Identifier
Created
Classification
Origin
06BEIJING7349
2006-04-18 09:00:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:
WHA A/S SHANNON DISCUSSES LATIN AMERICA WITH
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UNCLAS SECTION 01 OF 04 BEIJING 007349
SIPDIS
USINT HAVANA PRIORITY
AMEMBASSY SEOUL
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PREL ECON EIND ETRD CH CU TW VE XM
SUBJECT: WHA A/S SHANNON DISCUSSES LATIN AMERICA WITH
CHINESE BUSINESSMEN AND SCHOLARS
REF: BEIJING 6849 AND BEIJING 01810
SUMMARY
-------
UNCLAS SECTION 01 OF 04 BEIJING 007349
SIPDIS
USINT HAVANA PRIORITY
AMEMBASSY SEOUL
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PREL ECON EIND ETRD CH CU TW VE XM
SUBJECT: WHA A/S SHANNON DISCUSSES LATIN AMERICA WITH
CHINESE BUSINESSMEN AND SCHOLARS
REF: BEIJING 6849 AND BEIJING 01810
SUMMARY
--------------
1. (SBU) Over dinner with Chinese businessmen and academics
on April 13, WHA Assistant Secretary Thomas A. Shannon
explained that the United States is launching consultations
with China on Latin America as part of a broader dialogue.
The Chinese executives explained that their firms operate in
Latin America on a commercial basis and do not engage in
politics. China,s technology and need for natural resources
complement Latin America,s rich resource base, and lay the
basis for economic cooperation. The executives said they
could not stop President Chavez from playing the &China
card,8 but they did not like it. A Chinese oil executive
noted that his firm received no special treatment from the
Venezuelan authorities. End Summary.
Consulting with China
--------------
2. (SBU) Chinese Academy of Social Science (CASS) Institute
of Latin American Studies Deputy Director Professor Jiang
Shixue reported that Americans he encounters are intensely
interested about China's relationship with Latin America.
Jiang said he was mobbed by U.S. reporters during a
conference at which he spoke in Miami in late 2005, and his
picture featured prominently in the Miami press. China
Institute of Contemporary International Relations (CICIR)
Division of Latin American Studies Director Professor Dr. Wu
Hongying welcomed A/S Shannon's visit as a milestone.
3. (SBU) A/S Shannon explained that his trip, which
represents the first USG/China consultation on Latin America,
is part of the larger strategic dialogue with the Chinese led
by Deputy Secretary of State Robert Zoellick. The purpose of
the consultations is to identify areas of shared interests,
and solicit China's cooperation in promoting trade, political
stability, and open markets at a time when Latin America is
undergoing significant political changes. Such cooperation
will help dispel suspicions about China,s intentions in the
area.
Chinese Firms Focus on Finding Profitable Ventures
-------------- --------------
4. (SBU) China National Petroleum Corporation (CNPC) Vice
President Zhou Jiping stressed the global nature of CNPC's
operations, with offices in 22 countries and 58 international
projects including Venezuela, Ecuador, Peru and Mexico. Zhou
BEIJING 00007349 002 OF 004
explained that since U.S. and other large western oil firms
have little interest in "marginal" oil fields, CNPC was able
to secure such a small field in Venezuela in 1998. Using
Chinese technology, CNPC was able to increase production from
4,000 barrels per day (bpd) to 40,000 bpd. In Peru, CNPC
took over a 120-year old field that U.S. firms had abandoned
and increased production from 600 bpd to 7,000 bpd (See
Beijing 1810). He voiced some concern about political
stability in Latin America, but said Chinese firms like CNPC
have to go where the resources are. CNPC's discussions with
interlocutors in Latin America focus on trade, not politics.
5. (SBU) Baosteel Group Corporation Business Development
Department Director Dr. Lin Li said Baosteel has interests in
Brazil and Venezuela. China imports about 10 million tons of
iron ore from Brazil, but demand in China is great. Baosteel
would like to expand its operations. Baosteel echoed CNPC,s
view that its interaction with Latin America focuses on
business, not politics.
6. (SBU) China Minmetals Senior Vice President Xu Siwei
stressed that Minmetals is in Latin America to maximize
returns for its investors. It's a win-win endeavor for both
China and Latin America. Minmetals interests in ferrous and
non-ferrous metals include iron, magnesium, copper, tin,
aluminum, and antimony. Minmetals has exported USD200
million worth of mining equipment to Brazil. China Minmetals
Non-ferrous Metals Company, Ltd. Vice President Peng Pugang
said that Minmetals is a global enterprise with 50 branches.
Europe, North America, and East Asia are its key markets.
One third of Minmetals employees have overseas experience,
Peng said. Chinese technicians often are able to work well
with poorly educated or equipped workers, like those in the
highlands of Bolivia.
United States as Partner, Market for Chinese Firms
-------------- --------------
7. (SBU) Minmetals VP Peng said that Minmetals has a 30-year
relationship with Chevron, with the two firms partnering to
produce bauxite in Jamaica for the U.S. market. In Bolivia,
Minmetals is developing tin and antimony to supply the U.S.
market. Such examples show that an important part of
Minmetals' activities have a North American focus, Peng said.
