PRC/AFRICA: BEYOND THE BEIJING SUMMIT TRADE AND

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 023695

SIPDIS

SIPDIS

DEPT FOR AF, EAP, EAP/CM, EB/IFD/OMA
INR FOR GILLES
STATE PASS USTR FOR STRATFORD, WINTER, CELICO, DWOSKIN

E.O. 12958: DECL: 11/09/2026
TAGS: PREL PGOV AGOA ECON EAID CH
SUBJECT: PRC/AFRICA: BEYOND THE BEIJING SUMMIT TRADE AND
INVESTMENT PROPAGANDA

REF: A. BEIJING 22370

B. BEIJING 23169

Classified By: Classified by Political External Unit Chief Edgard Kagan
. Reasons 1.4 (b/d).

Summary
--------------


1. (C) China and African countries announced 16 trade deals
worth USD 1.9 billion at the conclusion of the Beijing Summit
of the Forum for China-Africa Cooperation (FOCAC)(Ref A),but
contacts tell us that the real number and value of bilateral
contracts signed during the Beijing Summit is likely far
greater. Consistent with Propaganda Department guidelines to
downplay bilateral pacts (Ref B),the PRC is likely
underreporting trade deals resulting from the Beijing Summit,
failing to announce significant deals that have surfaced in
the press, such as a USD 8.3 billion agreement to upgrade
Nigeria's rail system. Noting that his delegation held an
unreported meeting with approximately 70 Chinese companies
interested in coal, bitumen and other minerals, a Nigerian
Embassy contact speculated that other African delegations
held similar meetings. Premier Wen Jiabao underscored
China's intentions to expand its economic ties to Africa,
calling for two-way trade to hit USD 100 billion by 2010.
African dignitaries welcomed China's interest in greater
economic ties, but several peppered their public remarks with
gentle caveats. While eager to explore business
opportunities with Chinese companies, a number of African
businessmen complained about Chinese business practices,
noting the difficulty in exporting to China. Chinese
enterprises, for their part, must "work through networks"
established by PRC State-Owned Enterprises already present in
a given African country. End Summary.

PRC Pursues Expanded Trade
--------------


2. (C) A "High-Level Dialogue between Chinese and African
Leaders and Business Communities and the Second Conference of
Chinese and African Entrepreneurs" (High-Level Economic
Dialogue) held during the Beijing Summit brought together
Chinese and African politicians and business leaders to
promote two-way trade and investment as well as "match"
Chinese and African business interests. Premier Wen Jiabao
opened the High-Level Economic Dialogue with a keynote
address consisting largely of platitudes touting previously
reported aggregated China-Africa two-way trade and economic
statistics. Premier Wen expressed the desire to continue
China's rapid economic expansion in Africa, calling for
Sino-African trade to double to USD 100 billion by 2010.


3. (C) African dignitaries welcomed Wen's call to expand
economic ties, but several peppered their public remarks with
gentle caveats. Ethiopian Prime Minister Zenawi said the
relations must expand "without affecting the quality of goods
and services" exchanged. Algerian President Boutefika
referenced the New Economic Partnership for African
Development (NEPAD) and said the China-Africa partnership
must benefit both sides. Lesotho Prime Minister Mosisili,
speaking on behalf of the Southern African Development
Community (SADC) said PRC-SADC consultations in advance of
the Beijing Summit produced a commitment by SADC to provide
an enabling environment for Chinese investment, but SADC
sought increased high-level visits and China's support "as a
P-5 member" for African Union positions in the international
arena.

What Is Beijing Hiding?
--------------


4. (C) At the closing of the High-Level Economic Dialogue,
Chinese firms and African governments and countries announced
16 trade and investment deals worth USD 1.9 billion.
However, the number and value of bilateral contracts signed
as a result of the Beijing Summit is likely far greater. Per
Ref A, China's zero-tariff proposals and other agreements
will all be contracted and implemented bilaterally.
Consistent with Propaganda Department guidelines to downplay
bilateral pacts (Ref B),the PRC has declined to announce
significant deals that have surfaced in the African and/or
international press, such as a USD 8.3 billion agreement to
upgrade Nigeria's rail system reported by AFP. At least one
Chinese paper did report a USD 10 billion rail deal between
South Korea and Nigeria shortly after the summit.

