By SolidarioGB | June 24, 2026
Introduction: A Historic Turn
In June 2026, Cuba’s Communist Party approved the most ambitious programme of economic and social reform in decades—176 measures grouped into 23 areas, touching virtually every sector of the island’s economy. The reforms, which expand the role of private capital and market mechanisms, come as Cuba faces its most severe multidimensional crisis since the “Special Period” that followed the collapse of the Soviet Union. Average daily power outages have reached 20 hours, the electricity deficit has climbed to 1,955 megawatts, and the economy contracted sharply in the first half of 2026 .
Yet for all their radicalism, these reforms are not a departure from socialism. Cuban officials insist they represent a renewal—a pivot toward a model that has been tested and proven successful by two Asian socialist nations: China and Vietnam. As President Miguel Díaz-Canel put it, “Reality imposes urgent and necessary changes on us. And when the life of the people becomes so hard, the first duty of the Communist Party and the revolutionary government is not to better explain the crisis, but to change what needs to be changed to get out of it”.
This article examines the parallels between Cuba’s new reform package and China’s socialist market economy, exploring how Havana is drawing inspiration from Beijing’s experience while navigating its own unique challenges.
The Theoretical Foundation: Market as Instrument
The most fundamental parallel lies in the ideological reorientation of the role of markets in socialist development. For decades, Cuba adhered to a centralized planned economy modeled on the Soviet system. But China broke with this orthodoxy in 1978, gradually transforming its planned economy into a “socialist market economy with Chinese characteristics”.
The Chinese position, articulated clearly in official discourse, is that “market economy is a stage that cannot be surpassed during socialist development” and that “the planned economy does not belong to socialism, since the capitalist system also uses planning methods. The market economy does not belong to capitalism either, since the socialist system also uses market means” . Planning and markets are thus understood not as defining characteristics of different systems, but as neutral tools that can serve socialist ends.
Cuba’s reform package explicitly adopts this logic. Prime Minister Manuel Marrero Cruz stated that the measures “do not imply renouncing the social responsibility of the State,” but rather incorporate market mechanisms as “instruments for efficient resource allocation” . The reforms acknowledge that market mechanisms can help overcome the inefficiencies that have plagued Cuba’s state-dominated economy while preserving socialism’s commitment to social justice.
This represents a profound theoretical shift. Both China and Cuba now recognize that the essential difference between socialist and capitalist economies lies not in the presence or absence of markets, but in whether the market is linked to the socialist system and serves socialist objectives .
The Sino-Vietnamese Precedent: Why Cuba is Looking East
Scholarly research has provided a powerful empirical basis for Cuba’s turn toward the Chinese-Vietnamese model. A landmark study by Carmelo Mesa-Lago, published in the Latin American Research Review, systematically compares the performance of Cuba’s central plan against the Sino-Vietnamese socialist market model.
The study identifies two distinct models:
The Cuban Central Plan: Characterized by large state enterprises predominant over the market and private property, with mild market-oriented structural reforms that have proven ineffective in generating sustainable socioeconomic development.
The Sino-Vietnamese Socialist Market: Typified by small, medium, and some large private enterprises operating under a decentralized plan (a guideline rather than a central plan), with the state regulating the economy and controlling the largest enterprises.
The results are stark. By 2019, the state sector’s share of GDP had declined to 27 percent in Vietnam and 31 percent in China, compared to 91 percent in Cuba . The Sino-Vietnamese model has prompted some of the highest economic growth rates in the world and significantly improved social security.
Mesa-Lago’s analysis of twenty economic and social indicators yields a composite ranking: China first, Vietnam second, Cuba lagging behind . This finding is particularly significant because at the time of their revolutions, China and Vietnam were significantly less developed than Cuba—meaning the two Asian nations had to make a far greater effort to match and exceed Cuba’s pre-revolutionary position.
The study concludes by recommending reforms for Cuba based on the successful policies of China and Vietnam . Cuba’s 2026 reform package appears to be a direct response to this scholarly consensus.
Parallels in Key Reform Areas
State Enterprises: From Command to Commercialization
Both China and Cuba are transforming state-owned enterprises from administrative units into commercial entities capable of operating in market environments. Cuba’s reforms envision transforming state enterprises into commercial companies with shares and equity interests, with the state retaining majority control only in strategic sectors . Non-state actors—private individuals, cooperatives, and foreign investors—will be permitted to purchase shares.
This mirrors China’s long-standing approach, where state-owned enterprises have been reformed to operate as independent market entities, improving efficiency and competitiveness while the state maintains regulatory oversight and control over the largest enterprises . The Chinese model features “greater play of market forces in resource allocation and technological innovation,” but differs from the Western free-market paradigm by upholding a “people-centered policy orientation” and “top-level government design”.
Private Enterprise: Formalization and Expansion
Cuba’s reforms authorize non-agricultural micro, small, and medium-sized private enterprises, lift the cap on employees, and allow individuals to own multiple firms. This builds on the 2021 legalization of private enterprises with a maximum of 100 employees, but represents a significant expansion.
The parallels with China are evident. China’s private sector is a major driver of economic growth and employment, operating alongside state enterprises in a complementary relationship. The Chinese model explicitly combines “the role of bottom-up market forces with the government’s top-level design”.
Foreign Investment: Opening Doors
Cuba is courting foreign investors with unprecedented openness. Surface rights are extended to ninety-nine years and usufruct rights to more than fifty years. Foreign capital businesses may open bank accounts abroad without prior authorization and access the foreign exchange market. Cuban citizens will enjoy the same investment conditions as foreign investors.