U.S. firms' high technology complements Chinese firms' low
labor costs.
8. (SBU) CNPC VP Zhou reinforced this point, saying that he
was meeting with executives from Chevron the following day
to discuss cooperation in Latin America. Zhou recounted how
Chevron had helped CNPC get established in Papua New Guinea
in the early 1990's.
BEIJING 00007349 003 OF 004
9. (SBU) A/S Shannon welcomed such news of Sino-American
cooperation in Latin America. He encouraged the Chinese
businessmen to make this cooperation known to audiences in
North America.
Chinese Comment on Chavez and the "China Card"
-------------- -
10. (SBU) CASS Professor Jiang stressed that China had not
encouraged President Chavez to play the "China card," and did
not appreciate it. "Gifts" like the F-16s Chavez had at one
time alluded to passing to China are something the Chinese
would not accept. The other Chinese academic and business
guests concurred. Jiang asserted that Venezuela spends more
to win the hearts and minds of Latin Americans with economic
aid than the United States.
11. (SBU) CNPC VP Zhou deplored Venezuela's decision to make
foreign oil companies change their current servic contracts
for 30 percent minority stakes in joint venture companies,
but said foreign oil firms had no choice but to accept.
Likewise, Venezuela's decision to increase the tax rate from
25 percent to 30 percent or even to 50 percent was not good
for the investment climate, but foreign firms had no
alternative. U.S. firms had complained, but CNPC resigned
itself to the new measures as part of a regional trend. CNPC
received no special treatment from the Venezuelan Government,
he noted.
12. (SBU) Zhou confirmed that there are discussions between
CNPC and the Venezuelan authorities about building a pipeline
across Colombia to the Pacific. Zhou stressed that CNPC had
not invited this "China card," and pointed out that the
economic feasibility of the project and the ability to obtain
transit rights were open to question.
Participants
--------------
U.S. Side
1. Mr. Thomas A. Shannon, WHA Assistant Secretary
2. Mr. David Sedney, DCM (host)
3. Mr. John S. Creamer, Senior Executive Assistant
4. Mr. Christopher Beede, Acting Economic Minister Counselor
5. Mr. Eric Madison, Econoff (note taker)
6. Mr. Paul Kreutzer, Poloff
7. Mr. James Brown, language officer
Chinese Side
1. Mr. Xu Siwei, China Minmetals Senior VP
2. Mr. Peng Pugang, China Minmetals Non-Ferrous Metals VP
BEIJING 00007349 004 OF 004
3. Mr. Zhou Jiping, China National Petroleum Corp. VP
4. Ms. Wu Hongying, Phd., CICIR Research Professor
5. Mr. Lin Li, Phd., Baosteel Group Corp. Business
Development Director
6. Mr. Jian Shixue, ILAS CASS Deputy Director
13. (U) The WHA delegation has cleared this report.
SEDNEY
SIPDIS
USINT HAVANA PRIORITY
AMEMBASSY SEOUL
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PREL ECON EIND ETRD CH CU TW VE XM
SUBJECT: WHA A/S SHANNON DISCUSSES LATIN AMERICA WITH
CHINESE BUSINESSMEN AND SCHOLARS
REF: BEIJING 6849 AND BEIJING 01810
SUMMARY
--------------
1. (SBU) Over dinner with Chinese businessmen and academics
on April 13, WHA Assistant Secretary Thomas A. Shannon
explained that the United States is launching consultations
with China on Latin America as part of a broader dialogue.
The Chinese executives explained that their firms operate in
Latin America on a commercial basis and do not engage in
politics. China,s technology and need for natural resources
complement Latin America,s rich resource base, and lay the
basis for economic cooperation. The executives said they
could not stop President Chavez from playing the &China
card,8 but they did not like it. A Chinese oil executive
noted that his firm received no special treatment from the
Venezuelan authorities. End Summary.
Consulting with China
--------------
2. (SBU) Chinese Academy of Social Science (CASS) Institute
of Latin American Studies Deputy Director Professor Jiang
Shixue reported that Americans he encounters are intensely
interested about China's relationship with Latin America.
Jiang said he was mobbed by U.S. reporters during a
conference at which he spoke in Miami in late 2005, and his
picture featured prominently in the Miami press. China
Institute of Contemporary International Relations (CICIR)
Division of Latin American Studies Director Professor Dr. Wu
Hongying welcomed A/S Shannon's visit as a milestone.
3. (SBU) A/S Shannon explained that his trip, which
represents the first USG/China consultation on Latin America,
is part of the larger strategic dialogue with the Chinese led
by Deputy Secretary of State Robert Zoellick. The purpose of
the consultations is to identify areas of shared interests,
and solicit China's cooperation in promoting trade, political
stability, and open markets at a time when Latin America is
undergoing significant political changes. Such cooperation
will help dispel suspicions about China,s intentions in the
area.
