VZCZCXRO6183
OO RUEHCN RUEHGH RUEHMR RUEHPA RUEHRN RUEHVC
DE RUEHBJ #4004/01 3260958
ZNY CCCCC ZZH
O 220958Z NOV 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2362
INFO RUEHEG/AMEMBASSY CAIRO PRIORITY 0265
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHTV/AMEMBASSY TEL AVIV 2020
RUEHJM/AMCONSUL JERUSALEM 0658

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 024004 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPT FOR AF, EAP, EAP/CM 
INR FOR GILLES, KNIGHT AND HOOKER 
CAIRO FOR HILL-HERNDON, HEGADORN 
USUN FOR PHEE 
 
E.O. 12958: DECL: 11/22/2026 
TAGS: PREL PGOV AGOA ECON EAID EG CH
SUBJECT: PRC/AFRICA: MUBARAK IN CHINA 
 
REF: A. BEIJING 22370 
     ¶B. BEIJING 23169 
     ¶C. OSC GMP20061105950051 
 
Classified By: Political External Unit Chief Edgard Kagan.  Reasons 1.4 
 (b/d). 
 
Summary 
------- 
 
¶1. (C) President Mubarak's November 6-7 State Visit 
immediately following the Beijing Summit of the Forum for 
China-Africa Cooperation (FOCAC)(Ref A) included separate 
meetings with President Hu Jintao, Premier Wen Jiabao and 
National People's Congress (NPC) Chairman Wu Bangguo as well 
as with executives of six leading Chinese companies, 
according to and MFA official who works on Egyptian affairs. 
Egypt granted China Market Economy Status (MES).  President 
Mubarak generally discussed the Israeli-Palestinian conflict 
and made a pitch for PRC investment in Egypt in his 
discussions with PRC leaders, according to Zhou.  An Egyptian 
Embassy contact told us that PRC aid and development 
assistance pledged during the Beijing Summit was not generous 
and lacked specifics.  Zhou and an Egyptian Embassy contact 
separately insisted President Mubarak did not discuss 
Sino-Egyptian nuclear cooperation despite Chinese press 
reports to the contrary.  A French diplomat claimed that 
President Mubarak did raise Sino-Egyptian nuclear cooperation 
at the highest levels in Beijing.  End Summary. 
 
¶2. (C) Poloffs discussed Egypt's participation at the FOCAC 
Beijing Summit separately with MFA West Asia and North 
African Department Deputy Division Director Zhou Biao, 
Egyptian Political Officer Yasser El-Shemy (protect), 
Egyptian Commercial Minister Ahmed Abady (protect) and 
Egyptian Commercial Officer Fadel Yacoub (protect). 
 
Egypt: Not Much Aid 
------------------- 
 
¶3. (C) From Egypt's perspective, Chinese trade and 
development assistance pledges to Africa during FOCAC's 
Beijing Summit (Ref B) were not generous and lacked 
specifics, El-Shemy complained.  He commented that many of 
the benefits from China's more general commitments to Africa 
announced at the summit may not be available to Egypt. 
Referring to PRC promises to provide USD 3 billion in 
preferential loans and USD 2 billion of preferential buyer's 
credits to Africa over the next three years, El-Shemy noted 
that very few African countries have the ability to export to 
China.  Chinese companies may be the real winners. 
Similarly, the PRC provided no specifics on its proposed USD 
5 billion China-Africa development fund or the criteria for 
accessing the fund, El-Shemy added, noting that USD 5 billion 
is a small sum against the needs of 48 African countries. 
Septel will report other issues surrounding the PRC trade and 
development assistance proposal and the Beijing Action Plan 
and Beijing Declaration. 
 