China’s experience with foreign investment—particularly through special economic zones and a progressively more open business environment—provides a clear model. China’s approach has been to welcome foreign capital while maintaining regulatory oversight and ensuring that investment aligns with national development priorities. As one former IMF official noted, “further opening-up will remain a crucial growth engine for China”.
Banking and Finance: Modernization Under Control
Cuba’s reforms include establishing private banks and exchange houses, allowing foreign currency accounts, and creating a digital exchange market. Private companies, cooperatives, and foreign investors will be permitted to establish banking and non-banking financial institutions operating under Central Bank supervision on equal terms with state banks.
This parallels China’s modernization of its financial system, which features both state-owned and private banks, advanced fintech, and digital payment systems—all under the supervision of the People’s Bank of China. The Chinese model emphasizes that market-oriented financial reform must be accompanied by “strengthening local government finances and improving people’s incomes and welfare”.
Agriculture: Decollectivization and Marketization
Cuba’s agricultural reforms are particularly notable. The requirement that usufructuaries work the land directly and permanently is abolished. Cooperatives are empowered to import fuels, conduct foreign trade directly, and open bank accounts abroad. Farmers gain access to foreign currency and the right to import raw materials without state intermediaries.
These changes echo China’s “Post-collectivization Household Responsibility System,” which catalyzed unprecedented agricultural growth by granting farmers secure, transferable land-use rights while maintaining state ownership of land . A comparative study of land reforms concludes that sustainable agrarian transformation requires “moving beyond rigid ideological models” toward “a hybrid governance framework that strategically hitches Marxist concerns for equity with market mechanisms for efficiency” —a formula that both China and now Cuba appear to be embracing.
Digital Transformation: State-Enabled Innovation
Cuba’s reforms recognize data as “the fifth factor of production” and authorize private sector provision of data center services, cloud services, and telecommunications infrastructure . Artificial intelligence is to power a new digital platform for public procurement.
This aligns with China’s push for digital transformation under state guidance, where technological innovation is seen as a key driver of productivity growth. The Chinese model “features market forces playing the pivotal and most important role, while reforms pushing technological advances” serve as critical pillars.
The Control Paradox: Lessons and Challenges
The Cuban reforms raise a critical question that China has grappled with for decades: How can a socialist state liberalize its economy while maintaining control?
China’s approach has been to develop strong regulatory capacity. The state “regulates the economy and controls the largest enterprises” . A “high-standard socialist market system with Chinese characteristics” is being built, where market forces play the pivotal role while reforms strengthen local government finances and improve people’s welfare. The system combines “top-level government design” with market mechanisms, creating what some scholars describe as a “New Socioeconomic Formation” marked by “the coexistence of different modes of production”.
Cuba faces a more difficult path. The reforms acknowledge that the state sector accounts for approximately 80 percent of economic activity —far higher than China’s 31 percent or Vietnam’s 27 percent. The state capacity required to regulate complex private markets may be deficient, particularly given the severe economic crisis Cuba faces.
The “control paradox” is real: direct state ownership failed to generate sufficient productivity, but the regulatory alternatives require state capacity that the reforms themselves are designed to overcome. Cuba’s leadership appears to recognize this challenge. The reform package is described as a “process” that will be “flexible, with constant review, adoption of corrective actions, and a learning system”.
Social Protection: The Socialist Imperative
Perhaps the most important parallel between the Cuban and Chinese models is the commitment to social protection. Both insist that market mechanisms must be accompanied by social welfare.
Cuba’s reforms eliminate product subsidies and replace them with direct personal subsidies through a Social Protection Fund. All economic actors must participate in corporate social responsibility: supporting pension payments, soup kitchens, children’s homes, nursing homes, and family support systems; providing discounted or free services to vulnerable individuals; contributing to public health and education; creating monthly food baskets for needy families.
This reflects a core principle of the Chinese model: “market forces play the pivotal and most important role” while reforms “improve people’s incomes and welfare”. The Chinese socialist market economy is “linked to the basic socialist system” and this linkage is “the fundamental condition to guarantee socialism as the nature and direction of the Chinese economy”.
Both models share a fundamental premise: market liberalization is permissible only insofar as it serves socialist ends—generating the wealth needed to sustain social justice and improve living standards.
Conclusion: A Controlled Experiment
Cuba’s 2026 reforms represent the most significant attempt by a socialist state to learn from the Chinese model since Vietnam’s Đổi Mới reforms of the 1980s. The parallels are extensive and deliberate: state enterprises commercialized, private enterprise formalized, foreign investment welcomed, financial systems modernized, agriculture marketized—all under the umbrella of continued socialist political control.
Scholarly research has provided a compelling rationale for this pivot. The Sino-Vietnamese socialist market model has outperformed Cuba’s central plan across economic and social indicators. Mesa-Lago’s comparative analysis explicitly recommends that Cuba adopt reforms based on the policies of China and Vietnam.
Yet Cuba’s path is not a simple copy of the Chinese model. The island faces unique challenges: a US embargo that China never experienced; a much smaller economy with less diversification; and a crisis of state capacity that may complicate the regulation of newly liberalized markets. The reforms acknowledge these difficulties, describing the process as one that will be “flexible, with constant review, adoption of corrective actions, and a learning system”.
The success of Cuba’s experiment will depend on whether it can build the regulatory capacity that has been crucial to China’s model—or whether, lacking that capacity, liberalization leads to the fragmentation and social stratification that the document’s mandatory corporate social responsibility provisions seem designed to manage.
What is clear is that Cuba has made a historic choice: to embrace the market not as a concession to capitalism but as a tool for socialism. In doing so, it has placed itself on a path that China has walked for nearly five decades—one whose destination remains uncertain, but whose direction is now unmistakable.
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