Kenyan Ambassador on Growing China

UNCLAS SECTION 01 OF 02 BEIJING 001050

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EINV ETRD PREL SENV CH KE
SUBJECT: Kenyan Ambassador on Growing China
Relationship

REF: Beijing 00288

This cable is Sensitive But Unclassified (SBU) and
for official use only. Not for transmission outside
USG channels.

1.(SBU) Summary: China continues to make greater
inroads into Africa, with Kenya aggressively
lobbying for closer ties with China and seeking a
larger share of China!/s substantial investment in
the continent, according to Kenya!/s Ambassador to
China Julius Sunkuli. Democracy in Africa is there
to stay, and the Kenyan government and its vocal
civil society ensure Kenya can avoid any potential
negative effects on the environment or Kenyan jobs
that Chinese investment might create. Ambassador
Sunkuli opined the United States risks losing its
still pre-eminent influence on the continent if it
continues to make unreasonable demands on African
governments. He stressed that the indictment of
Sudanese President Bashir would be counter-
productive. End Summary.


Looking for Future Investment
--------------


2. (SBU) Over lunch with Emboffs, Kenyan Ambassador
Julius Sunkuli described Kenya!/s relationship with
China as !0friendly, of growing importance and
consisting of mutual interests.!1 He said Kenya is
greatly interested in the China-Africa Development
Fund (CADF),which has USD 1 billion (eventually
expected to reach 5 billion) with which to support
Chinese companies investing in Africa as equity
partners (REF). Kenya did not receive funding for
the initial tranche of projects supported by CADF,
and is now lobbying more aggressively for a piece of
the pie. In 2006, China!/s investment in Kenya was
only USD 30 million and consisted of smaller-scale
development projects such as hospital enhancements
and the development of a sports center. China!/s
investment portfolio in Kenya now includes a variety
of industries ranging from natural resources to home
appliances manufacturing. Kenya and the China
National Offshore Oil Company (CNOOC) formalized an
oil exploration agreement in 2006. In 2007, the
state-owned metal manufacturing group Jinchuan
became the first Chinese company to enter Kenya's
mining sector with the purchase of a 20 percent
stake in Tiomin Kenya, Ltd. China recently granted
the Kenyan government a concessional loan for a USD
120 million road construction project.

Tourism and Trade Promotion
--------------

3.(SBU) Kenya imports Chinese-made household
electric appliances, industrial and agricultural
tools, textile goods and building materials, and
hopes to increase its exports of items such as black
tea, coffee and leather goods, said Sunkuli. (Note:
Kenyan exports to China grew 55 percent from 2006 to
2008.) Sunkuli said Kenya also hopes to capitalize
on stronger trade relations to increase the number
of Chinese tourists who visit Kenya. Currently,
approximately 20,000 Chinese tourists visit Kenya
each year. Sunkuli noted that Kenya Airways!/ newly
launched nonstop flight from Nairobi to Guangzhou
would promote both tourism and trade. [Note: Kenya
Airways is the first Sub-Saharan Africa airline to
offer a non-stop flight to mainland China.]


A New Partnership, but with Issues of Concern
-------------- --------------


4. (SBU) Sunkuli noted that Kenya!/s partnership with
China has raised concerns about Chinese companies'
environmental impact and labor practices. However,
he stressed that Kenya's government and vocal civil
society would prevent any serious harm to Kenya's
environment and workers. He cited as an example the
refusal of Kenya!/s National Environment Management
Authority (NEMA) to permit a Chinese-owned cement
company from building a proposed factory in an
environmentally sensitive area, noting that
environmental NGOs would have raised a furor if

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permission had been granted. Similarly, Kenya!/s
labor activists criticize Chinese companies
tendency to hire Chinese nationals and avoid
employing local labor. In response, the Kenyan
government limits the number of work visas issued to
Chinese workers, said Sunkuli.

U.S. Risks Losing Influence in Africa
--------------


5. (SBU) Commenting on U.S. foreign policy in
Africa, Sunkuli said the United States risks losing
its still pre-eminent influence on the continent if
it continues to make unreasonable demands on African
governments. He criticized the International
Criminal Court (ICC) indictment of Sudanese
President Bashir, arguing that the United States
should have prevented this "counter-productive"
move.

PICCUTA