Mubarak Talks Palestine 
----------------------- 
 
¶4. (C)  MFA West Asia and North African Department Deputy 
Division Director Zhou said President Mubarak's November 6-7 
State Visit immediately following the Beijing Summit included 
separate meetings with President Hu Jintao, Premier Wen 
Jiabao and National People's Congress (NPC) Chairman Wu 
Bangguo as well as with executives from six major Chinese 
companies.  According to Zhou, President Mubarak discussed 
with President Hu Egypt's efforts to encourage the 
Palestinians to form a unity government.  President Mubarak 
seemed to be deeply engaged in the Palestinian issue, Zhou 
commented.  El-Shemy separately said President Mubarak asked 
President Hu to urge Israel to show flexibility and restraint 
in order to give Palestinian Authority Chairman Abbas room to 
maneuver.  President Mubarak spent much of the bilateral 
meeting describing Egyptian efforts at shuttle diplomacy 
between Cairo and Tel Aviv.  Egyptian Intelligence Chief 
Suleiman attended and passed Mubarak handwritten talking 
points throughout, according to Zhou, adding that President 
Hu listened to President Mubarak's concerns but did not make 
any commitments.  The meeting lasted more than an hour.  In 
the final fifteen minutes, Egyptian Minister of Trade and 
 
BEIJING 00024004  002 OF 003 
 
 
Industry Rachid expressed Egypt's desire to more than double 
bilateral trade by 2010 to USD 5.5 billion, El-Shemy said. 
Zhou and El-Shemy separately noted that President Hu and 
President Mubarak did not discuss other regional issues such 
as Iran, Iraq or Sudan/Darfur. 
 
Nuclear Cooperation Discussions? 
-------------------------------- 
 
¶5. (C) Zhou said President Mubarak did not discuss nuclear 
cooperation during his meetings with President Hu, Premier 
Wen or NPC Chairman Wu and that the PRC leaders also did not 
raise the issue.  China supports in principle Egypt's 
development of a civilian nuclear program per a 2002 
agreement, Zhou said.  When Poloff showed Zhou a China Daily 
report from the internet entitled "China, Egypt Agree on Nuke 
Co-Operation" and describing a "joint communique" to that 
effect (Ref C), Zhou said the report simply restated common 
understandings between China and Egypt.  El-Shemy likewise 
insisted that Mubarak did not seek PRC support for an 
Egyptian nuclear program during any of his official meetings 
in China.  El-Shemy added the caveat that he personally could 
not say what might have happened under the table.  In 
contrast, a French diplomat in Beijing reported that an 
Egyptian embassy source told him that Sino-Egyptian nuclear 
technology was discussed "at the highest levels." 
 
Mubarak Makes Investment Pitch 
------------------------------ 
 
¶6. (C) Zhou said Mubarak also raised the Israeli-Palestinian 
conflict with Premier Wen, but largely pressed for general 
economic cooperation.  The bilateral with NPC Chairman Wu was 
largely a courtesy call, Zhou added.  El-Shemy said Premier 
Wen surprised the Egyptians by announcing to Mubarak that the 
PRC granted RMB 50 million (approximately USD 6.3 million) to 
Egypt to build a school in President Mubarak's hometown and 
establish a fishery project in Egypt (Note: Zhou said that 
Premier Wen previously announced the school-building project 
during his visit to Egypt in April.  End Note.) 
 
¶7. (C) Meeting with Chinese firms, President Mubarak 
underscored that Egypt needs Chinese investment and 
technology transfers and will provide all necessary 
assistance to facilitate Chinese firms' entry into the 
Egyptian market, according to El-Shemy.  China International 
Trade and Investment Corporation (CITIC), China Aviation 
Technology Import-Export Corporation (CATIC) and ZTE (a 
telecommunications vendor) were among the participants.  No 
Egyptian companies were present.  The meeting covered 
information technology, communications, transportation 
(especially rail), chemicals, petro-chemicals, financial 
services and recycling, El-Shemy said. 
 
