VZCZCXRO4132
OO RUEHCN RUEHGH RUEHMR RUEHPA RUEHRN RUEHVC
DE RUEHBJ #3695/01 3120655
ZNY CCCCC ZZH
O 080655Z NOV 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1986
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHFR/AMEMBASSY PARIS 3978

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 023695 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF, EAP, EAP/CM, EB/IFD/OMA 
INR FOR GILLES 
STATE PASS USTR FOR STRATFORD, WINTER, CELICO, DWOSKIN 
 
E.O. 12958: DECL: 11/09/2026 
TAGS: PREL PGOV AGOA ECON EAID CH
SUBJECT: PRC/AFRICA: BEYOND THE BEIJING SUMMIT TRADE AND 
INVESTMENT PROPAGANDA 
 
REF: A. BEIJING 22370 
     ¶B. BEIJING 23169 
 
Classified By: Classified by Political External Unit Chief Edgard Kagan 
.  Reasons 1.4 (b/d). 
 
Summary 
------- 
 
¶1. (C) China and African countries announced 16 trade deals 
worth USD 1.9 billion at the conclusion of the Beijing Summit 
of the Forum for China-Africa Cooperation (FOCAC)(Ref A), but 
contacts tell us that the real number and value of bilateral 
contracts signed during the Beijing Summit is likely far 
greater.  Consistent with Propaganda Department guidelines to 
downplay bilateral pacts (Ref B), the PRC is likely 
underreporting trade deals resulting from the Beijing Summit, 
failing to announce significant deals that have surfaced in 
the press, such as a USD 8.3 billion agreement to upgrade 
Nigeria's rail system.  Noting that his delegation held an 
unreported meeting with approximately 70 Chinese companies 
interested in coal, bitumen and other minerals, a Nigerian 
Embassy contact speculated that other African delegations 
held similar meetings.  Premier Wen Jiabao underscored 
China's intentions to expand its economic ties to Africa, 
calling for  two-way trade to hit USD 100 billion by 2010. 
African dignitaries welcomed China's interest in greater 
economic ties, but several peppered their public remarks with 
gentle caveats.  While eager to explore business 
opportunities with Chinese companies, a number of African 
businessmen complained about Chinese business practices, 
noting the difficulty in exporting to China.  Chinese 
enterprises, for their part, must "work through networks" 
established by PRC State-Owned Enterprises already present in 
a given African country.  End Summary. 
 
PRC Pursues Expanded Trade 
-------------------------- 
 
¶2. (C) A "High-Level Dialogue between Chinese and African 
Leaders and Business Communities and the Second Conference of 
Chinese and African Entrepreneurs" (High-Level Economic 
Dialogue) held during the Beijing Summit brought together 
Chinese and African politicians and business leaders to 
promote two-way trade and investment as well as "match" 
Chinese and African business interests.  Premier Wen Jiabao 
opened the High-Level Economic Dialogue with a keynote 
address consisting largely of platitudes touting previously 
reported aggregated China-Africa two-way trade and economic 
statistics.  Premier Wen expressed the desire to continue 
China's rapid economic expansion in Africa, calling for 
Sino-African trade to double to USD 100 billion by 2010. 
 
¶3. (C) African dignitaries welcomed Wen's call to expand 
economic ties, but several peppered their public remarks with 
gentle caveats.  Ethiopian Prime Minister Zenawi said the 
relations must expand "without affecting the quality of goods 
and services" exchanged.  Algerian President Boutefika 
referenced the New Economic Partnership for African 
Development (NEPAD) and said the China-Africa partnership 
must benefit both sides.  Lesotho Prime Minister Mosisili, 
speaking on behalf of the Southern African Development 
Community (SADC) said PRC-SADC consultations in advance of 
the Beijing Summit produced a commitment by SADC to provide 
an enabling environment for Chinese investment, but SADC 
sought increased high-level visits and China's support "as a 
P-5 member" for African Union positions in the international 
arena. 
 
What Is Beijing Hiding? 
----------------------- 
 
¶4. (C) At the closing of the High-Level Economic Dialogue, 
Chinese firms and African governments and countries announced 
16 trade and investment deals worth USD 1.9 billion. 
However, the number and value of bilateral contracts signed 
as a result of the Beijing Summit is likely far greater.  Per 
Ref A, China's zero-tariff proposals and other agreements 
will all be contracted and implemented bilaterally. 
Consistent with Propaganda Department guidelines to downplay 
bilateral pacts (Ref B), the PRC has declined to announce 
significant deals that have surfaced in the African and/or 
international press, such as a USD 8.3 billion agreement to 
upgrade Nigeria's rail system reported by AFP.  At least one 
Chinese paper did report a USD 10 billion rail deal between 
South Korea and Nigeria shortly after the summit. 
 
