China's Engagement in Ghana

UNCLAS SECTION 01 OF 02 ACCRA 000614 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: PGOV EAGR ECPS EFIN MARR PREL SENV TRGY GH SUBJECT: China's Engagement in Ghana REF: (A) STATE 41697, (B) ACCRA 561 ¶1. (SBU) SUMMARY: While China's close ties to Ghana date to the establishment of diplomatic relations in 1960, economic and commercial ties are growing, with China focused on a series of high-profile infrastructure projects. The Chinese have shown little interest, however, in coordinating with other major development partners and are notably absent from regular sector coordination meetings. As requested reftel, following is a summary of Chinese engagement in Ghana, including areas for potential cooperation between the U.S. and Chinese Missions. END SUMMARY. China's Commercial and Economic Interests in Ghana -------------- -------------- ¶2. (U) China has focused its efforts in Ghana in the commercial and economic areas, but has also provided support to Ghana's participation in various African peacekeeping missions, including a grant to purchase vehicles, the sale of several Chinese fighter jets and the rehabilitation of Ghanaian military buildings. Ghana-China relations have been very strong in recent years, as the countries continue to exchange high-level and technical visits following Chinese Premier Wen Jiabao's visit to Ghana in June 2006 and President Kufuor's attendance at the Beijing Summit on China-Africa Cooperation in November 2006. ¶3. (U) China remains an important and growing trade and investment partner for Ghana. According to IMF statistics, China was the number two exporter to Ghana (behind Nigeria) in 2006. Ghana's statistics submitted to the WTO indicate that China was the number one source of imports in 2006, supplying 9.5 percent of all imports. Only about one percent of Ghana's exports go to China, however. According to the Ghana Investment Promotion Centre (GIPC),China registered the most investments in 2007 (65) in terms of number and the second largest in terms of value (about $130 million over the life of the investment). Not all investments that are registered with GIPC materialize but the figures are indicative of the level of interest China is showing in Ghana. ¶4. (U) China has also financed some major infrastructure projects, including providing a $600 million loan to finance construction of a 400 megawatt hydro-electric dam at Bui in Brong Ahafo. Chinese projects have also included building a large youth center in Kumasi, a new Ministry of Defense headquarters, and renovating the National Theatre in Accra. ¶5. (U) There are discussions of possible Chinese involvement in rehabilitating Ghana's railroad network, but it is unclear how serious this initiative may be. In addition, there is a Ghanaian-Chinese joint venture plan to construct a 200-500 MW gas-stream combined cycle power generation project near Kpone, and a pulp and paper mill at Dabuase in the Western Region. ¶6. (SBU) Chinese involvement in the natural resources sector is also growing and merits close attention in terms of environmental stewardship. A Chinese delegation recently visited Ghana to discuss investment in Ghana's forestry sector. Ghana may provide financing for aquaculture cultivation of tilapia for domestic consumption and possibly for a partnership to produce salt resistant tilapia for export to China. China is also engaged in commercial fishing, sometimes intruding into areas reserved for local artisanal shipping (ref B). ¶7. (U) China has also sent medical teams to Ghana to perform research and combat infectious diseases. Opportunities for Coordination -------------- ¶8. (SBU) To date, coordination between the Chinese and U.S. Missions in Ghana has been limited. While there is some contact between the Missions, China does not participate in meetings of development partners or any of the sector discussions that take place regularly. ¶9. (SBU) China is playing a major role as a development partner in Ghana, and indeed, is the driving force behind several major infrastructure projects that will have a significant impact on Ghana's development. Consequently, we believe there would be positive benefits to increased coordination, particularly if China were to participate in the regular "sector group" meetings held between the government and foreign donors (including in areas such as health and education). However, despite having been invited to these meetings in the past, the Chinese mission in Accra has not participated in the donor coordination process. ¶10. (SBU) In addition, while we believe increased cooperation would be useful, we caution that there have been social and environmental concerns centering around some Chinese projects such as the Bui Dam. This project will require significant resettlement of local ACCRA 00000614 002 OF 002 populations and potentially destroy a hippopotamus sanctuary. In addition, because China has brought in a large number of Chinese workers for projects such as the recent construction and rehabilitation of sports stadiums, there has been a limited impact on job creation for Ghanaians. Our understanding is that the Environmental and Social Impact Assessment Study for the Bui project was hastily pushed through. China's involvement in fish farming may also raise environmental concerns, as there are indications that Ghana may be planning to import GMO tilapia that can reach maturity faster. Such fish can have a devastating impact on indigenous fish species if this initiative is mismanaged and the fish escape. COMMENT -------------- ¶11. (SBU) China is clearly playing an important development role in Ghana with major projects centered on infrastructure, and the Chinese-Ghana relationship appears to be robust. While coordination between the Chinese and other foreign development partners has been very limited, we believe it would be beneficial and will continue to look for opportunities to engage the Chinese in Ghana. END COMMENT. Bridgewater