VZCZCXRO0467
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0305/01 0680439
ZNR UUUUU ZZH
R 090439Z MAR 07
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 5649
INFO RUEHBJ/AMEMBASSY BEIJING 0334
RUEHJB/AMEMBASSY BUJUMBURA 2498
RUEHKM/AMEMBASSY KAMPALA 2950
RUEHLGB/AMEMBASSY KIGALI 0919
RUEHNR/AMEMBASSY NAIROBI 0541
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP MCC

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000305 
 
SIPDIS 
 
SIPDIS SENSITIVE 
 
DEPT AF/RSA FOR DEPSTEIN, AF/E FOR BYODER 
ALSO AF/EPS FOR THASTINGS 
MCC FOR GBREVNOV 
PASS TO USTR FOR WJACKSON 
PASS ALSO TO USAID R/EA FOR KDESGRANGES 
 
¶E. O. 12958: N/A 
TAGS: ECON EFIN EAID PREL PGOV CH TZ
SUBJECT: TANZANIA:  UPDATE ON TRADE AND COOPERATION WITH CHINA 
 
REF: A) STATE 024937 
 
DAR ES SAL 00000305  001.2 OF 002 
 
 
¶1. (U) Tanzania has maintained diplomatic ties with the People's 
Republic of China (PRC) since 1964.  The Government of Tanzania's 
(GOT) relationship with the PRC has been historically strong, with 
frequent high-level exchanges and ongoing bilateral cooperation in 
development assistance, trade and international affairs. 
 
New Agreements 
-------------- 
¶2. (U) On June 23, 2006, the PRC's Prime Minister Wen Jiabao and 
President Jakaya Kikwete signed five agreements in Dar es Salaam for 
economic and technical assistance.  The Chinese government agreed 
to: 
 
  -- provide Tanzania with anti-malaria drugs and 
     construct a malaria prevention and treatment center; 
-- explore the possibility of a joint venture to 
   manufacture anti-malarial drugs in Tanzania; 
  -- provide a loan to the Tanzania-Zambia Railway 
   Authority (TAZARA)-the railway China helped construct 
   30 years ago--to rehabilitate the passenger cars. 
 
¶3. (U) The PRC is also assisting Tanzania with the renovation of a 
sports stadium in Zanzibar, renovation of Radio Tanzania 
broadcasting stations both on the Mainland and in Zanzibar, and is 
cooperating with the GOT in the transportation and communications 
sectors.  On July 26, 2006, the Chinese government donated USD 
500,000 to the Government of Tanzania to train nurses and midwives 
in order to reduce newborn and maternal deaths. 
 
Chinese Businesses and Contractors 
---------------------------------- 
¶4. (U) The PRC government continues to provide incentives to Chinese 
enterprises to invest in Tanzania.  Chinese companies are 
competitive bidders for GOT contracts to develop water, road, and 
bridge construction projects.  Chinese companies are also invested 
in resource exploration and exploitation, including the timber and 
minerals sectors, as well as in agriculture and telecommunications. 
In mid-2006, PRC President Hu Jintao and Premier Jiabao promised to 
provide Tanzania with coal-fired generators to increase the 
production of electricity.  The Chinese are also ready to assist 
with equipment and management personnel to extract coal from the 
mines at Kiwira in the Mbeya Region in southwestern Tanzania. 
 
¶5. (U) The PRC-sponsored Chalinze water project began in 2005 and is 
due to be completed in 2007.  The project will total USD 11.73 
million and provide 7,200 metric tons of water daily to the 
residents of the Sangasanga and Ngerengere areas of the Coastal 
region. 
 
World Class Sports Stadium 
-------------------------- 
¶6. (U) The PRC and the GOT are jointly constructing a new 
60,000-seat sports stadium in Dar es Salaam that meets Federation of 
International Football Association (FIFA) and Olympic standards. 
The Beijing Construction Engineering Company Limited is building the 
stadium at the total cost of USD 45.2 million; China is contributing 
USD 25.2 million and Tanzania, the remaining USD 20 million.  The 
stadium is on schedule to be completed in mid-2007. 
 
