OPPORTUNITIES
FOR STRENGTHENING ECONOMIC AND TRADE COOPERATION BETWEEN CUBA AND SHANDONG
OPORTUNIDADES PARA EL
FORTALECIMIENTO DE LA COOPERACIÓN ECONÓMICA Y COMERCIAL ENTRE CUBA Y SHANDONG
Kong Xiangrong I
* https://orcid.org/0000-0003-0950-6270
I Shandong
Academy of Governance, Shandong, China
*Corresponding author: kongxiangrong666@126.com
JEL
Classification: E22, E62, F3
Received: 03/05/2021
Accepted: 19/07/2021
Abstract
Economic and
trade cooperation between the Republic of Cuba and the People's Republic of
China has a long history and has achieved gratifying results in the 1960s years
of diplomatic relations. China is the second commercial partner of Cuba and its
main technological supplier and the province of Shandong is one of the most
important provinces within the economic-commercial cooperation between both
nations. In the article, the key areas of cooperation are highlighted, with the
aim of visualizing them, for their strengthening, highlighting future
projections. In addition, some alternatives are shown to provide a reference in
the economic and commercial cooperation between Cuba and the Shandong province.
Keywords: economic cooperation, trade
cooperation, policies, strategic sectors, special development zones, foreign
investment, Belt and Road
Resumen
La cooperación económica y comercial
entre la República de Cuba y la República Popular China tiene una larga
historia y ha logrado resultados gratificantes en los 60 años de relaciones
diplomáticas. China es el segundo socio comercial de Cuba y su principal
proveedor tecnológico y la provincia de Shandong es una de las provincias más
importantes dentro de la cooperación económico-comercial entre ambas naciones.
En el artículo, se destacan las áreas claves de la cooperación, con el objetivo
de visualizarlas, para su fortalecimiento, destacándose las proyecciones
futuras. Además, se muestran algunas alternativas para proporcionar una
referencia en la cooperación económica y comercial entre Cuba y la provincia de
Shandong.
Keywords: cooperación económica, cooperación comercial, políticas,
sectores estratégicos, zonas especiales de desarrollo, inversión extranjera,
Franja y Ruta
Introduction
The
mutual ambition of the governments of the
Republic of Cuba and the People's Republic of China to expand economic and
commercial exchanges has brought gratifying results to bilateral cooperation.
China is Cuba's second trading partner and one of the main technology providers.
Shandong is one of the most important provinces for economic and commercial
cooperation between both nations. Already in 2001, the province of Shandong
signed a friendly relationship agreement with the former province of Havana. In
2019, the export volume from Shandong province to Cuba represented
approximately 10% of bilateral trade. Many Shandong companies have cooperated
with Cuba, and the results have been remarkable.
This article aims to explore the key
areas of economic and commercial cooperation between Cuba and Shandong, for its
strengthening, with the search for new opportunities and the deepening of
existing ones.
Key areas of economic and trade cooperation between Cuba and Shandong
There are several areas of the economy in which a fruitful collaboration
between Cuba and Shandong has been sustained. Some of these sectors, in which
the close ties and opportunities for growth are evident, are:
1.
Biotechnology applied to
health and the health services industry
The biotechnology sphere is the most
important in the cooperation between Cuba and Shandong. In this area, the
exchange is very active. The two parties established the Lukang Haiboer
Biotechnology Co., Ltd., which is engaged in the research, production and
marketing of agricultural products and semi-finished products. The Center for
Genetic Engineering and Biotechnology (CIGB) is the most advanced center of
Cuban biotechnology and in 2014 established a joint venture with the Shandong
Lukang Pharmaceutical Co., Ltd., to deepen cooperation, based on trust mutual.1
On April 6, 2018, the signing ceremony of the CIGB-814 project of type I
innovative products was held in the Lukang Pharmaceutical Park. At the same
time, the bilateral exchange was deepened to cooperate in the establishment of
a joint platform of Research and Development (R&D) of biotechnological
products and a Memorandum of Understanding were signed, which expanded the
space for cooperation between Lukang and the CIGB.2
Shandong is
a province with a large economy and population, whose GDP ranks third in the
country and its demographic of more than 100 million people ranks second. In
keeping with its sustained socioeconomic development, the people's health and
medical care needs have been growing. The health and wellness sector is one of
Shandong's five emerging industries. By 2022, this industry aims to reach an
added value of RMB 1.15 trillion and thus become an important pillar of the
province's economy.
