CUBA, CHINA, AND THE LONG MARCH TO THE MARKET

Miguel, better known as Chino, gestured enthusiastically toward his new armchair. A carpenter by trade, he had always made his own furniture, but this was a piece to be proud of. It contained the best available fabric and timber, affordable thanks to his new job. Since 2011 he had been working in a nearby marketplace, selling pipes, valves, and spare parts for home plumbing repairs. Chino took me to the small courtyard where his concrete cubicle stood alongside ten or so others, which sold everything from ground coconut to T-shirts (figure 1.1). A promotional sign indicated his professional versatility: "Se realiza todo tipo de trabajo a domicilio y en el puesto, gracias" (I provide every kind of service in-house and in-store, thank you).

Over the bustle of animated negotiations, Chino explained that he had acquired about half of the items on sale in his cubicle through official government-licensed suppliers, and the rest illegally through a network of friends working in state factories. Everybody in the courtyard, he said, relied on the black market for about half of their supplies because "otherwise none of this would be possible. Unfortunately our system is broken, because it only works if you steal things. The newspaper says Raúl [Castro, Cuba's president since 2008] is going to create a wholesale market ... that's why he went to China again to find suppliers." I had known Chino for a decade, but I had never previously encountered him with money in his pocket and optimistic about the future. In the absence of a legal supply chain, though, he would continue to operate under the table and under the threat of surprise inspections.

Chino's uncertainty about the trajectory of Cuba's development and China's role in it is shared by observers around the world. Critics argue that in contrast to China's economic liberalization over the past three decades, Cuba's commitment to "updating the socialist system" constitutes a justification for maintaining the fifty-year-old status quo, and that "nothing much will change" (Azel 2011). Others perceive real change under Raúl Castro, describing the suite of reforms announced by his government in 2011 as "a significant realignment of the paternalistic relationship that has existed between the State and its citizenry since the revolutionary period began in 1959" (Laverty 2011, 4). Even Freedom House, which has long doubted the sincerity of the Cuban government's policies, finds that "the opening of a private sector, while still limited, is driving genuine change in Cuba" (Moreno and Calingaert 2011, 25).

The global financial crisis deepened efforts to shift the contours of Cuba's post–Fidel Castro economic landscape, its impact transmitted through the island's sensitivity to foreign credit, export earnings (particularly from nickel), remittances, and tourism (Mesa-Lago and Vidal-Alejandro 2010, 690–91). Cuba's response was unveiled in the April 2011 Communist Party Congress: a series of 313 reforms called the Lineamientos de la política económica y social del partido y la revolución (Economic and social policy guidelines of the party and revolution; República de Cuba 2011).

A prominent feature of the Lineamientos is an attempt to build synergies between large state enterprises, small private actors like Chino, and suppliers for both. As in China, the goal is not to replace the state with the market, but to create a more liberal blend of state authority and market incentives capable of integrating aspiring entrepreneurs into existing hegemonic structures. Through this process the Cuban government hopes to scale back its share of spending from 95 percent of gross domestic product (GDP) to around 40 percent by 2017 (Frank 2012). This optimistic goal resonates with the advice of Chinese policy researchers in a recent issue of the Cuban journal Temas, who argue that the optimal developmental path is one that prioritizes gradual opening under the "supreme guidance of the state" (J. Yan 2011, 13; also see Shi 2011). China is not simply an example for Cuba, but an active player in the reformulation of the Cuban system. China helped Cuba survive the collapse of the Soviet Union and upgrade basic industrial infrastructure, and by 2014 Cuba's GDP (in purchasing power parity) had rebounded to $234 billion (World Bank 2015b). As noted in the introduction, China is now Cuba's second largest trading partner, with annual bilateral trade reaching $1.39 billion in 2014. The dollar amount has fluctuated considerably since reaching a peak of $2.3 billion in 2008, but it is up from just $314 million in 2000 (figure 1.2; United Nations Commodity Trade Statistics Database 2015). Commercial agreements have been accompanied by advice about trade and investment liberalization, conveyed repeatedly to Cuban officials by their Chinese counterparts ever since Fidel Castro's 1995 meeting with Chinese Premier Li Peng in Beijing (Y. Cheng 2007a and 2007b; Jiang 2009). As Chino indicated above, Cuba's emerging entrepreneurs continue to rely on the black market, a problem their government hopes to address in part through inbound supply of Chinese consumer products for the wholesale market.

Ideological affinity is no longer the prime mover of Sino-Cuban engagement. As a former Cuban diplomat in Beijing noted, "we can no longer knock on China's door and ask for favors the way we used to. Political trust is still important in our relationship, but now it's a matter of pragmatism, because the Chinese insist that the numbers have to add up" (Omar Pereira Hernández, interview, May 28, 2012). Cuba's de facto ambassador to China during the Cultural Revolution, Mauro García Triana, described the situation this way: "The Chinese are very clear about one thing: they're not going to be benefactors for Cuba like the Soviets were. I was once told in no uncertain terms by a Chinese diplomat: 'Our relations with Cuba have to be mutually beneficial or they will not work'" (interview, January 11, 2007).

Political solidarity continues to shape the contours of Sino-Cuban cooperation, but the ideological foundations of the relationship are shifting away from doctrines of top-down control. This shift reflects a common development trajectory: centralized governance once sought to command economic development and the social interactions it entails. As Lenin put it, "trust is good, but control is better." More recently, appropriately regulated private sectors have been gaining credibility in both nations as experimental policies open new ground for small businesses and the independent exchanges they require. China and Cuba are grappling with this transformation in their own ways, in the process redefining the balance of vertical and horizontal power that underpins their domestic development and bilateral relations.

This chapter's first section outlines the changing nature of...