CHINA WANTS TO BE A GOOD, BUT DISCREET, NEIGHBOR TO

C O N F I D E N T I A L DUSHANBE 000301 SIPDIS SIPDIS EMBASSY MANILA: PLEASE PASS TO ADB AMBASSADOR SPELTZ E.O. 12958: DECL: 2/14/2016 TAGS: PREL ECON EAID EINV SUBJECT: CHINA WANTS TO BE A GOOD, BUT DISCREET, NEIGHBOR TO TAJIKISTAN REF: DUSHANBE 63 CLASSIFIED BY: Richard Hoagland, Ambassador, US Embassy Dushanbe, State. REASON: 1.4 (b) ¶1. (SBU) China shares the United States' desire to see an economically stable Tajikistan, but is keeping its specific investment and trade priorities close hold. Chinese Trade Representative Wan Shungan told PolOff and BISNIS representative February 13 that China regards infrastructure and hydropower projects as emerging industries, but declined to elaborate on other sectors for Chinese investment, or the specifics of China's trade relations in Central Asia. ¶2. (SBU) "Tajikistan is our neighbor," said Shungan, so Beijing has a natural interest in helping Tajikistan develop. However, as a market, Tajikistan is less attractive. China exported close to $120 million to Tajikistan in 2004, mainly in light industrial machinery. China also exported some consumer goods, but not in significant quantities by Chinese standards. Shungan demurred when asked whether Tajikistan served as a transit route for Chinese goods and showed little interest in the transportation link to South Asia when the bridge at Nizhniy Pyanzh opens in Summer 2007. ¶3. (C) Shungan confirmed recent press reports the Chinese planned to build a hydropower station at Shurob, but said they were still conducting the feasibility study. Once completed, the tender would be open to Chinese firms only. Shungan acknowledged that they were also exploring other areas for hydropower investment but declined to elaborate. (Note: Two Deputy Energy Ministers told PolOff the Chinese were moving quickly to conduct feasibility studies on the Varzob Cascade, and the South-North transmission lines from Dushanbe to Khujand (reftel). END NOTE.) Shungan indicated the Chinese would provide their own financing and contractors for their investments. ¶4. (C) Aside from infrastructure, Shungan made no mention of other Chinese interests or investments in Tajikistan. (NOTE: He failed to mention the more than 150 Chinese workers producing metal frames and rebar at a Chinese-Tajik joint venture in Yavan; a Chinese-owned armaments factory in Khorog; or the Chinese commitment to rehabilitate the road at Sharshar Pass. END NOTE) ¶5. (SBU) Shungan seemed dubious that China would import Tajik produce or food stuffs, although he noted there was a growing demand in China for "ecologically clean" fruits and vegetables which may provide a market for Tajik agriculture. Shungan's comments remained extremely guarded throughout the hour-long conversation, despite PolOff's assurances that the United States welcomed all foreign investment too boost Tajikistan's economy and recognized the special relationship China has as a neighbor. ¶6. (C) COMMENT: China clearly has economic interests in Tajikistan, as its neighbor and as an investment possibility, but seems unlikely to take a public role as a donor country influencing Tajikistan's foreign policy, preferring instead to influence regional policy through the Shanghai Cooperation Organization. AES told PolOff in January they are interested in partnering with China on a hydropower station; given Shungan's insistence that only Chinese companies would construct the Chinese-financed projects, this seems unlikely, unless negotiated outside Tajikistan. ¶7. (C) COMMENT CONTINUED: Tajik government officials have expressed varying degrees of interest and concern at China's growing involvement. One Deputy Energy Minister noted that China acts fast while the United States hesitates (reftel), while another cautioned that China was moving so quickly, it was committing to projects without much research or thought. Many Tajiks laugh at the poor quality of Chinese goods available on the local markets, indicating that China could easily have competition if Russian or Western goods become available at comparable prices. END COMMENT ARMBRUSTER