Sunday 17 April 2011

China And The New Cuba

Yesterday, just days after their celebration of the 50th anniversary of their victory over a CIA-backed amphibious invasion at the Bay of Pigs, the Cuban Communist party held their first congress since 1997. At the congress, Raul Castro, brother of Fidel Castro who commanded the communist forces at the Bay of Pigs and ruled Cuba for 49 years until stepping down in 2008, announced a series of far-reaching political and economic reforms.

Anyone who knows the Chinese political system that has been in place since Deng Xiaoping's time will find the reforms very familiar. Most particularly, the limiting of the paramount leadership - both the president and the head of the Communist Party - to a maximum of two five-year terms announced by Castro, is the one reform which has ensued that China has not fallen into the kind of crypto-monarchical system that has afflicted North Korea. In the case of China this ten-year limit is not law but merely a matter of custom, but Raul Castro intends to go a step further and enshrine it in the Cuban constitution.

In other areas, though, Castro is not going as far as the Chinese, with ownership of property being limited to a single plot, and business ownership being limited to SMEs. Whilst Cuba enjoys a nominal per capita GDP significantly higher than China, and has seen reasonably high growth in recent years (see graph above, or here) it is uncertain whether these reforms, which still very much place the emphasis on the "state" part of the "state capitalism" formula, will be enough to ensure continued growth.

It is worth noting that Cuban nominal GDP per capita is roughly comparable to that of some other non-communist countries in the region. At at estimated* value of 5,200 US Dollars, Cuban GDP per capita in 2010 was roughly the same as that of the Dominican Republic, and higher than that of Jamaica (4,800 US Dollars). However, Cuban economic performance begins appears poor next to those countries in the region that have successfully developed tourism and resource-extraction industries, like Trinidad and Tobago (17,300 US Dollars) and the Bahamas (24,300 US Dollars).

That Castro should in some ways imitate the Chinese is not surprising. The Chinese have been the most successful at combining the Leninist political system with market reform, and, more importantly no doubt from the point of view of Castro and his comrades, have been very successful so far in "revolution proofing" their regime. This said, Cuba is not China, and the histories of its regional neighbours suggest that rather than Chinese-style state capitalism, a greater focus on tourism might pay off, but this would require a more liberal society than seems possible under the communists, and would require the lifting of at least some elements of the US embargo.

*All estimates taken from the CIA World Factbook nominal GDP figures for 2010.

[Picture: Raul Castro with Che Guevara, Cuba, 1958. Via Wikicommons]


Anonymous said...

A great shift of attention, but the suggestion that attention to tourism might pay off indicates.....well something.

In fact, Cuba has had a developing beachside jv tourist business for quite some time for well-heeled Canadian and Europeon gringos, plus a dual currency arrangement to make the most of this industry. The only real flow-on effects has been the creation of low level hotel employment and the re-emergence of prostitution plus attendent STDs.

Those still-operating SOEs are totally beyond repair and most people hold a second job to put food on the table. These recent reforms allow individuals to branch out on their own in approximately 130 job categories.

Despite the mongrel attempt by the US to strangle the Cuban economy there is one bright spot, and that is in medical research of all things (skin grafting, tissue renewal). This is not surprising, since Cuba has probably the highest ratio of doctors per unit of population in the world.

Such is the desperation for foreign currency that you can hire a fourteen piece orchestra of world class musicians, plus studio, for the price of a large flat screen TV in the west. This is in fact what my Oz barrister/social activist friend PP aka Pacho did to record his cd Taxi Amigo:

Poor Yang obsessed KT

justrecently said...

Just wondering what's going to happen if a privately-owned company grows beyond SME size. Nationalization might spell exactly the trouble they are now trying to escape. But then, that will be a problem of another day.

You are Yang-obsessed, KT? Yang who?

Gilman Grundy said...

@KT - RE: Medical research - I'd wondered where the idea for that scene in that 007 movie where JB goes to Cuba to catch a NK spy who's being given plastic surgery came from.

On a similar theme, I know of Cuba's tourist industry mainly from the novel "Platform" by Michel Houellebecq. Just like you say - mostly ageing Europeans looking for a cheap lay.

Still, tourism has made Barbados, Trinidad, and the Bahamas quite rich over the past 40 years, from a similar starting point to Cuba. With a liberalised economy, and the a Florida packed with ageing pensioners looking for one last fling only 90 miles away - who's to say the same thing couldn't happen there?

The idea of going there for cheap high-quality session gigs is a totally new one on me. Definitely a good idea though.

As for Yang Hengjun, well, I'll say that I had barely ever heard of him before his disappearance, and care little for him now that he is apparently out of harm's way. His story is a distraction.

@JR - People like Abramovich and Khordokovsky cut their teeth running small businesses and trading hard currency in the mid 80's. The Cubans would be wise to ensure that a business class emerges, rather than a group of semi-criminals operating in the grey area between what the state officially allows and what people can get away with. This means a looser economic regime than what has been proposed.

justrecently said...

Surprisingly few comments - economics doesn't seem to be too many peoples' cup of tea.

Gotta stir feelings.

Gilman Grundy said...

@JR - Ach, things are a bit quiet at the moment.

justrecently said...

Except for spammers.