HUI SAID XI SAID: CHINESE LEADERS VISIT LATIN

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 000518

SIPDIS

E.O. 12958: DECL: 02/27/2029
TAGS: PREL PGOV ECON EFIN EAID ETRD ENRG CH XM XL
SUBJECT: HUI SAID XI SAID: CHINESE LEADERS VISIT LATIN
AMERICA AND THE CARIBBEAN

REF: A. 08 BEIJING 3760

B. 08 BEIJING 4253

Classified By: Political Minister-Counselor Aubrey Carlson,
reasons 1.4 (b/d).


1. (C) Summary: The overlapping visits of two of China's top
leaders to Latin America and the Caribbean February 7-22 were
marked by numerous investment and aid agreements. While some
of the agreements lacked substance or were rehashed from
previous visits, our contacts say China has begun to
implement "the spirit" of a late-2008 Chinese policy paper
calling for expanded relations with the region. Our Chinese
contacts emphasized repeatedly that neither the visits nor
Chinese relations with the region are aimed at the United
States, the primary motivating factor behind both being
economic. End Summary.

The Visits
--------------


2. (SBU) In February, two of China's top leaders visited nine
Latin American and Caribbean nations. Vice President Xi
Jinping visited Mexico, Jamaica, Colombia, Venezuela and
Brazil February 8-22, and Vice Premier Hui Liangyu visited
Argentina, Ecuador, Barbados and the Bahamas February 7-19.
Official Chinese state-controlled media reported that the
visits reflected the "rising importance" of the region and
emphasized the importance that China placed on its
relationships there.

The Visit Is the White Paper in Action
--------------


3. (C) The overlapping visits to the region by two of China's
top leaders represents the "implementation of the spirit" of
the State Council White Paper on developing China's relations
with the region, Ministry of State Security-affiliated China
Institutes for Contemporary International Relations (CICIR)
Latin American Studies Division Assistant Research Professor
Sun Yanfeng told PolOff February 20. The White Paper,
published in November 2008, codifies standard Chinese
platitudes on "the desire for greater mutual understanding
and cooperation," the need for "mutual respect and mutual
trust," and the desire for "win-win results." In the
political field, the paper calls for increased high-level
exchanges. Economically, the paper calls for increased trade
and greater cooperation in the fields of investment, finance,
agriculture, industry, infrastructure and energy and
resources. The paper also calls for greater cooperation in
science and technology, such as in fighting climate change,
and in the fields of "peace, security and judicial affairs,"
such as police exchanges, military cooperation for
peacekeeping, and in "non-traditional security issues."
Professor Sun noted that agreements signed in countries
visited by Xi and Hui fulfilled goals set forward in the
White Paper. These agreements included increased energy
cooperation with Venezuela, planned police exchanges with
Brazil, infrastructure development and financial aid to the
three Caribbean nations visited, and MOUs on increasing
tourism with Colombia.

A Primary Driving Factor: Global Financial Crisis
-------------- --------------


4. (C) The primary motivation for the timing of the
two-pronged trip to Latin America was the global financial
crisis, CICIR Latin American Studies Division Professor Shang
Deliang told PolOff February 20. While China was currently
Latin America's third largest trading partner, the volume of
trade was still only half that of the region's trade with the
EU and one fifth of the region's trade with the United
States. China's new focus on the region came at a time of
reduced global demand, and seeking to expand potential
markets there made sense from both a short-term and long-term
point of view, he said. In the short term, the shrinking
demand in Europe and the United States has made China
"desperate" to increase market share elsewhere in order to
prevent the closure of struggling Chinese export firms. In
the long run, solid relationships with Latin America would
help with energy security, resource supply and facets of

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China's key strategic interests, he said. (Note: Increased
Chinese exports to the region could exacerbate trade
frictions with countries like Mexico, as reported ref B.)

Another Factor: Domestic Timing Considerations?
-------------- ---


5. (C) The visits were not timed to come just after the
inauguration of the new U.S. President, nor should the visits
be seen as a threat to U.S. interests in the region, CICIR
Latin American Studies Associate Professor Yang Shouguo told
PolOff February 20. Rather, the visits took place in
February because of Chinese domestic timing considerations,
such as the early March scheduling of the "two meetings" --
the National People's Congress and the Communist Party
Political Consultative Committee -- that dominate the
schedules of the principals involved in the visits, he said.
Brazilian First Secretary Daniella Menezes, in a meeting with
PolOff February 18, disagreed, claiming that America's
relations with Latin America were largely ignored during the
Bush Administration and that China had actively sought to
fill the void. The timing of the latest visit was meant to
send a signal that China still valued Latin America, and that
the change in U.S. Administration did not change Latin
America's ability "to count on China," she said.

