CHINA IN DJIBOUTI

UNCLAS DJIBOUTI 000430 STATE FOR AF/E LONDON, PARIS, ROME FOR AFRICA WATCHER CJTF-HOA FOR POLAD SIPDIS SENSITIVE E.O. 12958: N/A TAGS: PREL EAGR ECPS EFIN CH DJ SUBJECT: CHINA IN DJIBOUTI Ref: State 41697 ¶1. (U) SUMMARY. China's engagement in Djibouti--through aid and trade--is significant and growing. While Chinese bilateral assistance to Djibouti has long been focused on infrastructure projects, China is also starting to focus more on health, education, and vocational training. Given USAID's focus on education and health in Djibouti, all of these areas would be potential candidates for U.S.-Chinese cooperation in Djibouti. END SUMMARY. -------------- CHINESE FOOTPRINT IN DJIBOUTI -------------- ¶2. (U) After Djibouti gained independence from France in 1977, China quickly moved to develop the Sino-Djiboutian relationship, mostly through large construction projects. Chinese loans paid for the construction of the USD 10 million "People's Palace" conference center in 1983 and the USD 11 million sports stadium in 1991. Smaller grants financed a new wing of the main public hospital in 1997, and a new building for the Ministry of Foreign Affairs in 2001. ¶3. (SBU) While current Chinese aid projects are still largely focused on physical infrastructure, China has also modestly increased other forms of aid to Djibouti, including training and medical support. The Chinese-built wing of the main public hospital is staffed by a Chinese medical team that provides training and support for the Djiboutian staff. A planned 100- bed hospital to be built in the town of Arta--some 15 miles outside of the capital and as of now without its own hospital-- may also be staffed by limited Chinese personnel. According to the Chinese Embassy in Djibouti, over 200 Djiboutians have received training in China in various fields, ranging from environmental management and renewable energy to various technical skills. ¶4. (SBU) President Guelleh's 2001 visit to China with a group of government officials and business people significantly boosted Sino-Djiboutian business links. Djibouti has invested heavily in Chinese communications technology, working with the Chinese companies ZTE and Huawei on fixed and mobile phone networks and Internet technology. Chinese construction companies are also active in Djibouti's building boom. While Chinese companies and products often are extremely competitive in the Djiboutian market based on price alone, there have been some complaints about poor-quality after-sales service and follow-up by Chinese suppliers, especially from state-run telecommunications monopoly Djibouti Telecom. There have also been reports that Chinese companies may sometimes resort to bribery to win contracts. -------------- U.S.-CHINA COORDINATION -------------- ¶5. (SBU) In the context of Djibouti's small diplomatic corps, Post maintains a cordial working relationship with the Chinese Embassy. However, to date there has been no targeted cooperation on specific projects. EconOff and Chinese EconCouns met April 27 to discuss possible areas of U.S.-China cooperation. Chinese EconCouns identified agricultural development, renewable energy exploration, infrastructure improvements, and water resource expansion as potential areas for U.S.-China cooperation. According to Chinese EconCouns, "the U.S. is a powerful country, but China is a big developing country, and Djibouti needs the assistance and experience of both the U.S. and China to develop at a quicker pace." ¶6. (SBU) COMMENT: Djibouti has few large-scale natural resources to interest China. However, Djibouti's growing service economy has created a construction boom and a thirst for technological infrastructure that is bringing in more Chinese investment. While Chinese companies often offer the most competitive price, some Djiboutian end users have complained about quality, service, and after-sales follow up from Chinese firms, and several GODJ contacts have said that absent the compelling price factor, they would have preferred to buy U.S.-developed technologies. Nevertheless, many Djiboutians feel that Chinese goods and services have answered a market need at an attractive price point. END COMMENT. SYMINGTON