Identifier
Created
Classification
Origin
06BEIJING11363
2006-06-06 09:09:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:
FINATT MEETS CHINA EXIM PRESIDENT ON LENDING TO
how-toVZCZCXRO8984 PP RUEHCN RUEHGH DE RUEHBJ #1363/01 1570909 ZNR UUUUU ZZH P 060909Z JUN 06 FM AMEMBASSY BEIJING TO RUEHC/SECSTATE WASHDC PRIORITY 7812 INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY RUEHML/AMEMBASSY MANILA 8763 RUEHKO/AMEMBASSY TOKYO 0659 RUEHGH/AMCONSUL SHANGHAI 4833 RUEHSH/AMCONSUL SHENYANG 6269 RUEHGZ/AMCONSUL GUANGZHOU 0708 RUEHCN/AMCONSUL CHENGDU 6450 RUEHHK/AMCONSUL HONG KONG 7564 RUEHIN/AIT TAIPEI 5672 RUCPDOC/USDOC WASHDC RUEHGV/USMISSION GENEVA 1136 RUEHFR/AMEMBASSY PARIS 3810
UNCLAS SECTION 01 OF 02 BEIJING 011363
SIPDIS
SENSITIVE
SIPDIS
USDOC FOR DAS LEVINE AND ITA/MAC/AP/MCQUEEN
MANILA FOR AMBASSADOR SPELTZ
TREASURY FOR OASIA/ISA KOEPKE AND DOHNER
STATE PASS CEA FOR BLOCK
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN
FRANCISCO FRB FOR CURRAN; NEW YORK FRB FOR DAGES/CLARK
STATE PASS USTR STRATFORD/WINTER/MCCARTIN
PARIS PASS USMISSION OECD
E.O. 12958: N/A
TAGS: EFIN ECON EPET PREL CH SU XA
SUBJECT: FINATT MEETS CHINA EXIM PRESIDENT ON LENDING TO
SUDAN AND OTHER POOR DEVELOPING COUNTRIES
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY. NOT FOR DISTRIBUTION OUTSIDE USG CHANNELS.
UNCLAS SECTION 01 OF 02 BEIJING 011363
SIPDIS
SENSITIVE
SIPDIS
USDOC FOR DAS LEVINE AND ITA/MAC/AP/MCQUEEN
MANILA FOR AMBASSADOR SPELTZ
TREASURY FOR OASIA/ISA KOEPKE AND DOHNER
STATE PASS CEA FOR BLOCK
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN
FRANCISCO FRB FOR CURRAN; NEW YORK FRB FOR DAGES/CLARK
STATE PASS USTR STRATFORD/WINTER/MCCARTIN
PARIS PASS USMISSION OECD
E.O. 12958: N/A
TAGS: EFIN ECON EPET PREL CH SU XA
SUBJECT: FINATT MEETS CHINA EXIM PRESIDENT ON LENDING TO
SUDAN AND OTHER POOR DEVELOPING COUNTRIES
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY. NOT FOR DISTRIBUTION OUTSIDE USG CHANNELS.
1. (SBU) Summary. On June 1, FinAtt David Loevinger met
with President Li Ruogu of the China Export-Import Bank
(China Exim) to discuss export credit policy and China's
lending to heavily indebted poor countries (HIPCs),
particularly in Africa. FinAtt urged China to seek greater
cooperation with OECD (Organization for Economic
Cooperation and Development) in this area, and encouraged
Li to attend its November meeting in Paris. Li pledged
further engagement with the United States Government and
the OECD on export credit policy, and expressed a
willingness to work within the IMF/World Bank's debt
sustainability framework, but strongly defended China's
current lending practices, particularly to Sudan. End
Summary.
2. (SBU) In a June 1 meeting between FinAtt Loevinger and
China Exim Bank President Li, FinAtt began by encouraging
greater Chinese cooperation with OECD Working Party on
Export Credits, and urged Li to attend the organization's
November meeting in Paris. Li said he would accept the
invitation, noting that the most effective way to avoid
misunderstanding is through constant engagement. Li noted
the China Exim tries to follow the OECD's export credit
guidelines, even though China is not a member country.
3. (SBU) FinAtt reaffirmed the United States Government's
commitment to maintain sustainable debt burdens for HIPCs,
particularly those who have benefited from multilateral
debt reduction. FinAtt then expressed concern about the
Chinese Government's vigorous lending to countries like
Sudan, who will need to normalize their relations with
external creditors and will be seeking eventual debt
relief. Li responded that China believes the best method
to achieve debt sustainability is to promote economic
growth and exports through financing of commercially viable
projects. He contrasted China's approach with the U.S.
approach, which focuses on achieving debt sustainability
by reducing debt. Li then claimed that past U.S. lending
practices in HIPCs had been largely politically motivated
and subject to widespread corruption, whereas China's
lending was more commercially oriented.
4. (SBU) Li argued that China's lending would boost
economic growth in the recipient countries, and this along
with increased production of commodities, would increase
the likelihood that these countries would be able to fully
repay their debts. FinAtt reminded Li that despite the
best intentions of creditors, HIPCs ended up needing
multiple cycles of debt relief because they lack strong
institutions to withstand external shocks and that external
lending can end up benefiting creditors' exporters or
contractors, NGOs or aid bureaucracies, which is why the
United States promotes greater use of grants.
