Identifier
Created
Classification
Origin
06BEIJING24004
2006-11-22 09:58:00
CONFIDENTIAL//NOFORN
Embassy Beijing
Cable title:  

PRC/AFRICA: MUBARAK IN CHINA

Tags:  PREL PGOV AGOA ECON EAID EG CH 
pdf how-to read a cable
VZCZCXRO6183
OO RUEHCN RUEHGH RUEHMR RUEHPA RUEHRN RUEHVC
DE RUEHBJ #4004/01 3260958
ZNY CCCCC ZZH
O 220958Z NOV 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2362
INFO RUEHEG/AMEMBASSY CAIRO PRIORITY 0265
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHTV/AMEMBASSY TEL AVIV 2020
RUEHJM/AMCONSUL JERUSALEM 0658
C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 024004 

SIPDIS

NOFORN
SIPDIS

DEPT FOR AF, EAP, EAP/CM
INR FOR GILLES, KNIGHT AND HOOKER
CAIRO FOR HILL-HERNDON, HEGADORN
USUN FOR PHEE

E.O. 12958: DECL: 11/22/2026
TAGS: PREL PGOV AGOA ECON EAID EG CH
SUBJECT: PRC/AFRICA: MUBARAK IN CHINA

REF: A. BEIJING 22370

B. BEIJING 23169

C. OSC GMP20061105950051

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

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 024004

SIPDIS

NOFORN
SIPDIS

DEPT FOR AF, EAP, EAP/CM
INR FOR GILLES, KNIGHT AND HOOKER
CAIRO FOR HILL-HERNDON, HEGADORN
USUN FOR PHEE

E.O. 12958: DECL: 11/22/2026
TAGS: PREL PGOV AGOA ECON EAID EG CH
SUBJECT: PRC/AFRICA: MUBARAK IN CHINA

REF: A. BEIJING 22370

B. BEIJING 23169

C. OSC GMP20061105950051

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

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


1. (C) President Mubarak's November 6-7 State Visit
immediately following the Beijing Summit of the Forum for
China-Africa Cooperation (FOCAC)(Ref A) included separate
meetings with President Hu Jintao, Premier Wen Jiabao and
National People's Congress (NPC) Chairman Wu Bangguo as well
as with executives of six leading Chinese companies,
according to and MFA official who works on Egyptian affairs.
Egypt granted China Market Economy Status (MES). President
Mubarak generally discussed the Israeli-Palestinian conflict
and made a pitch for PRC investment in Egypt in his
discussions with PRC leaders, according to Zhou. An Egyptian
Embassy contact told us that PRC aid and development
assistance pledged during the Beijing Summit was not generous
and lacked specifics. Zhou and an Egyptian Embassy contact
separately insisted President Mubarak did not discuss
Sino-Egyptian nuclear cooperation despite Chinese press
reports to the contrary. A French diplomat claimed that
President Mubarak did raise Sino-Egyptian nuclear cooperation
at the highest levels in Beijing. End Summary.


2. (C) Poloffs discussed Egypt's participation at the FOCAC
Beijing Summit separately with MFA West Asia and North
African Department Deputy Division Director Zhou Biao,
Egyptian Political Officer Yasser El-Shemy (protect),
Egyptian Commercial Minister Ahmed Abady (protect) and
Egyptian Commercial Officer Fadel Yacoub (protect).

Egypt: Not Much Aid
--------------


3. (C) From Egypt's perspective, Chinese trade and
development assistance pledges to Africa during FOCAC's
Beijing Summit (Ref B) were not generous and lacked

specifics, El-Shemy complained. He commented that many of
the benefits from China's more general commitments to Africa
announced at the summit may not be available to Egypt.
Referring to PRC promises to provide USD 3 billion in
preferential loans and USD 2 billion of preferential buyer's
credits to Africa over the next three years, El-Shemy noted
that very few African countries have the ability to export to
China. Chinese companies may be the real winners.
Similarly, the PRC provided no specifics on its proposed USD
5 billion China-Africa development fund or the criteria for
accessing the fund, El-Shemy added, noting that USD 5 billion
is a small sum against the needs of 48 African countries.
Septel will report other issues surrounding the PRC trade and
development assistance proposal and the Beijing Action Plan
and Beijing Declaration.

