CHINESE PRESIDENT SPREADS LARGESSE AND BRUISES

C O N F I D E N T I A L SECTION 01 OF 04 PORT LOUIS 000064

SIPDIS

DEPT FOR AF/E AND AF/EPS

E.O. 12958: DECL 02/19/2029
TAGS: PGOV EAGR EFIN MARR PREL SENV TRGY CH MP
SUBJECT: CHINESE PRESIDENT SPREADS LARGESSE AND BRUISES
FEELINGS IN MAURITIUS

REF: A. PORT LOUIS 44

B. 2008 PORT LOUIS 142

Classified by Charge d'Affaires Virginia Blaser for reasons
1.4 (b and d).


1. (C) SUMMARY: Although diplomatic relations between China
and Mauritius date back to 1972, the first visit to Mauritius
of a Chinese President took place this week from February 16-

17. President Hu Jintao visited Mauritius as part of a four-
leg African tour that also included Senegal, Mali, and
Tanzania. Eager to please, the Prime Minister made public
statements during the visit that some observers considered
pandering. And GOM willingness to accede to every
logistical demand made by the Chinese government caused
economic disruption, school closings, and wide-ranging
complaints among the public. The GOM considers the visit
well worth the complaints of locals, however, as it led to
new bilateral cooperation agreements amounting in value of
approximately USD 281 million. END SUMMARY.

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SEEDS FOR A VISIT
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2. (U) In July 2007, during his week-long visit to China to
discuss bilateral trade and investment cooperation and attend
the China-Africa Summit, Mauritian Prime Minister (PM) Navin
Ramgoolam invited Chinese President Hu Jintao to Mauritius.
It seems as if the pitch made by Ramgoolam and his delegation
in 2007 convinced China of the potential strategic advantages
of a stronger relationship, because on February 16-17, for
the first time in the history of their diplomatic relations,
the Chinese president visited Mauritius.

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CONTEXT: PRE-VISIT STATUS OF BILATERAL TRADE
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3. (U) The visit took place in an already healthy bilateral
trade partnership. China is a major trading partner of
Mauritius, and the relationship is readily expanding. Total
trade between the two countries grew by 35 percent in 2007,
from USD 322 million in 2006 to USD 434 million. Imports
from China amounted to USD 330 million in the first 9 months
of 2008, which represents 11 percent of total Mauritian
imports. China is the second largest source of imports for
Mauritius, after India. Chinese imports to Mauritius include
basic consumer goods, household/electrical appliances,
motorcycles, hardware, communication equipment, paper,
plywood, chemicals, tires, textiles and apparel, and
foodstuffs. Exports to China are negligible, accounting for
0.2 percent of total Mauritian exports in 2007.

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CONTEXT: PRE-VISIT STATUS OF CHINESE AID AND INVESTMENT
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4. (SBU) Mauritius has received aid from China ever since the
two countries established diplomatic relations in 1972.
Chinese aid, mostly in the form of interest-free or low-
interest loans, is channeled principally into infrastructure
projects, such as health and sports facilities, an airport
terminal, low-cost housing, and sewage projects.


5. (SBU) As another example of Chinese aid, in April 2008,
the Mauritius Police Force signed an agreement with the
Chinese Institute of Research to install 300 surveillance
cameras in the tourist-laden North of the island, as part of
a program to combat crimes in tourist areas. The project is
estimated at USD 4 million. China is also financing the new
headquarters for the national radio/TV station, which is
currently under construction. The project is estimated at
USD 13 million.


6. (SBU) In recent years, three Chinese telecommunication
companies (Huawei Technologies, Haier Mobile, and ZTE) opened
their regional headquarters in Mauritius to service the local
users and the Indian Ocean and African markets. In addition,
three construction firms (Chan Chen Esquares, China Jiang
Shu, and Tianli Construction),have offices in Mauritius and
are currently involved in several construction projects,
using mostly Chinese labor. In the Freeport (free trade
zone),five Chinese companies are engaged in import/export
activities in general goods supplying the markets in this
region. The most recent investment is by Luo Fude, which
recently began construction of a USD 5 million paper

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recycling plant in La Tour Koenig industrial zone.


7. (C) The Shanxi Tianli Enterprise Group (STEG) plans to
invest massively to create the Mauritius Tianli Economic and
Trade Cooperation Zone near the Mauritius port. The total
cost of the project, the largest ever foreign direct
investment in Mauritius to date, is estimated at about USD
500 million and is expected to generate 42,000 jobs in the
next five years. The project expects to attract Chinese
investors in a wide range of sectors, including
manufacturing, information technology, property development,
tourism and leisure, health, logistics, and services.
Construction works on the first phase of the project,
scheduled for early 2008, are now expected to start by mid-

2009. The construction delay is said to be a result of local
government change in the Chinese province of Shanxi, which is
also supporting the project. The new governor was in
Mauritius at the beginning of February 2009, ahead of the
President's visit, to reaffirm their support of the project.
China Development Bank is the principal financier of the
zone, which is to be one of the five offshore bases for
Chinese commercial activity in Africa. Earlier in 2003, STEG
invested USD 27 million in a large cotton spinning plant,
which is supplying yarn to both local and export markets.


8. (C) Post contacts like Rajcoomar Bikoo, Director of
Technical Services for the Ministry of Public Utilities,
cites poor performance of Chinese companies' awarded tenders
in the past for a reason to be leery of Chinese investment.
The local press reports that trade unionists and government
officials are worried about an influx of Chinese laborers and
an increased black market of substandard equipment and
services. Public suspicions prompted Ambassador Yuchen to
defend the Tianli project, in a 13 February interview in the
L'express daily, as a project that will "generate many jobs
for Mauritians and diversify local production." He added
that Tianli would not be a "Chinese enclave," meaning that
there should be no fear of an influx of Chinese labor.

