SANTO DOMINGO: CHINESE ACTIVITIES IN DOMINICAN

C O N F I D E N T I A L SECTION 01 OF 04 SANTO DOMINGO 004104

SIPDIS

DEPT FOR EAP/CM KAYE LEE, WHA/PCP JEFF BISCHOFF, AND
WHA/EPSC LAWRENCE GUMBINER

E.O. 12958: DECL: 08/08/2025
TAGS: ECON PREL ETRD ETTC EINV ENRG EAGR EFIN PHUM EMIN CH
SUBJECT: SANTO DOMINGO: CHINESE ACTIVITIES IN DOMINICAN
REPUBLIC

REF: A. 2005 SECSTATE 138041


B. 2004 SANTO DOMINGO 06472

C. 2004 SANTO DOMINGO 06656

D. 2004 SANTO DOMINGO 06298

(C) Summary: The Dominican Republic is one of just 26
countries that maintain formal diplomatic relations with
Taiwan. Beijing's economic, political, and social investment
in the country has been limited. The People's Republic of
China has concentrated its efforts on convincing the
Dominican government to recognize the PRC formally.
President Fernandez is interested in the PRC in order to
expand his nation's economic opportunities and broaden its
international relationships. Members of congress have
recently traveled to the PRC. End Summary.

(C) Following are the Department's questions from reftel and
our responses:

(C) Q: What is the frequency of high-level political contact
between host-country officials and Chinese officials? Is
there evidence of political discussion on global policy
issues or Chinese pressure to support China's view on hot
button issues? How does Beijing's effort to constrain
Taiwan's international space play into Chinese local
activities and its relationship with host government?

(C) A: The Dominican Republic is the largest Caribbean
island nation that maintains diplomatic relations with
Taipei. The focus of PRC relations with the Dominican
political system has been on Beijing's global campaign to
isolate Taiwan (ref B). We do not foresee Dominican
recognition of Beijing in the immediate future, but do not
rule out the possibility sometime in the next few years (ref
B).

(C) Over the past year, PRC representative have visited about
every 3-4 months. Taiwan has responded at about the same
frequency, often announcing additional investment or
assistance.

(C) It appears that PRC discussions are keyed far more to
linking economic opportunity with recognition than to
discourse on specific policy issues (for example none of the
visitors was reported to have made specific demarches).

(C) Foreign Minister Carlos Morales Troncoso commented to the
Ambassador in November 2004 that Dominican recognition of
Beijing might be inevitable over the long term, "but not
right now." Taiwanese news reports just prior to
Fernandez,s inauguration in August 2004 speculated that,
while Fernandez might strengthen ties with the PRC, the new
president was a "long-time friend of Taiwan" who had promised
to maintain ties between Taiwan and the Dominican Republic
after taking office.

(SBU) In January 2005, Morales Troncoso was quoted in the
Dominican press as saying that the Dominican Republic should
select which entity, PRC or Taiwan, is more convenient for
diplomatic and commercial relations. He said that the PRC is
a "great reality in the world" and that it has made important
investments in Latin America.

(SBU) In January 2005, a PRC delegation met in Santo Domingo
with members of the Partido de la Liberacion Dominicana
(PLD),and called on President Fernandez at the Presidential
Palace. The delegation included Wang Yulin, Sub Director for
Latin American issues, Wang Jialei and Chen Fafen. The PRC
representatives reminded the Dominican government of the
importance of PRC-Dominican relations and discussed the
possibilities for commercial cooperation. Wang said that the
PRC has formal relations with 166 countries in the world and
that he hoped the Dominican Republic would be number 167.
Dominican news report that Reinaldo Pared Perez, Secretary
General of the PLD, stated that the PRC could be a great ally
to the Dominican Republic and could provide a solution to
some of the important problems the country now faces, such as
the energy crisis.

(SBU) The PLD hosted a celebration in the Presidential Palace
for the Chinese delegation. When asked by press if the
Dominican government relationship with Taiwan would hinder
relations with China, Perez stated that the PLD would
maintain and strengthen relations with the PRC.

(SBU) In mid-2004 Dominican Ambassador to the United States
Hugo Guilliani Cury visited the PRC seeking investment in
export-oriented factories in the Dominican Republic (ref B).
This visit was followed by that of nine Dominican senators
including Senate President Andres Bautista, who spent 7 days
in the PRC, visiting Beijing, Guaylin, Shenzhen, and
Shanghai. The group was accompanied throughout the visit by
Vice Foreign Minister Ji Peiding. Many PRC officials,
including the National People's Assembly president,
reportedly expressed their government's desire for diplomatic
relations with Santo Domingo. Dominican senators had been
guests of Taipei authorities on a previous trip, in mid-2004,
and caused a brief stir when a Taipei legislator reported
speculation by Dominican Revolutionary Party (PRD) Senator
Ramon Albuquerque that the incoming administration might want
to recognize the PRC.

(U) The following 4 questions are answered jointly, below.

(C) Q: What is the composition and value of host country's
trade with China (imports and exports)? Please indicate
source of statistics and whether this includes trade with
Hong Kong. Please also advise on the trend line in key
resource areas, especially energy, but also steel, cement,
timber/timber products, etc., and supply statistical data.