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5. (C) An Economic Minister at the Nigerian Embassy
speculated the Chinese did not announce the China-Nigeria
rail deal because it was a "private matter" between Chinese
companies and Nigerian authorities, overlooking the parallels
to the 16 deals announced during the Beijing Summit. A
Nigerian consultant told Poloff that the Nigerian Minister
for Solid Mineral Development met with approximately 70
Chinese companies, primarily SOEs, at a Beijing hotel to
discuss joint ventures in coal, bitumen and other minerals.
While the consultant did not know whether any specific deals
were inked following the hotel meeting, he said that the
Chinese companies were "fighting with each other" over
opportunities presented. The Nigerian Economic Minister
confirmed the meeting but said he had no details, adding that
he believed other African ministers likely held such
"informal" discussions while in Beijing.

African Frustrations
--------------


6. (C) While generally eager to explore business
opportunities with China and Chinese companies, a number of
African businessmen expressed some frustrations with Chinese
business practices at a "match-making" session for Chinese
and African businesses in connection with the High-Level
Economic dialogue. African businessmen and/or delegations
were granted table space in an exhibition hall at the China
World Hotel and given the opportunity to pitch their
businesses to potential Chinese partners, mostly from Chinese
State-Owned Enterprises (SOEs) according to participants who
spoke with Poloff on the margins of the event. In general,
participants felt the two-hour event did not provide enough
time for genuine business transactions but did produce some
contacts. A number of Africans said that they could not find
serious partners for their ventures because the Chinese
wanted to dictate the terms of the relationship. "They are
very tough negotiators," a Ghanaian businessman told Poloff.
A Namibian developer said that his company had secured a USD
400 million contract with Chinese partners earlier this year,
but added that Chinese are less keen to develop projects
jointly in venues outside Namibia. A Togolese printer said
that he could not find any appropriate partners and said that
the Chinese companies present seemed to be focused simply on
natural resources and infrastructure. An Ethiopian textile
exporter added that few Chinese companies appeared more
interested in buying his company than its products.


7. (C) Africans expressed similar frustrations at an African
Commodities Exhibition held at the Beijing International
Conference Center sponsored by the PRC Ministry of Commerce
(MOFCOM) November 6 and 7, immediately after the close of the
Beijing Summit. MOFCOM set up country blocks within the
exhibition hall, with each country allotted several booths
for its companies and/or trade promotion entities. Sudan and
Zimbabwe were given the most prominent spots for their
booths. Sudan also had the largest block of booths, with ten
companies represented. Higleig Petroleum had the most
prominent display, pitching engineering, procurement and
construction services. The Societe Nationale Des Bois Du
Gabon (SNBG),Gabon's national timber company, drew interest
from Chinese participants with an expensive multimedia
exhibit designed to showcase the value of Gabon's tropical
hardwoods. Chinese saleswomen in Nefertiti costumes
accompanied lavish Egyptian displays designed to pitch
cosmetics, refrigerators and carpets. Several Zambian mine
companies were also represented. Most other country displays
appeared designed to sell carvings and batiks.


8. (C) The Chinese participants at the Commodities Exposition
included a number of businessmen seeking joint ventures, but
also a shopping mall crowd gawking at the African mementos.
MOFCOM interlocutors were stationed in each booth, allegedly
to broker transactions between the Africans and the Chinese.
Several Africans did not like the intermediaries. A Kenyan
marketer for the Horticultural Crops Development Authority
summed up the exasperation of some African businesses
present, saying with a glance at her minder, "It's been a
long day." A Sudanese Gum Arabic Company representative
echoed the sentiments of several other Africans, saying "We
have good products but it's very easy for the Chinese to sell
to us and very hard for us to penetrate their market."

SOE Networks Dictate Market Access?
--------------


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9. (C) Chinese businessmen willing to speak with Poloff
confirmed they had strong support from the Chinese government
to pursue contracts in Africa. One SOE businessman working
for a water pipe company said it was very difficult for
"private" Chinese companies to operate in Africa. The
businessman said culture and language pose the biggest
challenges to Chinese companies in Africa. Security is less
of a problem because Chinese enterprises seeking to enter
African markets must "work through networks" established by
Chinese SOEs already in a target country, the businessman
said, adding that a relatively small number of SOEs with
significant African experience serve as bridges for other
Chinese firms.
Randt