Within this
industry, the added value of the health services sector occupies more than 60%
and a group of cities such as Jinan, Qingdao, Yantai, Zibo and Linyi have
reached the level of 10 billion, which allows raising the international level
industry medical of the province's and the quality and efficiency of the biopharmaceutical
industry.
Cuba has the highest number of
doctors per capita in the world, with 6.7 doctors per 1,000 inhabitants,
compared to 2.5 in the United States, 2.8 in the United Kingdom, 3.2 in France
and 3.8 in Germany. Counting nurses, Cuban medical personnel represented 13.2%
of the total workforce. On the other hand, Cuba has made long-term efforts to
develop high-standard biopharmaceutical technology and has developed many novel
products.
The CIMAvaxEGF and RACOTUMOMAB lung
cancer vaccines are at the forefront of the world. Adjuvant cancer drugs
VIDATOX (blue scorpion peptide) and lipid-lowering drugs PPG are popular drugs
bought by the Chinese abroad.3 The pharmaceutical industry has
become one of the main lines of exports in Cuba with a wide range of products.
The prospects for cooperation
between the two parties in the field of biotechnology are many. Both Cuba and
China prioritize people's health. To combat the new SARS-CoV-2 coronavirus
pneumonia epidemic, the two sides have built numerous infrastructures and
invested in substantial human and material resources. At the same time, the
epidemic offers new possibilities for cooperation between Cuba and China in the
fields of biotechnology and health.4 Cuba and Shandong have great
development potential in the field of medicine and pharmaceutical production
and can further strengthen cooperation and join forces in the field of
biomedicine.
2.
Electronic and digital technology
In 2020, the Cuban ambassador to
China, Carlos Miguel Pereira Hernández, within the framework of the 60th
anniversary of the establishment of diplomatic relations between the two
countries stated: Cuba has always maintained contact with Shandong companies,
which carry out an important role in the modernization, transformation and
improvement of the Cuban electronics industry.5 During his working
visit to Shandong, held on September 10 and 11 of the same year, he referred to
the historical ties that unite Qingdao with Cuba, from the presence in that
town of the Haier business group, with more than 20 years of uninterrupted
relations with the island. Likewise, he underlined the broad prospects for
bilateral cooperation and the importance of strengthening existing links and
systematizing them with a future and comprehensive projection.6
In December 2013, the Shandong
Inspur Group successfully held a promotional event for cloud computing with the
Cuban company COPEXTEL, on that occasion, both entities signed a server
acquisition contract.7 This was the first marketing event organized
by Inspur Group in Cuba, to show clients its strengths in servers and cloud
computing. Inspur Group received strong support from top Chinese and Cuban
government officials and was given their utmost attention by local clients. The
promotion activity had more than 80 participants, among them, senior officials
from COPEXTEL and the Cuban Electronics Group, as well as technical personnel
and government officials from the Ministries of Communications, Tourism,
Economy, Education, Ministry of the Interior and Ministry of Public Health,
among others. Through this conference to promote cloud computing in Cuba,
Inspur has carried out comprehensive cooperation with COPEXTEL and the Cuban
Electronics Group in products, technologies, services and other fields.
In the current context of the
coronavirus pandemic, services such as telemedicine, online education, exchange
platforms and cross-border e-commerce have been widely used in the world and in
particular in China, playing an important role. for economic stability in
various countries and in international cooperation against the epidemic. China
is adapting to digitization and networking to accelerate international
cooperation in the digital field, which is an opportunity for economic and
trade cooperation between Cuba and China.
The new generation of information
technology is one of Shandong's top five emerging industries. Cuba and Shandong
can continue to strengthen cooperation in the field of information and
communication technology, to help build computerization in Cuba.
Main channels of economic and commercial cooperation between Cuba and
Shandong
There are several ways in which can
be developed and deepened, which are set out below.
1.
Actively deepen trade cooperation
Economic and trade relations between
China and Cuba are strategic and complementary at the same time. There is close
cooperation in the fields of biotechnology, healthcare, tourism, industry, food
and agriculture, and renewable energy. For example, China and Cuba have signed
a series of biomedical technology cooperation agreements. The "China-Cuba
Tourism Cooperation Memorandum" was signed and the industrial departments
of the two countries jointly developed development plans that included
renewable energy industries.8
Regarding the economic development
of Cuba, the expansion of exports and the promotion of the diversification of
export products are the primary issues and also an important part of bilateral
cooperation. Cuban products such as cane sugar, tobacco, lobster, nickel and
rum are well known in the world and are also admired by Chinese consumers.
Cuba's rich mineral resources, soft rum and other staples also have a large
market in Shandong.