(C) Q: What is the value of Chinese investment in host
country? In which sector(s) is it concentrated? Is there
data to distinguish between portfolio investment and
investment in productive sectors? Please include figures for
realized investment as well as for contracted investment if
possible. From the host country perspective, what types of
financial or policy support does the Chinese government
provide for Chinese companies seeking to invest in Latin
America?

(C) Q: Does the local response to China's increasing demands
pose the risk of potential environmental degradation and/or
create long-term health hazards? Does China contribute to
helping address environmental and health-related concerns
that stem from its economic engagement with host country?

(C) Q: Has host country and/or China sought preferential
trade arrangements, either bilateral or as part of a
sub-regional or regional arrangement?

(SBU) A: The PRC commercial office in Santo Domingo has a
staff of three PRC nationals and two local hires. Cai
Weiquan, the principal PRC commercial officer in Santo
Domingo, has told journalists that the absence of diplomatic
relations has prevented the development of a legal framework
to facilitate trade and investment (ref C). Still, Cai stated
that PRC exports to the Dominican Republic amount to some USD
250 million annually and are more likely to grow than
Dominican exports to China. Chinese exports include
electronics, furniture, clothes, and automobiles. In 2004,
total Dominican exports to China amounted to USD 20 million,
and included coffee, tobacco, sugar, minerals, and iron.

(SBU) Recently the PRC has made some attempts at investment
in the Dominican Republic. Earlier this year a Chinese firm,
China Minmetal, proposed USD 5 billion to purchase worldwide
operations of the Canadian company Falconbridge, which
operates a nickel mine located in Bonao, an hour north of the
capital. The deal did not materialize.

(C) In another instance this year, Mainland Chinese and Hong
Kong firms attempted to buy a 35 percent share of the
Dominican Caucedo port, one of the newest most modern in the
Caribbean (ref D). Three Chinese companies bid on Caucedo:
Hutchison, China Merchant, and Cosco Pacific. Caucedo,s
local partners told Embassy Officer that they did not want a
"Chinese" partner because this might have a negative impact
on Caucedo,s close ties with the United States. None of the
Chinese companies was selected; instead, the 35 percent share
was sold to DPI Terminals of Dubai.

(SBU) In June 2005 the Dominican press reported that
Commercial Officer Cai Weiquan was promoting two PRC
investment projects here valued at USD 100 million. In the
first instance, a Chinese firm proposes to open a cement
factory at a cost of USD 50 million in the Dominican province
of San Cristobal. Cai stated the cement factory would use
the latest technology and would follow international
environmental standards. The other proposed investment, also
worth USD 50 million, is from a Shanghai company that plans
to provide five cranes to be used at Caucedo port.

(C) The PRC does not have any current projects or investments
in the agricultural sector in the Dominican Republic,
according to a planning director in the Dominican Ministry of
Natural Resources and the Environment.

(SBU) A Chinese delegation visited the Dominican Republic in
January and according to Cai, offered technical assistance on
ocean areas, environment and natural resources, education,
health, and other matters. The technical delegation is
reported to have met with the Dominican ministers of
environment, industry and commerce, and sports. The PRC
commercial officer suggested creating a mixed commission to
oversee these efforts.

(C) Another possible area for investment by the PRC here is
tourism. In late 2004, a Dominican undersecretary for tourism
informed Emboffs that PRC investors are looking at tourism
investments in the country "if the Dominican Republic
recognizes Beijing."

(SBU) The PRC is involved in the Dominican Free Trade Zones
areas (FTZ). According to Dominican Council on Free Trade
Zone Exportation (CNZFE),in 2004 PRC had accumulated
investments of USD 4,657,762 in Dominican FTZs. CNZFE also
reports that 16 PRC companies bought FTZ exports in 2004.
Additionally, 67 FTZ businesses buy primary materials from
the PRC, which as a provider of raw materials to the FTZ's is
second only to the United States.

(SBU) The Embassy has not heard of any PRC suggestions of
preferential trade treatment or bilateral trade agreements.

(C) Q: What if any assistance is China providing to host
country? What is the breakdown between grants and loans?
Does the Chinese government typically propose aid or does the
host country request it? Who proposes specific projects? Do
the Chinese push certain types of projects and shy away from
others even if the host country has requested them?

(SBU) A: No aid is expected from the China until the
Dominican Republic formally recognizes the PRC. There is no
indication that this is likely in the near term.

(SBU) Journalists have suggested that the January 2005
technical delegation mentioned above was considering a
possible Chinese purchase of Dominican bonds but we have seen
no evidence of this.

(C) Q: What are official and popular attitudes to the
Chinese presence? What are expectations for future relations
with China?

(SBU) There are no strong popular attitudes to the small
Chinese population in the Dominican Republic. The current
government is interested in maintaining good relations with
the PRC, short of formal recognition for now, in hopes of
mutually beneficial trade and investment relations.

(C) Q: What is the extent of military contact and assistance
between China and the host country?

(SBU) There appears to be little or no PRC-Dominican military
contact or assistance.

(C) Q: Describe Chinese military-to-military contacts and
efforts to sell weapons in your host country.

(C) A: There appears to be no PRC efforts to sell weapons to
the Dominican Government.

(C) Q: We also welcome additional information on China's
engagement with host country, cultural ties, education
exchanges, etc.

(U) A: A Chinese music and dance troupe performed in the
Dominican Republic in November 27-30, 2004. The PRC
commercial delegation arranges well-publicized events during
the year, such as the celebration of PRC,s national day.

End Cable.
HERTELL