Military Assistance 
------------------- 
¶7. (SBU) Each year the Tanzania Peoples Defense Forces' (TPDF) 
officers and non-commissioned officers attend training courses in 
China at various military training centers.  Between January and 
April 2006, TPDF sent approximately 35 officers to China for 
training.  The TPDF also hosts about 12 Chinese instructors that 
teach at the junior staff college in Dar es Salaam.  Mechanics and 
technicians tasked with maintaining the TPDF's Chinese-manufactured 
planes, trucks and other military equipment, rotate into Tanzania on 
a regular basis.  China also supplies spare parts for the above 
equipment.  On March 5, 2007, the Chinese military donated 33 new 
compact SUV vehicles to the TPDF for use by senior officers. 
 
Trade Opportunities 
------------------- 
¶8. (U) In 2005, the two-way trade between China and Tanzania totaled 
USD 474.6 million with the PRC exporting nearly twice as many goods 
and services than Tanzania sold to China.  Primarily raw 
 
DAR ES SAL 00000305  002.2 OF 002 
 
 
materials--wood, sisal, minerals and gemstones--are heading to Asia, 
while China floods East African markets with inexpensive, light 
manufactured goods.    The 2006 Tanzania-China trade statistics 
should be available in late March 2007.  China is the third largest 
investor in Tanzania after the United Kingdom (UK) and India. 
Between 2002 and 2005, PRC investments totaled USD 560.34 million. 
 
2005 Tanzania-China trade statistics: 
 
   Tanzania imported from China:  USD 303.8 million 
   Tanzania exported to China:    USD 170.8 million 
                         TOTAL    USD 474.6 million 
 
¶9. (U) In December 2006 the China Investment Center (CIC) of 
Tanzania organized its first "China Brand Commodities Show 2006" in 
Dar es Salaam.  The exhibition ran from December 12, 2006 through 
the last week of January 2007 and featured Chinese-made items 
including mini-buses, motorcycles, bicycles and spare parts, 
generators, televisions, DVD players and solar energy equipment. 
The PRC also has a large exhibition each year at the Dar es Salaam 
International Trade Fair organized by the GOT Ministry of Trade in 
late June-early July. 
 
US-Chinese-Tanzanian Business Cooperation 
----------------------------------------- 
¶10. (SBU) A U.S. company operating in Tanzania has formed a unique 
synergy with Tanzanian firms following the completion of Chinese 
funded-projects that is boosting sustainable economic development. 
The U.S.-owned Manchester Trade Ltd. specializes in project 
management consultancy.  Following the completion of roads, bridges, 
and hospitals, the Chinese model is to handoff the completed project 
to be managed by a Tanzanian company or parastatal.  However the 
Chinese do not focus on capacity building or preparing the company 
to manage.  Manchester Trade has been working for the past five 
years with several companies offering advice on finances, loan 
repayment, maintenance scheduling, etc.  The result to date is a 
"win-win" model:  the Chinese are pleased that project follow-up is 
thorough, the Tanzanians are mastering management skills, and the 
U.S company is succeeding in its business. 
 
IPR Issues 
---------- 
¶11. (SBU) Counterfeit products from China occasionally find their 
way into the Tanzanian economy.  In late 2006, a distributor for the 
U.S. firm William Wrigley Jr. and Co. discovered that two containers 
of counterfeited "Big G" bubble gum had entered Tanzania directly 
from Shanghai, China.  While the outside wrapping and trademark were 
an exact copy of the Wrigley product, the wrappers included a 
Shanghai PO Box address.  The quality of the bubble gum was 
distinctly inferior, raising both food safety issues and concerns 
about the loss of customers.  Wrigley Company worked closely with 
the Embassy Econ/Commercial section to quickly bring their concerns 
to the attention of the GOT.  The Tanzania Fair Competition 
Commission is currently investigating the issue. 
 
Comment 
------- 
¶12. (U) Tanzania and the PRC are long-time partners, comfortable 
with the other's way of doing business.  Tanzanian consumers are 
generally aware that many Chinese products are of inferior quality 
compared to European, U.S. or South African brands.  However, the 
"price is right" for lower income families, especially clothing, 
shoes, and basic household products. 
 
¶13. (SBU) The Chinese have contributed doctors and nurses to 
Tanzania's health care system for several decades, particularly in 
Zanzibar.  The additional funding from the June 2006 agreements for 
anti-malaria efforts and maternal and child health seem to coincide 
with our own work in Tanzania in the Presidential Malaria Initiative 
(PMI) and USAID health projects.  Another area of future cooperation 
between the U.S. and China might be on larger infrastructure 
projects in the road and water sectors, particularly as the 
Millennium Challenge Corporation Compact with Tanzania moves closer 
to being finalized. 
 
RETZER