Friday, November 3
BEIJING’S OPEN DOOR
Chinese investment comes to the fore at Cuban trade fair
Having hosted over 1,000 companies from 70 countries, the Havana International Fair closes today.
Despite the restoration of diplomatic relations in 2015, the US continues its embargo with Cuba; indeed, President Trump signalled a harder line on Havana in a key policy speech in June.
The decades-long embargo has led to general economic underdevelopment, leaving the door open for China to become a major player in the Caribbean. Just last year, Beijing became Cuba’s top economic partner, recording over $1 billion in bilateral trade.
This week, Chinese state media reported that Havana was seeking to join the multi-trillion dollar Belt and Road Initiative to capitalise on easy financing for large pieces of infrastructure, such as the Mariel special development zone. The Cuban government hopes that Mariel, which sports “the most modern” shipping terminal in the region and tax incentives for foreign investors, will turn the island into a regional maritime hub.
Beijing has shown its ability to capitalise on local ambitions for grand infrastructure projects by providing soft loans in return for preferential treatment. While China’s growing influence in Cuba will not go unnoticed in Washington, the continued embargo leaves Havana little alternative.
DOZEN DAY RESPITE?
Donald Trump to begin 12-day Asia trip
The US president begins his trip to East Asia today, where he will visit Japan, South Korea, China, Vietnam and the Philippines. He will attend the ASEAN summit in Manila and the APEC meeting in Danang.
The White House says North Korea will top the agenda amid rumours of a fresh missile test while Trump is in the region. To address the issue, Washington has deployed three carrier strike groups to the region, and Trump may press Chinese President Xi Jinping to implement tougher sanctions on Pyongyang, including limits on oil exports.
Trump likely hopes that the trip will distract attention from special counsel Robert Mueller’s probe into his campaign links to Russia. Most recently, former campaign foreign policy adviser George Papadopoulos pled guilty to lying to the FBI about his contacts with Russians.
Yet the president’s advisers fear such distraction could backfire: a new gaffe could undermine US goals abroad. Aides fear he will heap praise on authoritarian leaders like Xi and Rodrigo Duterte, upsetting key allies in the strategically sensitive region and emboldening those leaders’ policies. Expect the trip to only provide a temporary relief from Trump’s domestic headaches and potentially create new international ones.
IBERIA ON THE INCLINE
Portugal to vote on budget amid economic growth
Today, the Portuguese Assembly of the Republic will take an initial vote on the 2018 budget.
The primary objectives of the plan are to reduce the country’s budget deficit to 1% of GDP and increase the number of tax brackets from five to seven, lightening the burden on certain earners, primarily the middle class.
Thanks to the popularity of the ruling Socialists, who have presided over an incredible economic recovery, the budget is likely to be approved. Portugal’s GDP is projected to grow by 2.5% in 2017 and unemployment is to drop to 9%—the highest and lowest, respectively, since at least 2012; ratings agency Standard & Poor’s recently upgraded Portugal to “investment grade” status, the first such rating for Lisbon in five years.
While Portugal’s short-term outlook is favourable, it will need to implement serious reforms to maintain medium and long-term investment. Primarily, Lisbon would do well to invest more in human capital, which the OECD has cited as a key obstacle to higher growth—the country has one of the least educated working-age populations in the OECD.
HAPPENING ELSEWHERE…
October report to show jobs boon
US authorities will release employment data for October, with economists surveyed estimating some 300,000 jobs were added last month. If correct, the figure represents a sharp rebound from the September figure of minus 33,000, which was largely attributed to hurricane damage.