VZCZCXRO9974
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0989/01 1050523
ZNR UUUUU ZZH
P 150523Z APR 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 3434
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHME/AMEMBASSY MEXICO 0574
RUEHBU/AMEMBASSY BUENOS AIRES 0232
RUEHMN/AMEMBASSY MONTEVIDEO 0315
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 000989 
 
STATE PASS USTR 
DEPT FOR EEB/TPP/BA, EAP/CM, EAP/EP, WHA/AND, WHA/EPSC, WHA/MEX, 
WHA/BSC 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD EINV PREL EFIN CH AR UY MX
SUBJECT: Latin Diplomats on China-Argentine Currency Swap, 
Uruguayan State Visit, and China VP Xi's Mexico Trip 
 
Reference: (A)BUENOS AIRES 387 (B) MONTEVIDEO 178 (C) MEXICO 701 
(D) 08 BEIJING 4253 
¶1. (U) SUMMARY. In recent separate meetings with Emboffs, 
Beijing-based diplomats from Argentina, Uruguay and Mexico 
discussed recent developments in their respective countries' 
economic relations with China.  Argentine diplomats claimed to 
have no technical details on Argentina's recently-announced 
currency swap agreement with China, but noted trade tensions 
stemming from Argentine tariffs on Chinese goods.  Uruguayan 
diplomats were pleased with the recent visit by Uruguayan 
President Vazquez to China, during which a number of bilateral 
agreements were signed and Uruguay recognized China as a market 
economy.  Mexican diplomats highlighted commercial agreements 
signed on Chinese Vice President Xi's recent visit to Mexico, but 
expressed disappointment over a continued lack of Chinese 
investment in, and tourism to, Mexico.  However, they continue to 
be optimistic about the success of Mexican companies in China. 
End Summary. 
 
Argentina: Currency Swap, Outstanding Trade Issues 
--------------------------------------------- ------ 
¶2. (SBU) Argentine Economic and Commercial Officer in Beijing 
Juan Carlos Paz told Emboffs that his Embassy did not yet have 
any details on the recently-announced $10b Argentina-China 
currency swap deal (REF A).  Mr. Paz said that the deal was 
finalized in Medellin by the head of the Argentine Central Bank, 
Martin Redrado, and the People's Bank of China.  He noted that it 
does not need any further approvals but the technical details 
have not yet been made available.  He considered the swap 
agreement a contingency financing plan.  The deal was focused 
more on financial contingency than facilitating trade, as 
Argentina already has sufficient existing lines of credit with 
China, he added. 
¶3. (SBU) Argentina and China have enjoyed healthy trade relations 
since 2003.  China is currently Argentina's second largest trade 
partner after Brazil.  According to Mr. Paz, China and Argentina 
have a relatively even trade balance, although figures from both 
countries vary considerably.  Argentina granted China "market 
status" in 2004.  However, currently there is some tension 
between Argentina and China because Argentina has several WTO 
dumping investigations against China and has imposed tariffs on 
some Chinese goods, including Chinese toys.  China considers 
these dumping cases unfair, particularly given that China enjoys 
"market status," and is pushing Argentina to lift these tariffs. 
¶4. (SBU) Another important unresolved trade issue is Chinese 
approval for Argentine meat imports.  Argentine diplomats are 
frustrated by the lack of progress on this issue.  China's 
General Administration of Quality Supervision, Inspection and 
Quarantine (AQSIQ) is still imposing barriers to meat and meat 
derivative imports from Argentina, he said. 
¶5.  (SBU) Argentina has not received as much Chinese investment 
as hoped, Paz stated.  He explained that although China claimed 
to have made $136m investment in 2007, Argentina's calculations 
show significantly less.  He says that the Chinese calculations 
are very broad and include items like representational office 
space, typically not counted as foreign investment.  A few 
significant Chinese investments in Argentina include mineral 
extraction feasibility studies, manufacturing of electro-domestic 
goods and IT investments. 
 
Uruguay: Successful Presidential Visit, Market Status for China 
--------------------------------------------- --------- 
¶6.  (U) Uruguayan diplomats in Beijing were pleased with 
Uruguayan President Vazquez's March 21-26 trip to China (REF B). 
The delegation signed bilateral agreements including MOUs on 
trade and investment cooperation, economic and trade promotion, 
and water resource cooperation.  They also signed cooperation 
agreements on sports and entertainment.  During his visit, 
President Vazquez also granted China market economy status. 
¶7. (U) Vazquez was accompanied by over 50 Uruguayan entrepreneurs 
who attended an entrepreneurial forum organized by the Chinese 
Council for Trade Promotion.  Commercial officer Leonardo Olivera 
said the Chinese delivered a high caliber delegation and the 
event was very commercially successful for the Uruguayan business 
delegation.  Vazquez also had very positive meetings with the 
heads of four important Chinese companies (auto manufacturer 
Chery, wool importers China Textile Resources and State 
Development and Investment Corporation (SDIC) as well as telecoms 
giant Huawei).  Chery committed to invest another $12m in its 
Uruguay plant. 
 