5. (SBU) Li added that China Exim Bank supports the World
Bank and the International Monetary Fund debt
sustainability framework, and is prepared to offer more
concessional terms loans if necessary. Li also
acknowledged that new lending to Sudan and other countries
seeking future debt relief could be subject to Paris Club
requirements for comparability of treatment. (Comment:
Regarding comparability of treatment, Li mentioned flow
rescheduling. He did not mention stock reductions. End
comment.)
6. (SBU) Li differentiated the U.S. approach towards
countries it views as "bad actors" of trying to cut off
BEIJING 00011363 002 OF 002
external financing with the Chinese approach of promoting
reform by promoting economic growth.
7. (SBU) In response to FinAtt's question on which
Chinese Government organizations are supplying external
financing to developing economies, Li noted that China Exim
Bank provides the concessional lending at low interest
rates, while the Ministry of Commerce (MOFCOM) offers
grants and interest-free loans. To the extent State
Enterprises provide credits, they tend to on-lend resources
from China Exim or MOFCOM.
8. (SBU) FinAtt and China Exim Bank President Li agreed
to continue engaging on this topic and other issues of
mutual interest.
RANDT
SIPDIS
SENSITIVE
SIPDIS
USDOC FOR DAS LEVINE AND ITA/MAC/AP/MCQUEEN
MANILA FOR AMBASSADOR SPELTZ
TREASURY FOR OASIA/ISA KOEPKE AND DOHNER
STATE PASS CEA FOR BLOCK
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN
FRANCISCO FRB FOR CURRAN; NEW YORK FRB FOR DAGES/CLARK
STATE PASS USTR STRATFORD/WINTER/MCCARTIN
PARIS PASS USMISSION OECD
E.O. 12958: N/A
TAGS: EFIN ECON EPET PREL CH SU XA
SUBJECT: FINATT MEETS CHINA EXIM PRESIDENT ON LENDING TO
SUDAN AND OTHER POOR DEVELOPING COUNTRIES
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE
ACCORDINGLY. NOT FOR DISTRIBUTION OUTSIDE USG CHANNELS.
1. (SBU) Summary. On June 1, FinAtt David Loevinger met
with President Li Ruogu of the China Export-Import Bank
(China Exim) to discuss export credit policy and China's
lending to heavily indebted poor countries (HIPCs),
particularly in Africa. FinAtt urged China to seek greater
cooperation with OECD (Organization for Economic
Cooperation and Development) in this area, and encouraged
Li to attend its November meeting in Paris. Li pledged
further engagement with the United States Government and
the OECD on export credit policy, and expressed a
willingness to work within the IMF/World Bank's debt
sustainability framework, but strongly defended China's
current lending practices, particularly to Sudan. End
Summary.
2. (SBU) In a June 1 meeting between FinAtt Loevinger and
China Exim Bank President Li, FinAtt began by encouraging
greater Chinese cooperation with OECD Working Party on
Export Credits, and urged Li to attend the organization's
November meeting in Paris. Li said he would accept the
invitation, noting that the most effective way to avoid
misunderstanding is through constant engagement. Li noted
the China Exim tries to follow the OECD's export credit
guidelines, even though China is not a member country.
3. (SBU) FinAtt reaffirmed the United States Government's
commitment to maintain sustainable debt burdens for HIPCs,
particularly those who have benefited from multilateral
debt reduction. FinAtt then expressed concern about the
Chinese Government's vigorous lending to countries like
Sudan, who will need to normalize their relations with
external creditors and will be seeking eventual debt
relief. Li responded that China believes the best method
to achieve debt sustainability is to promote economic
growth and exports through financing of commercially viable
projects. He contrasted China's approach with the U.S.
approach, which focuses on achieving debt sustainability
by reducing debt. Li then claimed that past U.S. lending
practices in HIPCs had been largely politically motivated
and subject to widespread corruption, whereas China's
lending was more commercially oriented.
4. (SBU) Li argued that China's lending would boost
economic growth in the recipient countries, and this along
with increased production of commodities, would increase
the likelihood that these countries would be able to fully
repay their debts. FinAtt reminded Li that despite the
best intentions of creditors, HIPCs ended up needing
multiple cycles of debt relief because they lack strong
institutions to withstand external shocks and that external
lending can end up benefiting creditors' exporters or
contractors, NGOs or aid bureaucracies, which is why the
United States promotes greater use of grants.
5. (SBU) Li added that China Exim Bank supports the World
Bank and the International Monetary Fund debt
sustainability framework, and is prepared to offer more
concessional terms loans if necessary. Li also
acknowledged that new lending to Sudan and other countries
seeking future debt relief could be subject to Paris Club
requirements for comparability of treatment. (Comment:
Regarding comparability of treatment, Li mentioned flow
rescheduling. He did not mention stock reductions. End
comment.)
6. (SBU) Li differentiated the U.S. approach towards
countries it views as "bad actors" of trying to cut off
BEIJING 00011363 002 OF 002
external financing with the Chinese approach of promoting
reform by promoting economic growth.
7. (SBU) In response to FinAtt's question on which
Chinese Government organizations are supplying external
financing to developing economies, Li noted that China Exim
Bank provides the concessional lending at low interest
rates, while the Ministry of Commerce (MOFCOM) offers
grants and interest-free loans. To the extent State
Enterprises provide credits, they tend to on-lend resources
from China Exim or MOFCOM.
8. (SBU) FinAtt and China Exim Bank President Li agreed
to continue engaging on this topic and other issues of
mutual interest.
RANDT