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    China firms to reap rewards from Cuba-U.S. thaw

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    2016-03-22 09:34Global Times Editor: Li Yan

    Challenges remain for Chinese firms before embargo lift

    Chinese companies are expected to benefit from U.S. President Barack Obama's historic visit to Cuba as part of U.S. efforts to open up the country's market, though challenges still remain as it is unlikely the entire embargo will be lifted in the short term, observers said.

    "A thaw in U.S.-Cuba relations is expected to create a more favorable investment environment, leading to both opportunities and challenges for Chinese investors and companies in Cuba," Liu Yuqin, former Chinese ambassador to Cuba and a research fellow with the China Foundation for International Studies told the Global Times on Monday.

    As the first sitting U.S. President to set foot in the island nation since 1928, Obama's three-day visit comes just 15 months after the U.S. announced it would restore diplomatic ties with Cuba.

    Experts believe the focus will be on economic and trade cooperation between the two nations, as well as leading to a more open market.

    "Only around 12 Chinese companies are doing business in Cuba now despite the efforts of the Cuban government to attract foreign investors, as the U.S. embargo against Cuba can also affect Chinese companies' trade with the nation," Xu Shicheng, a research fellow in Latin American Studies at the Chinese Academy of Social Sciences told the Global Times.

    Cuba set up the country's first-ever special development zone at Mariel Port in 2013, hoping to attract Chinese investors, as China is the country's second-largest trade partner after Venezuela.

    Cuban dilemma

    The Cuban Democracy Act passed in 1992 and Helms-Burton Act passed in 1996 by the U.S. government suggest that sanctions may be applied to non-U.S. companies trading with Cuba, which has put internationally operating companies in a dilemma to choose between Cuba and the U.S.

    According to the laws, a foreign cargo ship shall not freight goods to the U.S. within six months after it docked in Cuba, while foreign products containing a certain percentage of U.S.-made components are not allowed to enter Cuba's market. Such rules have severely dampened Chinese companies' enthusiasm to invest in Cuba, Xu said.

    Thwarted by Congress on the 54-year-old embargo, Obama has instead used his executive authority to loosen restrictions on trade and travel with the Caribbean island. He now has both Democratic and Republican elected officials with him on his Cuba trip and hopes Congress may act after the November 8 presidential elections, Reuters reported.

    Improved relations between the U.S. and Cuba may lead to fewer restrictions, making it more convenient for Chinese businessmen to invest in Cuba, Xu said.

    Meanwhile, Chinese companies will also face increased competition, as an open market will offer Cuba more options, Liu said.

    "The U.S. possesses a geographical advantage when it comes to trade with Cuba, while Europe and Cuba share natural ties in language and culture. Chinese companies should explore their own advantages [in lower prices], as well as to improve their competitiveness and quality of their products," Liu said.

    China-Cuba trade grew 57 percent year-on-year in the first nine months of 2015 to about $1.6 billion. Cuba's principal exports to China include nickel, metalloids, seafood, cigars and rum, while it mainly imports machines, transportation equipment as well as textile from China, according to the website of the Chinese Embassy in Cuba.

    Lifting the entire embargo

    Obama was scheduled to attend a business forum with representatives from both countries, as well as U.S. Secretary of Commerce Penny Pritzker on Monday afternoon in Havana. Cuban state-owned enterprises and private companies will also present their investment proposals at the forum, the Xinhua News Agency reported.

    Cuba seeks U.S. investment in 12 economic segments, including renewable energy, oil exploration and tourism, and 20 Cuban firms have expressed an interest in importing goods from the U.S., and are now waiting to seal deals in the next few months, Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca told a press conference on Sunday.

    Last year more than 100 U.S. delegations visited the island to explore trade opportunities.

    Despite the restoration of economic ties between the two nations, benefits for Chinese investors can only be fully realized if the U.S. completely lifts its embargo and other sanctions on Cuba, which experts believe may take some time.

    Prior to Obama's trip, the Cuban government ruled out any political changes on the island as a concession for the full restoration of relations with the U.S., saying only its people can choose its political and economic system.

    "There are obstacles in the U.S. to full normalization of ties, as Republicans form the majority in Congress, and many of them oppose restoring relations with Cuba," Liu said.

    Though Obama's visit to Cuba cannot restore full bilateral ties, it's still a good start for the two country's future relations, as well as for a more open market in Cuba, Xu said.

      

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