BEIJING 00000989  002 OF 002 
 
 
¶8.  (SBU) Mr. Olivera commented that in 2008, China surpassed 
Argentina to become the second largest importer of Uruguayan 
goods.  2008 Uruguayan exports to China totaled $623m and 
included wool, wood, soy, leather products and paper pulp.  In 
addition, Uruguay is one of only two countries that have been 
approved by the Chinese for meat imports.  Olivera said that 
Uruguay has become an attractive destination for Chinese 
investment due to its stability and its ideal location as a 
logistics center for the region.  The Government of Uruguay does, 
however, have some concerns about its growing trade deficit with 
China and is looking for ways to increase Chinese investment in 
Uruguay. 
 
Mexico: Update on Xi Visit, Increased Cooperation 
--------------------------------------------- ----- 
¶9.  (SBU) Chinese Vice President Xi's February visit to Mexico 
was mainly symbolic and did not result in any substantive new 
political developments (REF C), Mexican diplomats told Emboffs. 
The real purpose was to signal internationally Chinese interest 
in Latin America and to build Xi's international credibility at 
home in China, the diplomats believed.  However, during the visit 
the state-owned China Development Bank (CDB) signed commercial 
agreements, mainly in the form of letters of intent with no 
specifics, with several Mexican banks, including the state-owned 
Banobras and Nacional Financiera (for infrastructure and 
development work, respectively) and private lender Banamex (a 
Citigroup subsidiary).  Mexican commercial officer Alberto Lima 
mentioned one deal that included actual figures, an agreement 
between CDB and America Movil to finance $1.3 billion of 
purchases from Huawei.  "In one pocket, out the other," said Lima, 
reflecting his feeling that like most Chinese investments, they 
are a form of financing Chinese purchases and do not benefit the 
Mexican economy in the long term. 
¶10.  (U) Mexican political officer Alejandro Martinez reported 
that he has noticed an increase in Chinese institutional 
cooperation with Mexico since China's November 2008 publication 
of a white paper outlining an updated policy on Latin America 
(REF D).  During the first few months of 2009, he has been 
contacted by several Chinese government agencies to cooperate on 
scientific and cultural initiatives. 
 
Promoting Tourism & Investment, Streamlined Visa Regulations 
--------------------------------------------- --------- 
¶11. (U) Mexico is actively promoting Chinese investment in Mexico. 
 
PROMEXICO, a special agency focused on attracting foreign 
investment and promoting Mexican exports, has opened offices in 
Shanghai and Guangzhou.  In terms of trade financing, EXIM and 
Banamex have signed treaties but nothing has come of them.  Mr. 
Lima has helped some companies try to access this financing but 
they were too small and were looking for less than the minimum 
$2m.  Mexican diplomats feel that the financial crisis has so far 
not greatly affected Chinese exports to Mexico.  They hope that 
it might lead to additional investment from China. 
¶12. (U) Last year only 17,000 Chinese tourists visited Mexico. 
The Mexican Embassy is making efforts to increase these numbers. 
On April 2, the Embassy hosted a promotional event with Chinese 
tourism officials.  Another step they have taken to promote both 
tourism and investment in Mexico is to simplify the visa process, 
reducing the visa turnover time to 3 days, making their consulate 
sections in Shanghai and Guangzhou more accessible, and issuing 
10-year visas. 
¶13. (U) Mr. Lima highlighted that the brightest spot in Mexico- 
Chinese commercial relations was the success of Mexican companies 
in China.  Brands like Bimbo (bread), Corona (beer), and Sol 
(beer) have gained significant recognition in China.  Other 
companies like Nemak (high tech aluminum auto parts) and Softtek 
(IT) are also doing very well. 
¶14. (SBU) An agreement with China last fall allows Mexico to 
maintain some tariffs on Chinese imports that are considered WTO- 
inconsistent by Beijing.  These tariffs now affect only 200 
products, and they will slowly be phased out over the next three 
years.  Mr. Lima says that the Chinese reluctantly gave in to 
this phase-out because they did not want to be viewed as taking 
advantage of Mexico. 
WEINSTEIN