Shandong is a major coastal economic
province of China and its agricultural exports account for a quarter of the
country. It presents a complete industrial sector and system and the production
value represents 13% of the country. A large number of internationally renowned
companies and brands such as Haier, Inspur, Weichai, Ruyi, Tsingtao Brewery, etc.
emerged. Shandong actively explores emerging markets along the "Belt and
Road" initiative and maintains sustained growth in the scale of trade.
During the epidemic, the
"Shandong Export Products Online Fair" was actively held, companies
were organized to participate in various online exhibitions, such as the
"Canton Online Fair", and participation in emerging markets such as
ASEAN, Central and Eastern Europe, Central Asia and Western Asia.
The value of exports of household
appliances, medical materials, medicines, fruits, among others, reached
double-digit growth. Many high-quality, low-cost products are also well suited
to the needs of Cuban consumers. Cuba and Shandong have broad prospects for
cooperation. Thus, through the active development of various commodity
exhibitions, trade exchanges between the two countries can be strengthened to
strengthen cooperation.
2.
Actively deepen investment cooperation
Investment cooperation between China
and Cuba opened up new opportunities. Cuba's recent draft amendment to the new
constitution9 affirmed the importance of legalizing private
companies and foreign investment, which has provided new opportunities for
Chinese companies to invest in Cuba.
Cuba looks forward to the
introduction of capital, technology and manufacturing capacity from China. The
two parties have great potential for cooperation in the fields of biomedicine,
pharmaceuticals, energy, TMT (technology, media and communications) and
tourism. The Cuban market has low entry barriers, legal security and
transparency, political and social stability, and a superior geographic
location, which are the main advantages for attracting foreign investment.10
Shandong Province has a number of
iconic production capacity cooperation projects in the fields of textiles and
garments, electronic appliances, rubber tires, chemical metallurgy, equipment
manufacturing, etc., landing in countries throughout of the "Strip and
Route". Among the 20 overseas economic and trade cooperation zones
nationwide that have passed nationwide verification and evaluation, Shandong
Province has established 4 overseas economic and trade cooperation zones
nationwide in countries throughout the route, which represents 1/5 of China.
Highlights are the textile and clothing industry, fine chemicals, wood
processing and household appliances, and other overseas industrial groups.
At the same
time, the Chinese government encourages Chinese companies to do more business
in Cuba and also welcomes Cuban companies to invest and trade in China. Looking
to the future, China-Cuba economic and trade cooperation has broad prospects
and enormous potential. Compared to this potential, the scale and level of
China-Cuba economic and trade cooperation still have much room for improvement
due to the extraordinary opportunities that exist.
3.
Strengthening scientific and technological
cooperation
Under the
direction of the government, the establishment of joint Research and
Development (R&D) platforms or laboratories by scientific research
institutes and companies is promoted. Shandong encourages the establishment of
joint R&D centers or laboratories with universities, scientific research
institutions and companies in countries along the "Belt and Road",
supports leading international scientists to build Nobel laboratories and
workstations in Shandong, and implements the introduction mechanism of “one
issue, one discussion.”
Scientific-technological
cooperation and transformation of the results achieved in key areas is
promoted, using projects as a starting point and basis for transformation and
development. transfer of specialized international technological achievements
and thus promote the "flourishing and development" of international
first-rate high-tech in Shandong province.
Cuba and
Shandong can further strengthen cooperation between scientific research
institutes and enterprises of both sides in the field of biotechnology through
mutual visits and government exchanges. In the R&D process, Cuba can use
its technological advantages and trained personnel in the biotechnology field
to jointly build R&D centers or laboratories with Shandong for joint
research.
Moreover, in
the production process, Shandong has several international cooperation
platforms such as the Shandong Free Trade Pilot Zone, the China-Shanghai
Cooperation Organization Local Economic and Trade Cooperation Demonstration
Zone, the Academic Port of Qingdao and the High-Tech Park, etc., which can
provide financial support and promote the industry of scientific research
results, in the formation of large-scale production. And in terms of the
commercialization process, Shandong has the Great International Logistics
Corridor of the emerging markets of "Belt and Road", which would make
it possible to jointly open a market with third parties.
Another
opportunity is appreciated in the R&D-production-sale value chain, in which
Cuba can take advantage of its technological advantages in the field of
biomedicine, participate in the R&D process and combine the advantages of
manufacturing and Shandong market to form a win-win, win-win cooperation
mechanism.
4.