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LOGISTICAL AND SECURITY PLANNING
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9. (C) According to a number of high-ranking Embassy
contacts, the visit was difficult to schedule. On February
2, Permanent Secretary Fong-Weng Poorun told POLOFF that that
Mauritian determination to meet the stringent demands of the
Chinese was not being reciprocated. She commented that the
advance Chinese protocol team of 11 persons that arrived on
January 13 had to be prodded to accept Mauritius holding
their traditional honorary banquet for the President, and
even when the Chinese accepted, the normal program was
truncated. Fong-Weng said that Hu Jintao's schedule would be
"fluffy" and consist of a meeting with the President, Prime
Minister, leader of the opposition, the traditional visit to
the botanical gardens, and a signing of bilateral treaties to
initiate already discussed projects. According to Fong-Weng,
Hu Jintao's visit to the Tianli project and STEG were turned
down by STEG representatives because they were "not ready to
for a meeting by the President." Fong-Weng seemed not
impressed with the visit, and suggested Hu Jintao was
treating Mauritius like a "quick stop" on his four leg tour.


10. (C) Before and during the visit, Police Commissioner
Rampersad vented privately to EmbOffs that the level of
security requirements from the Chinese was "unprecedented"
and that the Mauritian people would not like closed roads or
the removal of speed bumps. Other measures demanded, and
acceded to by the GOM, included shutting down shops and
businesses along the routes of the President's motorcade,
lining hundreds of police officers (roughly one every 300
meters) along the highway to and from the airport, and
blocking the one main highway on the island in both
directions some three hours before the motorcade traveled in
the area. Due to the expected traffic problems caused by
these demands, the Mauritian Government elected to shut down
the government for the duration of the visit and to require
all schools, public and private, to shut down for the same
period. During the State Dinner on February 16, Rampersad
told Charge that his forces were too thin on the ground and
were serving "ineffectual purposes." He believed the
security measures were unnecessary, especially as there was
no "identified or other threat against the Chinese
President."

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PUBLIC HOSTAGE TO HU JINTAU, SAYS THE PRESS

PORT LOUIS 00000064 003 OF 004


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11. (C) The Government was silent in responding to concerns
in press and the public about the visit. The Government made
no counter arguments to press stories such as "Drivers Taken
as Hostages of Hu Jintao" (Le Defi Plus, February 15) and
"China, the Friend Who Scares Us," (L'express Dimanche,
February 15). As another example of the GOM's desire to
please the Chinese, according to press articles, Amnesty
International's application for a demonstration was, for the
first time in its history in Mauritius, denied. They had
planned a peaceful demonstration against China's human rights
abuses.

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PRIME MINISTER USES VISIT TO PLEAD FOR MORE...
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12. (SBU) During the State Dinner on February 16, the PM
highlighted Mauritius? adoption of the one-China policy
decades ago, noting that Mauritius went ahead with the move
despite "immense pressure." He praised China's ability to
weather the international financial crisis, adding that "Now
the world waits with bated breath for China to play its part
for the world economies to recover from this global
recession. Those who extolled the virtues of free-market
capitalism and dreamt of a global free-market have been
proved decisively wrong. It is today clear that Adam
Smith's invisible hand can wreck (sic) havoc - we need the
firm, guiding hand of Central Government." And he heralded
China as a "rare beacon of hope," adding that he is confident
that China "will continue to stand by countries less
fortunate than itself."


13. (C) Many event attendees -- from foreign diplomats to
senior Mauritian government officials -- privately made
negative comments about the speech, calling it "over the
top," and "pandering." One Mauritian Government official was
visibly agitated over the speech, commenting "Now do you see
the problem we have because of the people who surround the
Prime Minister these days?"

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...AND GETS IT
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14. (C) During an 18 February private meeting with Charge,
the Prime Minister expressed his contentment over the success
of the visit. When asked about his negative free trade
comments which he made during the State Dinner, the Prime
Minister said proudly that he wrote this portion of the
speech himself, and that it was intended to send a message
"to a few specific people." He was pleased that the "Chinese
President really seemed to like that part." He added that he
had been told by credible sources that the trip to Mauritius
was the President's favorite stop. The Prime Minister also
raved in public over the results of the visit.


15. (U) During the visit, Hu Jintao and Ramgoolam signed a
number of agreements, which include:

- A preferential Buyers' Credit Loan Agreement, in which the
Export-Import Bank of China provided a loan of USD 270
million at two percent interest to finance the extension of
the airport terminal.

- An Interest-free Loan Agreement of USD 6.2 million and a
grant agreement of USD 4.7 million to be used to finance
still-to-be identified infrastructure projects.

- Promises for Chinese loan agreements for a harbor bridge
and the Terre Rouge-Verdun road to ease traffic congestion in
Port Louis.

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COMMENT
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16. (C) The Government of Mauritius, and especially the Prime
Minister, bent over backward to please the visiting
delegation. It seemed that pleasing the Chinese was more
important than freedom of speech (hence the rejection of the
properly filed Amnesty International petition) and that
little concern was given to the negative impact and
impression it left on the people of the island. Mauritius
will continue to play to its strengths as a stable country

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with preferential access to regional markets to attract the
most Chinese investment possible. The President's visit, the
subsequent loan agreements, and the Tianli project show that
the Chinese are open to exploring a broadened economic
relationship with Mauritius. The Chinese aggressive approach
to the Mauritian market may be tempered, however, by Mauritius'
small market size, trade unions, and public suspicion of
Chinese intentions.

BLASER