Mubarak Talks Palestine
--------------


4. (C) MFA West Asia and North African Department Deputy
Division Director Zhou said President Mubarak's November 6-7
State Visit immediately following the Beijing Summit included
separate meetings with President Hu Jintao, Premier Wen
Jiabao and National People's Congress (NPC) Chairman Wu
Bangguo as well as with executives from six major Chinese
companies. According to Zhou, President Mubarak discussed
with President Hu Egypt's efforts to encourage the
Palestinians to form a unity government. President Mubarak
seemed to be deeply engaged in the Palestinian issue, Zhou
commented. El-Shemy separately said President Mubarak asked
President Hu to urge Israel to show flexibility and restraint
in order to give Palestinian Authority Chairman Abbas room to
maneuver. President Mubarak spent much of the bilateral
meeting describing Egyptian efforts at shuttle diplomacy
between Cairo and Tel Aviv. Egyptian Intelligence Chief
Suleiman attended and passed Mubarak handwritten talking
points throughout, according to Zhou, adding that President
Hu listened to President Mubarak's concerns but did not make
any commitments. The meeting lasted more than an hour. In
the final fifteen minutes, Egyptian Minister of Trade and

BEIJING 00024004 002 OF 003


Industry Rachid expressed Egypt's desire to more than double
bilateral trade by 2010 to USD 5.5 billion, El-Shemy said.
Zhou and El-Shemy separately noted that President Hu and
President Mubarak did not discuss other regional issues such
as Iran, Iraq or Sudan/Darfur.

Nuclear Cooperation Discussions?
--------------


5. (C) Zhou said President Mubarak did not discuss nuclear
cooperation during his meetings with President Hu, Premier
Wen or NPC Chairman Wu and that the PRC leaders also did not
raise the issue. China supports in principle Egypt's
development of a civilian nuclear program per a 2002
agreement, Zhou said. When Poloff showed Zhou a China Daily
report from the internet entitled "China, Egypt Agree on Nuke
Co-Operation" and describing a "joint communique" to that
effect (Ref C),Zhou said the report simply restated common
understandings between China and Egypt. El-Shemy likewise
insisted that Mubarak did not seek PRC support for an
Egyptian nuclear program during any of his official meetings
in China. El-Shemy added the caveat that he personally could
not say what might have happened under the table. In
contrast, a French diplomat in Beijing reported that an
Egyptian embassy source told him that Sino-Egyptian nuclear
technology was discussed "at the highest levels."

Mubarak Makes Investment Pitch
--------------


6. (C) Zhou said Mubarak also raised the Israeli-Palestinian
conflict with Premier Wen, but largely pressed for general
economic cooperation. The bilateral with NPC Chairman Wu was
largely a courtesy call, Zhou added. El-Shemy said Premier
Wen surprised the Egyptians by announcing to Mubarak that the
PRC granted RMB 50 million (approximately USD 6.3 million) to
Egypt to build a school in President Mubarak's hometown and
establish a fishery project in Egypt (Note: Zhou said that
Premier Wen previously announced the school-building project
during his visit to Egypt in April. End Note.)


7. (C) Meeting with Chinese firms, President Mubarak
underscored that Egypt needs Chinese investment and
technology transfers and will provide all necessary
assistance to facilitate Chinese firms' entry into the
Egyptian market, according to El-Shemy. China International
Trade and Investment Corporation (CITIC),China Aviation
Technology Import-Export Corporation (CATIC) and ZTE (a
telecommunications vendor) were among the participants. No
Egyptian companies were present. The meeting covered
information technology, communications, transportation
(especially rail),chemicals, petro-chemicals, financial
services and recycling, El-Shemy said.