The White Paper is Nice, but...
--------------


6. (C) Vice-President Xi Jinping's visit to Brazil was
entirely the suggestion of the Chinese government, Brazilian
diplomat Menezes said. Originally, Brazil was not included
in the planned visit, but the MFA, "not wanting to overlook a
country as large as Brazil," contacted the Brazilian Embassy
in Beijing to arrange the trip on short notice, shortly
before Xi's departure. Menezes described the entirety of
both trips, by both Xi and Hui, as "just another feel-good PR
stunt" by the Chinese. "Nothing has changed" in
Sino-Brazilian relations since the publication of the White
Paper, she said, nor would any major changes be forthcoming
following Xi's visit. She described the agreements signed
during Xi's visit as "devoid of substance," more akin to
memoranda of understanding on various topics than actual
contracts or agreements. Despite her overall negative view
of the concrete results of Xi's visit, she noted that, in
keeping with the goals of last year's White Paper on Latin
America, China and Brazil had agreed to cooperate in the
field of police training.

Venezuela: Relations Remain Strong
--------------


7. (C) Scrutiny of the agreements signed during Xi's visit to
Venezuela reveal that they, too, were largely devoid of new
developments. Many of the agreements signed were identical
to those signed or announced during Venezuelan President
Chavez's September 23-25, 2008 visit to China (ref A),
including agreements on joint ventures for the "exploration,
exploitation, processing, refining and transportation of
crude oil," and for cooperation building a heavy-oil
refinery. China and Venezuela once again signed an agreement
to double their joint investment fund to USD 12 billion, the
same figure agreed on in September. Despite the lack of new
content in the agreements, the visit was intended to
reinforce China's partnership with Venezuela and stress its
importance in China's energy security, CICIR's Sun Yanfeng
said. Regarding Venezuela's February 15 constitutional
referendum abolishing term limits, three Chinese Latin
America scholars declared it "good for China." CICIR's Yang
Shouguo noted with a smile that China had excellent relations
with Chavez, "so why wouldn't we welcome the change?"

Mexico: Xi's outburst "not directed at America"
-------------- ---


8. (C) Vice President Xi's visit to Mexico was marked by an
unexpected outburst during a speech to a group of overseas
Chinese February 11, during which Xi was quoted as saying,
"There are some well-fed foreigners with nothing to do, who
point to China and make unnecessary accusations (shuo san dao
si)." He then defended China, saying "First, China does not

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export revolution; second, we don't export hunger and
poverty; and third, we don't make waves (zhe teng) with you.
What else can you say about us?" Hong Kong's South China
Morning Post reported that the comment was quickly purged
from Chinese media. Mexican Embassy Political Counselor
Emmanuel Trinidad said that the outburst was "undiplomatic
and unexpected" and that it reflected more of a lack of
maturity on the part of Xi Jinping than a policy shift for
China. CICIR's Shang Deliang said the outburst stemmed from
Xi's "personal frustration" at the current situation but
should be not be seen as an attack on America. Contacts in
media gave the contrasting view that Xi's statement was most
likely "calculated" and intended for China's domestic
audience.

Caribbean: Big Dollars Not a Bribe to Other Countries
-------------- --------------


9. (C) Xi and Hui's visits to Caribbean nations were marked
by high-value agreements for infrastructure development and
agricultural cooperation. In the Bahamas, Hui signed an
agreement earmarking USD 150 million for infrastructure
projects, as well as a comprehensive and lengthy agreement on
agricultural cooperation aimed at boosting local food
production. In the Barbados, three agreements were signed,
including one on concessional financing. In Jamaica,
agreements were signed totaling over USD 138 million,
including a line of credit of up to USD 100 million and a
provision for the establishment of a Confucius Institute at
the University of the West Indies. The large dollar values
pledged to Caribbean nations for infrastructure development
and financial aid were "absolutely not" intended to sway
other Caribbean nations toward establishing diplomatic
relations with the PRC over Taiwan, CICIR's Shang Deliang
said. Rather, the aid was a sign of China's "traditional,
friendly relations with Caribbean nations." CICIR's Yang
Shouguo said that developing relations with Caribbean
nations, including those with deepwater ports, might
facilitate China's trade with the Western Hemisphere in the
future. Caribbean media stressed that China's aid came at a
time of global financial crisis, implying that even in rough
times, China would stand by developing Western Hemisphere
nations.

Cuba: Not slighted
--------------


10. (C) Chinese leaders often visit Cuba when in the Western
Hemisphere, but the failure of both Xi and Hui to visit the
island should not be seen as a slight, according to two
scholars. CICIR's Sun Yangfen noted that Chinese President
Hu Jintao had visited Cuba in November 2008, where he was
greeted with appropriate media fanfare signaling that China
and Cuba maintained their "special relationship." Shang
Deliang avowed that Cuba's absence from the itinerary was due
only to time constraints.

Chinese Scholars: China Not Threatening the U.S.
-------------- --------------


11. (C) Unprompted, our Chinese contacts assured us
repeatedly that China's interactions in Latin America were
neither an effort to replace the United States nor a threat
to U.S. interests there. The scholars used similar language
following Venezuelan President Chavez's visit to China in
September 2008 (ref A),noting that China's relations with
other nations "are not directed at third countries," and that
China merely sought to build friendly relations on the basis
of mutual equality. In contrast, Brazilian diplomat Menezes
expressed incredulity at the idea that the United States
should not feel threatened by China's increased activities.
"Do you honestly believe them?" she asked.
PICCUTA