Identifier
Created
Classification
Origin
06BEIJING7229
2006-04-17 08:46:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

WHA A/S SHANNON MEETING WITH BEIJING BASED LATIN

Tags:  PREL ETRD EINV CH XM VE CU TW 
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C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 007229 

SIPDIS

SIPDIS

STATE FOR WHA/FO WHA/EPSC

E.O. 12958: DECL: 04/17/2026
TAGS: PREL ETRD EINV CH XM VE CU TW
SUBJECT: WHA A/S SHANNON MEETING WITH BEIJING BASED LATIN
AMERICAN AMBASSADORS

Classified By: Deputy Chief of Mission David S. Sedney. Reasons 1.4 (b
/d).

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 007229

SIPDIS

SIPDIS

STATE FOR WHA/FO WHA/EPSC

E.O. 12958: DECL: 04/17/2026
TAGS: PREL ETRD EINV CH XM VE CU TW
SUBJECT: WHA A/S SHANNON MEETING WITH BEIJING BASED LATIN
AMERICAN AMBASSADORS

Classified By: Deputy Chief of Mission David S. Sedney. Reasons 1.4 (b
/d).


1. (C) Summary: During a luncheon hosted by Ambassador
Randt for visiting WHA Assistant Secretary Shannon,
Beijing-based Ambassadors from Argentina, Brazil, Chile,
Mexico and Peru discussed their bilateral relations with
China and its influence in Latin America. Most agreed China
is primarily interested in regional stability and continued
growth in trade and investment rather than political
adventurism. In the region, China is seen as a partner as
well as a competitor. There is little region-wide dialogue
with China due to China,s continuing focus on Taiwan
recognition issues. The Ambassadors agreed that China is not
supportive of Venezuelan President Chavez,s politically
charged anti-American rhetoric. Several said China might be
willing to engage Cuba on political reform using China's
recent experience as an example. Others cautioned, however,
that Cuba still holds special value for the Chinese
Government. End Summary.

Taiwan Recognition Issue Clouds Regional Dialogue with China
-------------- --------------


2. (C) In response to A/S Shannon,s query about the
likelihood of regional talks between Latin American countries
and China, Chilean Ambassador Cabrera commented that the
MERCOSUR-China dialogues had not been substantive. China is
mainly concerned with getting Paraguay to switch diplomatic
recognition from Taiwan to China, he stated. Brazilian
Ambassador De Castro Neves added that Taiwan pays Paraguay
handsomely to maintain ties. Cabrera also commented that
Panama now has a representative office in Beijing and that
the Panamanians are trying to assess the impact of a possible
change in recognition.

China Not Supportive of Venezuelan Rhetoric, Say Latin
American Ambassadors
-------------- --------------


3. (C) A/S Shannon expressed concern that Venezuelan
President Chavez,s anti-U.S. rhetoric is aimed at provoking

a rupture between North and South America. He planned to
explain U.S. concerns about Venezuela to the Chinese and
would urge them to steer clear of the issue, lest they feed
suspicion in the United States regarding their regional
intentions. There are concerns in the United States that
China may become a political adventurer in the region, he
added, but China seems more interested in regional stability
and access to markets and resources. Latin American
countries could help explain the regional context to the
Chinese, he stated.


4. (C) Both the Brazilian and Mexican Ambassadors, citing
direct conversations with Chinese Government officials, said
China does not support Venezuela,s anti-American rhetoric.
A Chinese Vice Minister had said the rhetoric does nothing to
help the situation of the Venezuelan people, according to
Mexican Ambassador Lopez. Brazilian Ambassador De Castro
Neves concurred that the Chinese are concerned about
Venezuelan rhetoric and want trade relations with Latin
America without harming United States-Latin American
relations.


5. (C) The Chilean Ambassador suggested that the United
States take a cautious approach with the Chinese about
Venezuela. While still a Communist country, China is trying
to implement political and economic reforms, he said. The
Chinese are cool to the idea of influencing politics in the
region, he added, and are mainly interested in Venezuela,s
oil and gas. The Peruvian Ambassador cautioned that the
Chinese are not concerned about anti-American rhetoric in the
region, adding that their definition of democracy is
different from that of the United States.

China - Cuba Relations
--------------


6. (C) A/S Shannon commented that Cuba's policy of
succession will have disastrous consequences. Without a

BEIJING 00007229 002 OF 003


transition to democracy the regime is too brittle to survive.
Shannon then suggested that China, since it is going through
an opening process now, could teach the Cubans about reform.


7. (C) The Chilean, Brazilian, and Argentinean Ambassadors
said Cuba holds a special place in the minds of the Chinese
for historical reasons. Every high level Chinese visitor to
the region must stop in Havana, they observed. According to
the Chilean Ambassador, an official of the Chinese Communist
Party told him Cuba is still considered a jewel by China
because it is one of the last remaining Marxist-Leninist
regimes.


8. (C) Brazilian Ambassador Neves commented that China
won,t insert itself in this issue but would like to see a
Chinese-style transformation in Cuba. Based on a
conversation he had with a Chinese official, China would like
Cuba to "understand the world better."

