Xi's "Blah-Blah" Trip to Cuba

Wednesday, July 23, 2014
Over the weekend, Chinese dictator Xi Jingping traveled to Argentina, where he signed finance deals worth $7.5 billion for two hydroelectric plants and a railway project.

China's interest in Argentina is commodity-based, mainly soybeans.

Then, Xi traveled to Venezuela, where he signed a $4 billion finance deal, in exchange for one million barrels of oil per day through 2016.

China's commodity interest in Venezuela is obvious.

Finally, Xi traveled to Havana where he reportedly (according to Cuban state media) signed various cooperation deals, of which no details or amounts were disclosed.

China's interest in Cuba is, well, rhetoric.

Xi's latest visit sounded eerily familiar to his 2011 trip to the island, where he also signed a "host of cooperation deals" -- few of which have seen the light of day.

The big news during Xi's 2011 trip was that China was going to build a $6 billion oil refinery in Cuba.

Imagine the media hype and propaganda.

Needless to say, it never happened.

The Chinese have long been skeptical of doing business with the Castro regime.

As a Wikileak-released 2010 State Department cable revealed:

"(C) Payment problems continue for all countries. Despite once again restructuring all of its official debt in 2009, Japan has yet to see any payments. Even China admitted to having problems getting paid on time and complained about Cuban requests to extend credit terms from one to four years. When France and Canada responded with "welcome to the club", China suggested Canada help secure payment from a Cuban joint venture that includes Canadian firm Sherritt International which is now reportedly receiving its share of profits.

(C) Foreign investors have been treated poorly in Cuba and new investors will demand additional protections and guarantees, according to the French. The Chinese complained that the GOC's insistence on keeping majority control of all joint ventures makes no sense. "No matter whether a foreign business invests $10 million or $100 million, the GOC's investment will always add up to 51%," China's commercial counselor said in visible exasperation. He noted a joint venture to produce high-yield rice that produced a good first harvest but was not sustainable at the GOC-mandated prices. Brazilian investors are taking a longer term view on returns, however, noting some success in raising capital for the refurbishment of the port at Mariel."

Kudos to Reuters for its prudent reporting on Xi's trip this week:

"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."

In stark contrast, the AP's Havana bureau simply regurgitated what Cuban state media released and -- as usual -- unquestionably praised Raul Castro's so-called "reforms."