BEIJING 00023695  002 OF 003 
 
 
 
¶5. (C) An Economic Minister at the Nigerian Embassy 
speculated the Chinese did not announce the China-Nigeria 
rail deal because it was a "private matter" between Chinese 
companies and Nigerian authorities, overlooking the parallels 
to the 16 deals announced during the Beijing Summit.  A 
Nigerian consultant told Poloff that the Nigerian Minister 
for Solid Mineral Development met with approximately 70 
Chinese companies, primarily SOEs, at a Beijing hotel to 
discuss joint ventures in coal, bitumen and other minerals. 
While the consultant did not know whether any specific deals 
were inked following the hotel meeting, he said that the 
Chinese companies were "fighting with each other" over 
opportunities presented.  The Nigerian Economic Minister 
confirmed the meeting but said he had no details, adding that 
he believed other African ministers likely held such 
"informal" discussions while in Beijing. 
 
African Frustrations 
-------------------- 
 
¶6. (C) While generally eager to explore business 
opportunities with China and Chinese companies, a number of 
African businessmen expressed some frustrations with Chinese 
business practices at a "match-making" session for Chinese 
and African businesses in connection with the High-Level 
Economic dialogue.  African businessmen and/or delegations 
were granted table space in an exhibition hall at the China 
World Hotel and given the opportunity to pitch their 
businesses to potential Chinese partners, mostly from Chinese 
State-Owned Enterprises (SOEs) according to participants who 
spoke with Poloff on the margins of the event.  In general, 
participants felt the two-hour event did not provide enough 
time for genuine business transactions but did produce some 
contacts.  A number of Africans said that they could not find 
serious partners for their ventures because the Chinese 
wanted to dictate the terms of the relationship.  "They are 
very tough negotiators," a Ghanaian businessman told Poloff. 
A Namibian developer said that his company had secured a USD 
400 million contract with Chinese partners earlier this year, 
but added that Chinese are less keen to develop projects 
jointly in venues outside Namibia.  A Togolese printer said 
that he could not find any appropriate partners and said that 
the Chinese companies present seemed to be focused simply on 
natural resources and infrastructure.  An Ethiopian textile 
exporter added that few Chinese companies appeared more 
interested in buying his company than its products. 
 
¶7. (C) Africans expressed similar frustrations at an African 
Commodities Exhibition held at the Beijing International 
Conference Center sponsored by the PRC Ministry of Commerce 
(MOFCOM) November 6 and 7, immediately after the close of the 
Beijing Summit.  MOFCOM set up country blocks within the 
exhibition hall, with each country allotted several booths 
for its companies and/or trade promotion entities.  Sudan and 
Zimbabwe were given the most prominent spots for their 
booths.  Sudan also had the largest block of booths, with ten 
companies represented.  Higleig Petroleum had the most 
prominent display, pitching engineering, procurement and 
construction services.  The Societe Nationale Des Bois Du 
Gabon (SNBG), Gabon's national timber company, drew interest 
from Chinese participants with an expensive multimedia 
exhibit designed to showcase the value of Gabon's tropical 
hardwoods.  Chinese saleswomen in Nefertiti costumes 
accompanied lavish Egyptian displays designed to pitch 
cosmetics, refrigerators and carpets.  Several Zambian mine 
companies were also represented.  Most other country displays 
appeared designed to sell carvings and batiks. 
 
¶8. (C) The Chinese participants at the Commodities Exposition 
included a number of businessmen seeking joint ventures, but 
also a shopping mall crowd gawking at the African mementos. 
MOFCOM interlocutors were stationed in each booth, allegedly 
to broker transactions between the Africans and the Chinese. 
Several Africans did not like the intermediaries.  A Kenyan 
marketer for the Horticultural Crops Development Authority 
summed up the exasperation of some African businesses 
present, saying with a glance at her minder, "It's been a 
long day."  A Sudanese Gum Arabic Company representative 
echoed the sentiments of several other Africans, saying "We 
have good products but it's very easy for the Chinese to sell 
to us and very hard for us to penetrate their market." 
 
SOE Networks Dictate Market Access? 
----------------------------------- 
 
 
BEIJING 00023695  003 OF 003 
 
 
¶9. (C) Chinese businessmen willing to speak with Poloff 
confirmed they had strong support from the Chinese government 
to pursue contracts in Africa.  One SOE businessman working 
for a water pipe company said it was very difficult for 
"private" Chinese companies to operate in Africa.  The 
businessman said culture and language pose the biggest 
challenges to Chinese companies in Africa.  Security is less 
of a problem because Chinese enterprises seeking to enter 
African markets must "work through networks" established by 
Chinese SOEs already in a target country, the businessman 
said, adding that a relatively small number of SOEs with 
significant African experience serve as bridges for other 
Chinese firms. 
Randt