CHINA HOSTS AFRICAN DEVELOPMENT BANK MEETING

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000291

SIPDIS

SIPDIS

STATE FOR EAP/CM, AF
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 5/16/2017
TAGS: PREL ECON CH XA
SUBJECT: CHINA HOSTS AFRICAN DEVELOPMENT BANK MEETING

SHANGHAI 00000291 001.2 OF 002


CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer , ,
U.S. Consulate Shanghai.
REASON: 1.4 (b),(d)




1. (C) Summary. Chinese Premier Wen Jiabao opened the African
Development Bank (AFDB) 2007 Annual Meetings in Shanghai on May
16 with a speech that stressed China's sincere commitment to
helping Africa develop and acknowledged that China needed to
further implement its own financial sector reforms, including
greater market-driven exchange rate flexibility. During an
AFDB-sponsored ministerial roundtable on May 15, African
representatives welcomed more Chinese assistance, but cautioned
that there should be more coordination among African nations to
ensure that Africa's partnership with China would lead to
sustainable growth and not just "some holes in the ground and
jobs in other countries." This cable reports on Premier Wen
Jiabao's statements and the interaction between China and
African nations at the AFDB meetings. We defer to our
colleagues at the Treasury Department for reporting on the
technical and non-China aspects of the meeting. End Summary.

CHINA COMMITTED TO AFRICA
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2. (SBU) During the Opening Ceremony of the African Development
Bank's (AFDB) opening ceremony 2007 Annual Meetings in Shanghai
on May 16, Chinese Premier Wen Jiabao delivered a speech that
laying out China's commitment to helping Africa develop.
Rwandan President Paul Kagame, Cape Verde President Pedro Pires,
Madagascar President Marc Ravalomanana, and Shanghai Mayor Han
Zheng also attended the ceremony. Premier Wen applauded Africa
for its steady progress in maintaining peace and stability and
promoting regional cooperation. He called on the international
community, in particular developed nations, to take more
measures to assist Africa, including providing more financial
assistance, cancel debts, and increase technology transfer.


3. (SBU) Premier Wen noted that China has had a long
relationship with African nations. Since it began establishing
diplomatic relations on the continent five decades ago, China
has participated in 900 infrastructure and public projects,
provided 20,000 government scholarships to 50 countries and sent
16,000 medical personnel to 47 countries to treat 180 million
people. It extended zero-tariff treatment to the exports of
some of the least developed nations and provided market access
to many African nations. China also has already cancelled RMB
10.9 Billion in debt and recently announced additional debt
relief of RMB 10 Billion.


4. (SBU) Premier Wen stressed that China would fully deliver on
the commitments made at the China-Africa Forum in Beijing in
November 2006, which included doubling assistance by 2009 and
setting up a USD 5 billion fund to finance African countries
development and support Chinese enterprises in Africa. At the
forum, China promised to establish a new type of strategic
relationship with Africa that emphasized political cooperation,
a win-win economic relationship, and increasing cultural
exchanges. China and Africa needed to do more to explore new
areas of cooperation. Government assistance and business
cooperation should also go "hand-in-hand" with the government
providing guidance to businesses investing in Africa. Priority
for cooperation should be placed on certain areas including
infrastructure, education, environment, medical, and technical
cooperation. In addition, this cooperation should be conducted
in an open and transparent manner. Finally, China was "truly
sincere" in its intentions of helping Africa to obtain
sustainable development.

CHINA'S ECONOMIC DEVELOPMENT
--------------


5. (SBU) Premier Wen reported that China's overall economic and
financial systems were good, but there continued to be problems.
China had made significant reforms in the financial sector to
modernize its banking system and improve the market. However,
the economy suffered from a growing imbalance in international
payments, rapid accumulation of foreign exchange reserves, and
excessive liquidity. There needed to be deeper reforms in
China's financial sector. In particular, China needed to
improve the foreign exchange mechanism, giving greater scope to
the role of the market and introducing greater interest rate
flexibility.

AFRICAN NATIONS ENTHUSIASTIC, BUT CAUTIOUS
--------------

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6. (C) During the May 15 AFDB Ministerial Roundtable on the
theme of "Africa and Asia: Partners in Development", African
representatives were enthusiastic about China's increased
attention to the continent. A few speakers from African nations
said the fact that China was hosting the AFDB meetings was
evidence of the strength of the relationship between China and
Africa. Many spoke about the Asian model of development and
wondered whether this model was more appropriate for Africa than
those of Western nations. A representative from Kenya asked how
long Africa's orientation towards its former masters would
continue. Kenya believed that Africa should look all around to
the North, East, South and West for assistance. Economist
Jeffrey Sachs said China had one trillion in foreign reserves
and a large savings rate. If China provided even one percent of
this money to Africa, it would provide Africa with a chance to
have massive growth.


7. (C) Bank of China Governor Zhou Xiaochuan also participated
in the roundtable. He said that Asia and Africa had many
similarities and common interests which would serve as a base
for long-term mutually beneficial partnership. Closer
China-Africa relations were a part of a greater trend in which
economic comparative advantages were shifting from the West to
Asia. For example, factories that used to be in Japan in the
1950's, had shifted to South Korea, then to China and now to
Vietnam. Perhaps, these factories would move to Africa in the
future. Cooperation should be mutually beneficial; China was
ready to play an even more active part in helping Africa develop.


8. (C) Some African representatives had a rather cautious
attitude to China's increased attention to Africa. One
representative said African nations must enhance cooperation
among themselves before entering into any cooperative
relationship with Asia or any other non-African country. While
the rapid rise of China and India, provided enormous
opportunities for sustainable growth, it was also a significant
threat to Africa. African countries should adopt a strategic
approach to this relationship to maximize the positive benefits.
A representative from South Africa had a similar view and said
that African nations must look to themselves to ensure that the
relationship was mutually beneficial. Otherwise, African
nations would just end up with "some holes in the ground and
jobs in other countries." Africa needed to develop a regional
economic community and not negotiate 53 separate agreements with
countries like China. His comments garnered a great deal of
applause from the mostly African audience members.

CONFERENCE ATMOSPHERICS
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9. (C) There were few Chinese participants in the meetings
attended by Poloff and most of the discussions were technical
and African-specific. Participants with whom Poloff spoke were
pleased overall with their Chinese hosts. One member of the U.S.
delegation told Poloff that this conference was more "pomp and
ceremony" than other AFDB conferences and appeared to be good PR
for China.

COMMENT
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10. (C) Premier Wen's presence at the meeting and the fact that
China agreed to host the meeting are all indications of the
great importance that China has placed on its relationship with
Africa. China is clearly trying its best to woo African
nations. Shanghai is China's most developed city and a
testament to China's development policies and economic strength.
African delegates were clearly impressed by the city and took
note that much of Shanghai's development had taken place in the
past 15 years.
JARRETT