Egypt Has Little To Sell Us 
--------------------------- 
 
¶8. (C) Deputy Division Director Zhou said Egypt is generally 
dissatisfied with its trade deficit with China and seeks more 
Chinese investment.  Bilateral trade is approximately USD 3 
billion.  Egypt particularly seeks assistance in 
infrastructure development, including roads, ports and 
railroads.  The problem, Zhou said, is Egypt "has very little 
to sell us," adding that Chinese exports to Egypt consist 
mainly of clothes and consumer electronics.  Abady told us 
China's current investment in Egypt totals between USD 50-60 
million, although Chinese statistics tout three times that 
amount.  Abady said Chinese companies are hesitant to 
transfer capital to Egypt and are slow to make investment 
decisions.  Egypt wants to attract large investments by 
reputable Chinese companies in iron-ore, gold, zinc and 
phosphates.  Commenting that Chinese companies are still 
gaining international experience, Abady said Egyptian 
attempts to attract Chinese investment in a refinery are 
encountering problems as the Chinese seek to contract for the 
work rather than transfer capital and technology.  Egyptian 
labor laws prohibit the import of Chinese labor, Abady added. 
 
PRC Gets MES 
------------ 
 
¶9. (C) Egypt granted China Market Economy Status (MES) during 
the Beijing Summit, both Zhou and El-Shemy told us.  Zhou 
 
BEIJING 00024004  003 OF 003 
 
 
said the Minister of Trade and Industry Rachid and PRC 
Minister of Commerce signed the MES agreement.  China is 
pleased with MES, Zhou said, noting that China considers MES 
designation a political decision.  While the press reported 
that Minister Rachid signed nine economic cooperation 
agreements with China totaling approximately USD 250 million 
during the Beijing Summit (Ref C), Zhou was only willing to 
confirm two other bilateral agreements: a "small" PRC aid 
grant in excess of USD 1 million, which Zhou described as 
"symbolic" and a cooperation agreement between the two 
countries' health ministries.  Both El-Shemy and Abady 
mentioned that the Bank of China and Egypt's Social Fund 
signed a Memorandum of Understanding (MOU) designed to 
provide loans for Small to Medium-sized Enterprises (SMEs). 
El-Shemy said the Egyptian Cabinet Information Decision and 
Support Center and the PRC State Council's Development 
Research Center also reached agreement on technical support. 
 
¶10. (C) The Beijing Summit provided an opportunity for 
African businessmen to interact with each other and with 
Chinese counterparts, our Egyptian contacts told us.  Members 
of the Cleopatra Group, the Kato Group, the MAG Group and the 
Egyptian Cotton Company attended the Beijing Summit.  An 
Egyptian-owned textile company agreed to invest up to USD 20 
million in weaving facilities in Tianjin and Egyptian and 
Chinese companies signed a telecommunications agreement worth 
USD 500 million (El-Shemy said Chinese companies will build a 
mobile-phone assembly in Egypt).  El-Shemy told us that the 
China-Africa Joint Chamber of Commerce (JCC) established 
during the Beijing Summit represents a significant 
development for promoting Sino-African trade.  JCC 
headquarters will be in Cairo and the Egyptian government 
will provide the building and security and extend diplomatic 
privileges to the staff, El-Shemy noted. 
 
Egypt's Priorities 
------------------ 
 
¶11. (C) As FOCAC Co-Host for the 2009 Ministerial, Egypt's 
priorities will be to strengthen "trilateral" cooperation 
between Egypt, China and Africa, press the Chinese to provide 
specifics on key PRC proposals (such as establishing African 
trade zones) and obtain greater African participation in the 
FOCAC mechanism, El-Shemy said. 
 
PRC Reflecting On Mubarak Succession? 
------------------------------------- 
 
¶12. (C) Deputy Division Director Zhou said that President 
Mubarak's meetings with Chinese leaders went quite well 
because President Mubarak is "one of China's oldest friends" 
and the last foreign dignitary that Chairman Mao received 
before his death (Mubarak was Egypt's Vice President at the 
time).  Remarking that President Mubarak is getting on in 
years, Zhou wondered aloud what might happen in Egypt when it 
comes time for succession. 
Randt