FRANK

HAVANA Mon Jul 21, 2014 1:42pm EDT



(Reuters) - Chinese President Xi Jinping begins a two day visit to Cuba

on Monday evening, stirring hopes on the island that China will finally

invest in the country after a number of important deals never materialized.



Xi was to meet with President Raul Castro on Tuesday and then fly to

Santiago de Cuba to see plans to improve port facilities and recovery

efforts from Hurricane Sandy, which devastated Cuba's second city almost

two years ago.



Xi was in Brazil last week for a summit of the BRICS nations, which also

includes Russia, India and South Africa. He then traveled to Argentina

and Venezuela, signing a raft of multi-billion dollar credit and

investment agreements, before stopping in Cuba on his way home.



Communist-run China and Cuba are close political allies. Generous trade

credits have made China the island's largest creditor and second biggest

trade partner after Venezuela at $1.4 billion last year.



China has rescheduled Cuba's government and commercial debt, believed to

top $6 billion. But large investment agreements for the nickel industry,

signed in 2000, another in hotels, and a deal to expand an oil refinery

agreed five years ago, have not materialized.



Chinese-made cars, buses, locomotives, ships and household appliances

are increasingly prevalent in Cuba. China's flag flies from leased oil

rigs along the northwest coast and a modern container port boasts

Chinese equipment, but direct investments are limited to a

communications venture established 15 years ago and an onshore oil block

in Pinar del Rio province.



Chinese diplomats and businessmen have told Reuters over the years that

they had little confidence in Cuba's ability to work efficiently with

them, complained about the high cost of doing business, and said Cuba

has balked at bringing construction crews in from China to build projects.



Little of the $80 billion China has invested in Latin America and the

Caribbean in recent years has been in Cuba. That, along with a review of

debt and trade, will top this week's agenda.



Raul Castro began instituting market-oriented reforms after taking over

from ailing brother Fidel Castro in 2006, much as China did in the 1980s.



This year, Cuba established its first Chinese-style special development

zone and passed a more attractive foreign investment law with a

particular eye to friendly nations such as Russia, China and Brazil. It

includes a clause aimed at China that for the first time would allow

investors to bring in their nationals for construction.



Talks are reportedly underway for a number of investment projects,

including in pharmaceuticals and automotive assembly, but no final

investment agreements are expected this week.



"The Chinese are not satisfied with the pace and depth of reforms in

Cuba," said Christopher Sabatini, senior director of policy at the

Americas Society and Council of the Americas.



"This is ultimately a pragmatic government and it's not about to invest

in Cuba for ideological reasons or even for geopolitical, long-term

reasons if there isn't a profit or resource to be gained immediately."



(Reporting by Marc Frank; Editing by Kieran Murray and Andre Grenon)



Source: Cuba hopes for more investment as Chinese president arrives |

Reuters -

http://www.reuters.com/article/2014/07/21/us-cuba-china-idUSKBN0FQ1SI20140721