Bilateral Perspectives
--------------


9. (C) Chile: The Chilean-China free trade agreement (FTA)
negotiations had been very successful according to Chilean
Ambassador Cabrera. The countries are now moving on to
discussions regarding investments and services.
Characterizing the investment negotiations as no easy task,
he felt the services component is progressing well. Chile
pursued the FTA for strategic reasons, but the surge in
Chinese exports of consumer goods had hurt some sectors such
as footwear. Still, trade is developing quickly as
exemplified by the recent Minmetals (China) and Codelco
agreement that is expected to boost investment from USD 500
million to USD 2 billion. Chile is also talking with the
Chinese Government about an open skies agreement. Cabrera
said Chile want to become a platform for services for the
rest of Latin America.


10. (C) Argentina: Ambassador Morelli commented that
soybeans are Argentina,s major export to China. After the
2001 collapse of the Argentinean economy, the USD 4 billion
in trade with China is extremely helpful. Argentina
continues to deal with China in a transparent way and is
working on promoting anti-terrorism activities and human
rights with the Chinese.


11. (C) Brazil: Ambassador Neves highlighted the explosive
growth in trade with China (1,000 percent over the last six
years) that has made it Brazil,s number two trading partner.
He acknowledged the rise in domestic complaints as the
Brazilian surplus with China declines, but felt that
criticism of high value added imports from China and
Brazilian exports of primary commodities should not be
compared to previous North-South relations. He clarified
that Brazil is also exporting goods to China that are turned
into intermediary products that return to Brazil for finished
manufacturing. While there had been calls for anti-dumping
protection against Chinese imports, he stated, these are most
often coming from noncompetitive companies. He said China
prefers to deal with trade frictions bilaterally rather than
through WTO mechanisms as this could set a precedent for
disputes with other countries. Brazil feels the WTO
mechanisms have been working so far and will not adopt
safeguards to protect uncompetitive companies.


12. (C) Ambassador Neves added that for the first time trade
with China had become a domestic political issue in national
elections. The opposition claims that the Government has not
protected Brazilian industry and cites the example of
China,s purchase of an automotive parts factory, the
production lines of which were shipped back to China.


13. (C) Brazil,s investments in China (slightly larger than
China,s Brazilian investments) are dominated by the aircraft
manufacturer Embraer,s operations in Harbin and a
Brazil/U.S./China joint venture between Embraco, Whirlpool
and Snowflake for producing compressors. There is also talk
of investment in an electrical engine production facility.
China,s low cost production is the driving force in these
investments, according to Ambassador Neves, with labor costs

BEIJING 00007229 003.2 OF 003


30 percent lower than in Brazil. He is convinced that the
problems lie in Brazil rather than in China.


14. (C) Peru: Ambassador Reyes said China is now Peru,s
second largest trading partner as exports had been increasing
rapidly from the USD 500 million five years ago. While they
had problems with China's Ministry of Commerce in the past
regarding textile imports (Peru had used safeguards back in
2001),relations had progressed smoothly since then. Peru
would like more Chinese investment but the going has been
slow. Politically, the Chinese Communist Party had close
ties to all of the candidates in the upcoming election
including Ollanta Humala who is currently leading in the
polls. He went on to say that Peru has a large ethnic
Chinese population, most of whom came from Taiwan but who now
support the mainland. (Biographical note: Ambassador Reyes
mentioned that he is second generation Chinese.)


15. (C) Mexico: Categorizing the China-Mexico relationship
as love/hate, Ambassador Lopez described competition for the
U.S. market as the main feature of their relationship. The
main issue affecting Mexico-China relations at the moment is
the great disparity in trade flows. Real trade was USD 16.5
billion in 2005 with imports from China totaling USD 14
billion and Mexican exports only USD 2.5 billion according to
Ambassador Lopez. Mexico realizes that it can't stop the
flow of trade even if it wanted to. Mexico is focused on
increasing exports and has received a positive response from
China.


16. (C) The composition of Mexican exports to China, he
continued, is primarily processed food and manufactured goods
(including electronics, which they also import from China).
Mexico would like to expand pharmaceutical and chemical,
exports but constant pressure on China would be required to
open China's market. Since China,s economy is continuing to
grow, Mexico does not want to be left behind, he added.
Beyond trade, he noted that Mexico also maintains a human
rights dialogue with China.


17. (U) This report has been cleared by A/S Shannon's
delegation.

Participants
--------------

Latin American Ambassadors

Mr. Juan Carlos Morelli, Ambassador, Embassy or Argentina
Mr. Luiz Augusto De Castro Neves, Ambassador, Embassy of
Brazil
Professor Pablo Cabrera, Ambassador, Embassy of Chile
Mr. Ismael Sergio Ley Lopez, Ambassador, Embassy of Mexico
Mr. Luis Vicente Chang Reyes, Ambassador, Embassy of Peru

U.S. Government

Mr. Thomas Shannon, Assistant Secretary of State for Western
Hemisphere Affairs
Mr. Clark T. Randt, Jr., Ambassador, U.S. Embassy Beijing
Mr. John S. Creamer, Senior Executive Assistant to the
Assistant Secretary, U.S. Department of State
Mr. Paul Kreutzer, Political Officer (Control Officer)
Mr. Brian Klein, Economic Officer (Notetaker)
SEDNEY