Strengthening
cooperation in areas of humanities such as education and tourism
Cuba not
only has advantages in resources and minerals, but also has a high level of
higher education, recognized in the world, with high quality medical care and a
high index of people's happiness. In the field of tourism, Chinese tourists are
increasingly interested in traveling to Cuba. In 2003, Cuba became the first
country in Latin America to be declared a "Chinese tourist
destination", providing a good opportunity to promote cooperation between
Cuba and the province of Shandong in the field of tourism.
The social
environment of Cuba is safe and stable, Chinese tourists can not only enjoy
sunny beaches, but also experience diversified tourism projects such as
ecology, medical treatment, historical and cultural tourism.
Tourism is a
key development area in Cuba, and the cooperative development of tourism
between Cuba and China is in line with the National Plan for Economic and
Social Development of Cuba for 2030.11 Under the initiative one
"Belt and Road" of China, the two countries, especially Cuba and
Shandong Province, can cooperate in key areas such as medical services,
education and tourism.
Alternatives for strengthening
economic and commercial cooperation between Cuba and Shandong
There are
several alternatives for economic and commercial cooperation that can be
explored in the present and future of relations between Cuba and Shandong,
these being:
1.
Build a platform to
promote communication and the exchanges between the two parts
The Pearl of
the Caribbean and China has deep historical ties. Cuba is experiencing a
process of change and transformation of its economic model, just as China does,
which is developing a process of reform and opening up, which can enhance the
strengthening of economic and trade relations between the two countries. Cuba
is an important commercial partner of China, but in this new stage, a greater
understanding of all possible alternatives for strengthening cooperation is
required.
Under the
new situation in which the two countries continue to develop their own
economies, expanding market demand, and the business community pays more
attention to each other's markets, how to better understand and understand each
other so that companies that are market players can obtain more and better
information on policies, markets and projects, in order to find more suitable
avenues and opportunities for cooperation.
In this
sense, a greater exchange and dialogue is required to identify the advantages
and opportunities in achieving a mutually beneficial collaboration. One way
could be the government construction of a good platform, through the holding of
the Cuba-Shandong Investment Forum, among other spaces, that allows
strengthening exchanges, improving understanding, promoting investment and
seeking common business opportunities.
The
China-Latin America Cooperation Fund of the Export-Import Bank of China is a
platform for cooperation between Chinese and Cuban companies. In this sense, a
greater exploration and learning of the China-Latin America Cooperation Fund is
required, with the objective also that more Chinese companies invest in
cooperation with Cuba. In the future, China and Cuba may have more cooperation
in equity financing, venture capital funds, main funds, etc. In this way, the ties of friendship between
both countries are deepened, while both parties share profits.
In the
post-pandemic stage, the global investment pattern will show a regional
development trend. The adjustment and differentiation of the global industrial
chain will focus on the market and the regional industrial chain will be
deployed in countries close to the Asian market. For example, the signing of
the Regional Comprehensive Economic Partnership Agreement (RCEP) will promote
the development of Asian regional economic integration.
In 2020,
China jointly signed the RCEP with 10 ASEAN countries and Japan, South Korea,
Australia and New Zealand. The population, Gross Domestic Product (GDP) and
total trade volume of these 15 countries represent around 30% of the global
total, which means that around a third of the world economy makes up an
integrated market. Achieving the RCEP will help expand export markets, meet
import needs, and strengthen supply chain coordination in regional industrial
chains.
RCEP is a
large-scale, comprehensive, modern, high-quality and mutually beneficial
regional free trade agreement. Among
the beneficial aspects, the following stand out:
·
The number of zero-duty products in
merchandise trade will generally exceed 90%.
·
The level of openness to trade in services
and investment is relatively high. RCEP member states have made a higher level
of openness commitments in the areas of finance, telecommunications, and
professional services. When companies choose services such as consulting, legal
advice, accounting, finance and transportation, among others, they can choose
between national and foreign suppliers, which is convenient for international
investment companies.
·
The adoption of new technologies promotes
customs facilitation and the development of new cross-border logistics.
Whenever possible, endeavor to release express and perishable goods within 6
hours of arrival.
·
The adoption of a negative list for access
to investment.
·
The inclusion of high-level intellectual
property.
·
The promotion of electronic commerce or
e-Commerce Chapters to adapt to the needs of the era of the digital economy.
