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Cablegate: Western China Woos Burma Trade

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 RANGOON 000886

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV, EAP/CM, EB
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR PFA

E.O. 12356: N/A
TAGS: ETRD PREL ECON BM CH
SUBJECT: Western China Woos Burma Trade

REF: Chengdu 305

1. (SBU) Summary: The largest-ever business delegation to
travel to Burma from Southwest China's Sichuan province
visited Rangoon in late June for a Chinese-export trade
fair. Ironically, many Chinese goods exhibited at the fair
are on Burma's list of items restricted or banned for
import. Burmese businessmen share a desire to increase
bilateral trade, and have traveled to Sichuan to drum up
interest in Burma's raw materials and other exports.
Reported trade between Burma and Sichuan/Chongqing is one-
sided: exports from Sichuan and Chongqing to Burma totaled
over USD 100 million in 2003, while imports from Burma to
Chongqing were under USD 400,000 and imports to Sichuan
totaled zero. The fair was part of a broader effort by
local governments in Southwest China to promote trade with
Southeast Asian nations and of the GOB to showcase its
increasingly close ties to China. End Summary.

2. (U) This cable is a joint report by Embassy Rangoon and
Consulate General Chengdu.

Motorbikes, Pesticides, and Other Delights
-----------------------------------------
3. (U) The largest-ever business delegation to travel to
Burma from Southwest China's Sichuan province attended a
trade fair organized in Rangoon June 29-July 1 by the
Sichuan and Chongqing offices of the China Council for the
Promotion of International Trade (CCPIT). Embassy Rangoon
EconOff visited the fair, which featured 43 Chinese
exhibitors displaying an array of motorcycles, generators,
light agricultural machinery, pesticides, traditional
medicines, consumer goods, and foodstuffs. CCPIT officials
in Sichuan told ConGen Chengdu that they were emphasizing
exports to Burma of agricultural products, medicine, and
"infrastructure projects," which include equipment and
engineering services.

High-Level Connections
----------------------
4. (SBU) According to Sichuan trade promotion officials, the
Burmese government gave high-level attention to the event.
Five Burmese ministers attended the exhibit and each had one-
on-one meetings with Chinese companies. The impetus for
organizing the trade fair reportedly came from the new
Commercial Officer at the Chinese Embassy in Rangoon, Mr.
Tang Hai, who previously served as Vice-Director of
Sichuan's Commerce Bureau (formerly known as the Foreign
Trade Bureau). Tang may be hoping to use his new position
to help out old friends back in Sichuan.

Just "Window Shopping"
----------------------
5. (SBU) Ironically, the vast majority of Chinese goods
exhibited at the trade fair (such as vehicles and all
consumer goods) are on Burma's list of items restricted or
banned for import for protectionist or foreign exchange
conservation reasons. In addition, few of the Chinese
attendees spoke English or Burmese, and those that did
admitted that they had not made any deals -- nor did they
expect to -- and that they had not been given permission by
the GOB to import any more of their products than they could
display. Despite heavy promotion in Burma's state-
controlled media, Rangoon EconOff observed that the fair was
poorly attended by local businessmen and the only booths
drawing attention were those giving away freebies.

Legal or Underground Market?
----------------------------
6. (SBU) One ethnic Chinese businessman told Rangoon EconOff
before the fair that he recently led a group of top Burmese
executives on a promotional tour of Sichuan province trying
to drum up demand for Burmese raw materials and other export
goods. A parallel goal of the trip was to seek suppliers
for Burma's vast import needs. The businessman spoke
encouragingly of expanding future ties between Burma and
Sichuan, saying that to date most trade ties with China have
been with Yunnan province, which shares a long border with
Northern Burma. He was not clear, though, on whether new
trade ties with inland areas such as Sichuan and Chongqing
would be conducted through official channels ("white") or by
smugglers ("black").

7. (U) There are signs that Sichuan-based companies are
already seizing better business opportunities in Burma.
According to sources in Rangoon, Sichuan Machinery Import
and Export Company has inked a deal with Myanmar Electric
Power Enterprise to provide electric transmission
infrastructure -- probably using a massive supplier's credit
China granted to Burma over the past few years -- for a new
hydropower project under construction along the Burma-China
border.

One-Sided Trade
---------------
8. (U) Official Chinese government statistics indicate that
trade between Burma and Sichuan/Chongqing is extremely one-
sided. China recorded no imports from Burma to Sichuan in
2003, and in 2002 imports from Burma totaled only USD
40,000. Similarly, Chongqing authorities reported importing
nothing from Burma in 2002, and only USD 380,000 worth of
goods in 2003, mostly minerals and other raw materials.
Chongqing's exports to Burma spiked in 2003, surpassing USD
95 million, as the city increased the number of motorcycles
it shipped to Burma - despite official GOB restrictions on
such imports. This was nearly double the almost USD 50
million in exports Chongqing sent to Burma in 2002.
Sichuan's exports to Burma fell in 2003, dropping to USD
13.4 million compared to USD 21.2 million in 2002.

9. (U) China's trade figures show that about one-third of
China's total reported commerce with Burma is conducted
through Yunnan province (Ref A), which borders Burma, Laos
and Vietnam. Sichuan province is located north of Yunnan,
and does not border any foreign country. Reported exports
from Yunnan to Burma rose 20.6 percent in 2003 and another
40 percent in the first four months of 2004, while imports
rose 27.2 percent and 20.4 percent in the same time periods.
These figures likely do not take into account significant
smuggling activity in both directions. From Burma come
gems, illegal narcotics, and teak; from China come a wide
array of consumer goods and vehicles.

Comment
-------
10. (SBU) Officials in Southwest China are under pressure to
maintain high rates of GDP growth and have thus adopted
export promotion strategies that include aggressively
reaching out to Southeast Asian nations. Chinese contacts
have told ConGen Chengdu that the recent Sichuan/Chongqing
trade fair in Rangoon was an effort to build on Chongqing's
recent success in selling motorcycles to Burma, though we
doubt that it will do much to expand legal exports. The
personal connection between the Chinese Embassy's new
Commercial Officer and Sichuan foreign trade officials was
another important factor. More broadly, Southwest China has
a clear interest in promoting exports to Southeast Asian
markets as well as in acquiring more raw materials for use
by its manufacturers. The GOB is always keen to use trade
fairs to showcase its increasingly close ties with the PRC
as a counterweight to deteriorating relations with the
United States and Europe. However, it appears to see such
trade fairs as nothing more than a PR opportunity. End
comment.
Martinez

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