Egypt Has Little To Sell Us
--------------


8. (C) Deputy Division Director Zhou said Egypt is generally
dissatisfied with its trade deficit with China and seeks more
Chinese investment. Bilateral trade is approximately USD 3
billion. Egypt particularly seeks assistance in
infrastructure development, including roads, ports and
railroads. The problem, Zhou said, is Egypt "has very little
to sell us," adding that Chinese exports to Egypt consist
mainly of clothes and consumer electronics. Abady told us
China's current investment in Egypt totals between USD 50-60
million, although Chinese statistics tout three times that
amount. Abady said Chinese companies are hesitant to
transfer capital to Egypt and are slow to make investment
decisions. Egypt wants to attract large investments by
reputable Chinese companies in iron-ore, gold, zinc and
phosphates. Commenting that Chinese companies are still
gaining international experience, Abady said Egyptian
attempts to attract Chinese investment in a refinery are
encountering problems as the Chinese seek to contract for the
work rather than transfer capital and technology. Egyptian
labor laws prohibit the import of Chinese labor, Abady added.

PRC Gets MES
--------------


9. (C) Egypt granted China Market Economy Status (MES) during
the Beijing Summit, both Zhou and El-Shemy told us. Zhou

BEIJING 00024004 003 OF 003


said the Minister of Trade and Industry Rachid and PRC
Minister of Commerce signed the MES agreement. China is
pleased with MES, Zhou said, noting that China considers MES
designation a political decision. While the press reported
that Minister Rachid signed nine economic cooperation
agreements with China totaling approximately USD 250 million
during the Beijing Summit (Ref C),Zhou was only willing to
confirm two other bilateral agreements: a "small" PRC aid
grant in excess of USD 1 million, which Zhou described as
"symbolic" and a cooperation agreement between the two
countries' health ministries. Both El-Shemy and Abady
mentioned that the Bank of China and Egypt's Social Fund
signed a Memorandum of Understanding (MOU) designed to
provide loans for Small to Medium-sized Enterprises (SMEs).
El-Shemy said the Egyptian Cabinet Information Decision and
Support Center and the PRC State Council's Development
Research Center also reached agreement on technical support.


10. (C) The Beijing Summit provided an opportunity for
African businessmen to interact with each other and with
Chinese counterparts, our Egyptian contacts told us. Members
of the Cleopatra Group, the Kato Group, the MAG Group and the
Egyptian Cotton Company attended the Beijing Summit. An
Egyptian-owned textile company agreed to invest up to USD 20
million in weaving facilities in Tianjin and Egyptian and
Chinese companies signed a telecommunications agreement worth
USD 500 million (El-Shemy said Chinese companies will build a
mobile-phone assembly in Egypt). El-Shemy told us that the
China-Africa Joint Chamber of Commerce (JCC) established
during the Beijing Summit represents a significant
development for promoting Sino-African trade. JCC
headquarters will be in Cairo and the Egyptian government
will provide the building and security and extend diplomatic
privileges to the staff, El-Shemy noted.

Egypt's Priorities
--------------


11. (C) As FOCAC Co-Host for the 2009 Ministerial, Egypt's
priorities will be to strengthen "trilateral" cooperation
between Egypt, China and Africa, press the Chinese to provide
specifics on key PRC proposals (such as establishing African
trade zones) and obtain greater African participation in the
FOCAC mechanism, El-Shemy said.

PRC Reflecting On Mubarak Succession?
--------------


12. (C) Deputy Division Director Zhou said that President
Mubarak's meetings with Chinese leaders went quite well
because President Mubarak is "one of China's oldest friends"
and the last foreign dignitary that Chairman Mao received
before his death (Mubarak was Egypt's Vice President at the
time). Remarking that President Mubarak is getting on in
years, Zhou wondered aloud what might happen in Egypt when it
comes time for succession.
Randt