Furthermore,
the completion of the RCEP free trade area is a new milestone in the regional
economic integration of East Asia. This zone will significantly optimize the
general business environment in the region. In turn, with the application of
uniform rules such as the principle of origin, customs procedures, inspection
and quarantine and technical standards, the effects of tariffs and tariff
barriers will be eliminated. The overlay will gradually release the trade
creation effect of the RCEP. Just to mention a few figures, in 2020, the total
value of Shandong's imports and exports to RCEP member countries was 774.3
billion yuan. Thus, the signing of the RCEP will have a great impact on the
commercial and investment decisions of companies and on investment patterns,
and constitutes an alternative for economic and commercial cooperation.
2. Understand the key points to attract corporate
investment
Among the
key points to attract corporate investment between Cuba and Shandong are:
·
Market. As the largest island country in the
Antilles, Cuba has a population of more than 11 million and a market with
enormous development potential. In addition, the geographical location of Cuba
(in the middle of North and South America and the heart of the Caribbean) for
the transportation of goods is very advantageous, which is why it is called the
"Key to the Gulf", which provides the possibility for investors to
enter the markets of neighboring countries of Latin America and the Caribbean.
Cuba has also increased its economic and commercial exchanges with China and
has participated in the construction of the "Belt and Road", which
can become an axis of the "Belt and Road" towards the Caribbean and Latin
America and promote the development of the "Belt and Road". Road "in Latin America.12
·
Infrastructure. The investment needs in Cuba's
infrastructure for economic development constitute an opportunity for economic
cooperation with Shandong. Therefore, the introduction of foreign capital to
strengthen the construction of infrastructure is a key link to promote the
economic development of Cuba, an issue that has been repeatedly ratified by the
country's top leadership. At present, the Mariel Special Development Zone
(ZEDM) has among its priorities increasing the annual performance of its
support facilities, such as the Port Mariel Container Port Terminal, to meet
the needs of international trade.13 These improvements in logistics
services, operation and transportation may constitute investment opportunities
for Shandong. Other opportunities for investment in infrastructure in Cuba can
be transport logistics, the speed of transport operation, including rail,
electrical installations and renewable energy sources. On the other hand,
Shandong has strong technical reserves and construction capacity for electrical
installations, to help improve the supply of electrical energy and water in
Cuba. At the same time, it can reduce the price of industrial energy and create
an environment conducive to attracting foreign investment, with energy
conservation being very important for development in Cuba. China has a rich
experience in the generation of energy with biomass, this being one of the main
sources of renewable energy in the transformation of the energy structure of
Cuba. Shandong and Cuba have broad prospects for cooperation in this field and
can achieve mutual benefit (win-win).
·
Support industries. The agglomeration of support
companies upstream and downstream is an important factor
affecting business investment. It can attract companies upstream and downstream
from the entire industrial chain to invest, or the Cuban side can provide
supporting companies to achieve industrial chain agglomeration and development,
achieve scale effects, and create a good investment environment.
·
Policy measures. One of the policies refers to
tax relief. Tax incentives in Cuba are an opportunity to attract foreign investment.
There are experiences in foreign cooperation parks, such as the Haier-Ruba
Economic Zone and the China-Belarus Industrial Park, which can serve as
examples for the types of taxes with reduction and tax exemption and, in turn,
can be studied for its generalization. For example, corporate income tax in the
Haier-Ruba Economic Zone is only 1.25%, with an exemption period of 10 years.
It is also recommended to study the investment environments of Southeast Asia
and Central and Eastern Europe, in relation to tax incentives, to increase the
attractiveness of investment. In addition, efficient and low-cost public
services must be provided to attract foreign investment. These services not
only provide investors with application, permit and authorization procedures,
but also provide a full range of professional services, including: language,
labor intermediary, law, finance and project approval, from preliminary project
inspection to its execution, construction and operation, as well as other
professional support. Finally, the liquidity of the funds and the convenience
of currency exchange should be improved to reduce the impact of fluctuations in
the international exchange rate.
Conclusions
The
knowledge and understanding of the advantages and opportunities for commercial
and economic cooperation between Cuba and Shandong constitute an important way
for the promotion and strengthening of the beneficial relations between both
parties, starting from the strengths in the strategic sectors and the alliances
already established.
The
industrial development of Shandong province is an important attraction for
cooperation with Cuba, which has defined among the strategic sectors, the
biopharmaceutical, electronics, agriculture, food, transportation,
construction, energy, health and tourism industries, among other
The
identification of international trends on foreign investment and the factors
that affect its promotion and growth in Cuba, such as the market,
infrastructure, supporting industries and tax incentives, as well as existing
capacities in Shandong, are it becomes a way to attract foreign investment.
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Conflict of
interests
The authors declare that they have no conflicts of interest