INFORMAL FOREIGN AID DISCUSSIONS CONTINUE

UNCLAS SECTION 01 OF 02 BEIJING 005176 SIPDIS SENSITIVE SIPDIS TOKYO FOR USAID AANENSON STATE FOR EAP/CM AND EB/IFD/OMA STATE FOR EAP/EP, AF/EPS, NEA/RA, WHA/EPSC TREASURY FOR DEPUTY CHIEF OF STAFF TAIYA SMITH AND OASIA/ISA DOHNER/YANG/CUSHMAN STATE PASS TO USAID FOR NICHOLSON BANGKOK FOR USAID/RDMA CARDUNER AND WHELDEN PARIS FOR USOECD MANILA FOR ADB USED NSC FOR SHRIER, TONG E.O. 12958: N/A TAGS: ECON EFIN EAID CH SUBJECT: INFORMAL FOREIGN AID DISCUSSIONS CONTINUE REF: BEIJING 3587 and previous SUMMARY -------------- ¶1. (SBU) A Ministry of Commerce (MOFCOM) official responsible for foreign aid told a visiting USAID official that the Chinese Government would welcome efforts by the United States to cooperate with China on economic development initiatives. The August 2 meeting followed a positive exchange with a Treasury official in May after a long period of reluctance on MOFCOM's part to discuss foreign aid issues (reftel). According to the MOFCOM representative, the Chinese Government is interested in bilateral cooperation on development work in Africa, and the United States Government and China should begin to discuss possible projects for cooperation. Separately, Chinese press reports also indicate that the China Development Bank (CDB) has increased its stake in Africa through the launch of the new China-Africa Development Fund. END SUMMARY. MORE POSITIVE SIGNS ON DEVELOPMENT COOPERATION -------------- - ¶2. (SBU) Charles Aanenson, Counselor for Development Cooperation, Embassy Tokyo, followed up on the May 8-9 visit of Deputy Assistant Secretary of Treasury Kenneth Peel (reftel) to further encourage SIPDIS Chinese government officials to cooperate on development assistance with the United States. Liu Junfeng, Director, Department of Aid to Foreign Countries, Ministry of Commerce (MOFCOM),said he is optimistic about future cooperation and expressed his appreciation for Aanenson's overview of development cooperation between the United States and Japan. (Note: Prior to the Peel meeting in May, MOFCOM's Department of Aid to Foreign Countries routinely refused Embassy requests for meetings. Liu Junfeng, who also participated in Peel's May 9 meeting with the Department's Director General, Wang Shichun, met with Aanenson in place of Wang, who was traveling on August 2. End Note.) USAID'S COOPERATION WITH JAPAN -------------- ¶3. (SBU) Aanenson explained to Liu that his office's role in Tokyo is to develop bilateral cooperation projects with Japanese aid agencies and to avoid duplication of work in the developing world. While Japan's economic assistance strength is its yen loan program, the United States' strength is technical assistance. The United States Government is eager to learn if it can forge a similar partnership with China, Aanenson said. OPPORTUNITIES IN AFRICA -------------- ¶4. (SBU) Liu thanked Aanenson for his overview of the United States' development cooperation with Japan, and he reiterated China's foreign aid priorities as stated by Wang in the May 9 meeting (reftel). Liu pointed to Africa as a region where development cooperation between the United States and China might be most effective, as China's advantages with regard to strong bilateral relations and low project costs could be partnered with technical assistance from the United States. Liu said that China and the United States should further explore possible cooperation in Africa and begin to identify specific projects and perhaps propose feasibility studies to recipient countries. Liu offered the caveat that such cooperation would of course be subject to the agreement of the recipient country. He asked Aanenson to provide a list of specific countries and specific projects as examples of possible cooperative ventures, saying he would discuss the idea further with his superiors. NOTE: MORE ON AFRICA -------------- ¶5. (SBU) According to Liu, 48 countries in Africa have accepted ODA from China to date, but the number of projects is not very large. BEIJING 00005176 002 OF 002 He reemphasized a point Wang made previously that MOFCOM is under a tremendous amount of pressure to deliver aid to Africa following the November 2006 China-Africa Forum. A July 26 Caijing magazine article reported that the China Development Bank launched the China-Africa Development Fund in June with an initial investment of USD 1 billion and a goal of reaching USD 5 billion. In doing so, CDB broadened the scope of its international outreach, which CDB officials had highlighted to Peel in May (reftel). END NOTE. RANDT