Chinese Firms Focus on Finding Profitable Ventures
-------------- --------------
4. (SBU) China National Petroleum Corporation (CNPC) Vice
President Zhou Jiping stressed the global nature of CNPC's
operations, with offices in 22 countries and 58 international
projects including Venezuela, Ecuador, Peru and Mexico. Zhou
BEIJING 00007349 002 OF 004
explained that since U.S. and other large western oil firms
have little interest in "marginal" oil fields, CNPC was able
to secure such a small field in Venezuela in 1998. Using
Chinese technology, CNPC was able to increase production from
4,000 barrels per day (bpd) to 40,000 bpd. In Peru, CNPC
took over a 120-year old field that U.S. firms had abandoned
and increased production from 600 bpd to 7,000 bpd (See
Beijing 1810). He voiced some concern about political
stability in Latin America, but said Chinese firms like CNPC
have to go where the resources are. CNPC's discussions with
interlocutors in Latin America focus on trade, not politics.
5. (SBU) Baosteel Group Corporation Business Development
Department Director Dr. Lin Li said Baosteel has interests in
Brazil and Venezuela. China imports about 10 million tons of
iron ore from Brazil, but demand in China is great. Baosteel
would like to expand its operations. Baosteel echoed CNPC,s
view that its interaction with Latin America focuses on
business, not politics.
6. (SBU) China Minmetals Senior Vice President Xu Siwei
stressed that Minmetals is in Latin America to maximize
returns for its investors. It's a win-win endeavor for both
China and Latin America. Minmetals interests in ferrous and
non-ferrous metals include iron, magnesium, copper, tin,
aluminum, and antimony. Minmetals has exported USD200
million worth of mining equipment to Brazil. China Minmetals
Non-ferrous Metals Company, Ltd. Vice President Peng Pugang
said that Minmetals is a global enterprise with 50 branches.
Europe, North America, and East Asia are its key markets.
One third of Minmetals employees have overseas experience,
Peng said. Chinese technicians often are able to work well
with poorly educated or equipped workers, like those in the
highlands of Bolivia.
United States as Partner, Market for Chinese Firms
-------------- --------------
7. (SBU) Minmetals VP Peng said that Minmetals has a 30-year
relationship with Chevron, with the two firms partnering to
produce bauxite in Jamaica for the U.S. market. In Bolivia,
Minmetals is developing tin and antimony to supply the U.S.
market. Such examples show that an important part of
Minmetals' activities have a North American focus, Peng said.
U.S. firms' high technology complements Chinese firms' low
labor costs.
8. (SBU) CNPC VP Zhou reinforced this point, saying that he
was meeting with executives from Chevron the following day
to discuss cooperation in Latin America. Zhou recounted how
Chevron had helped CNPC get established in Papua New Guinea
in the early 1990's.
BEIJING 00007349 003 OF 004
9. (SBU) A/S Shannon welcomed such news of Sino-American
cooperation in Latin America. He encouraged the Chinese
businessmen to make this cooperation known to audiences in
North America.
Chinese Comment on Chavez and the "China Card"
-------------- -
10. (SBU) CASS Professor Jiang stressed that China had not
encouraged President Chavez to play the "China card," and did
not appreciate it. "Gifts" like the F-16s Chavez had at one
time alluded to passing to China are something the Chinese
would not accept. The other Chinese academic and business
guests concurred. Jiang asserted that Venezuela spends more
to win the hearts and minds of Latin Americans with economic
aid than the United States.
11. (SBU) CNPC VP Zhou deplored Venezuela's decision to make
foreign oil companies change their current servic contracts
for 30 percent minority stakes in joint venture companies,
but said foreign oil firms had no choice but to accept.
Likewise, Venezuela's decision to increase the tax rate from
25 percent to 30 percent or even to 50 percent was not good
for the investment climate, but foreign firms had no
alternative. U.S. firms had complained, but CNPC resigned
itself to the new measures as part of a regional trend. CNPC
received no special treatment from the Venezuelan Government,
he noted.
12. (SBU) Zhou confirmed that there are discussions between
CNPC and the Venezuelan authorities about building a pipeline
across Colombia to the Pacific. Zhou stressed that CNPC had
not invited this "China card," and pointed out that the
economic feasibility of the project and the ability to obtain
transit rights were open to question.
Participants
--------------
U.S. Side
1. Mr. Thomas A. Shannon, WHA Assistant Secretary
2. Mr. David Sedney, DCM (host)
3. Mr. John S. Creamer, Senior Executive Assistant
4. Mr. Christopher Beede, Acting Economic Minister Counselor
5. Mr. Eric Madison, Econoff (note taker)
6. Mr. Paul Kreutzer, Poloff
7. Mr. James Brown, language officer
Chinese Side
1. Mr. Xu Siwei, China Minmetals Senior VP
2. Mr. Peng Pugang, China Minmetals Non-Ferrous Metals VP
BEIJING 00007349 004 OF 004
3. Mr. Zhou Jiping, China National Petroleum Corp. VP
4. Ms. Wu Hongying, Phd., CICIR Research Professor
5. Mr. Lin Li, Phd., Baosteel Group Corp. Business
Development Director
6. Mr. Jian Shixue, ILAS CASS Deputy Director
13. (U) The WHA delegation has cleared this report.
SEDNEY