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Cablegate: Informal Foreign Aid Discussions Continue

VZCZCXRO4425
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #5176/01 2200926
ZNR UUUUU ZZH
R 080926Z AUG 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 0569
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RHEHNSC/NSC WASHDC
RUEHFR/AMEMBASSY PARIS 4151
RUEHKO/AMEMBASSY TOKYO 1518
RUCNDT/USMISSION USUN NEW YORK 1799

UNCLAS SECTION 01 OF 02 BEIJING 005176

SIPDIS

SENSITIVE
SIPDIS

TOKYO FOR USAID AANENSON
STATE FOR EAP/CM AND EB/IFD/OMA
STATE FOR EAP/EP, AF/EPS, NEA/RA, WHA/EPSC
TREASURY FOR DEPUTY CHIEF OF STAFF TAIYA SMITH AND OASIA/ISA
DOHNER/YANG/CUSHMAN
STATE PASS TO USAID FOR NICHOLSON
BANGKOK FOR USAID/RDMA CARDUNER AND WHELDEN
PARIS FOR USOECD
MANILA FOR ADB USED
NSC FOR SHRIER, TONG

E.O. 12958: N/A
TAGS: ECON EFIN EAID CH
SUBJECT: INFORMAL FOREIGN AID DISCUSSIONS CONTINUE

REF: BEIJING 3587 and previous

SUMMARY
-------

1. (SBU) A Ministry of Commerce (MOFCOM) official responsible for
foreign aid told a visiting USAID official that the Chinese
Government would welcome efforts by the United States to cooperate
with China on economic development initiatives. The August 2
meeting followed a positive exchange with a Treasury official in May
after a long period of reluctance on MOFCOM's part to discuss
foreign aid issues (reftel). According to the MOFCOM
representative, the Chinese Government is interested in bilateral
cooperation on development work in Africa, and the United States
Government and China should begin to discuss possible projects for
cooperation. Separately, Chinese press reports also indicate that
the China Development Bank (CDB) has increased its stake in Africa
through the launch of the new China-Africa Development Fund. END
SUMMARY.

MORE POSITIVE SIGNS ON DEVELOPMENT COOPERATION
--------------------------------------------- -

2. (SBU) Charles Aanenson, Counselor for Development Cooperation,
Embassy Tokyo, followed up on the May 8-9 visit of Deputy Assistant
Secretary of Treasury Kenneth Peel (reftel) to further encourage

SIPDIS
Chinese government officials to cooperate on development assistance
with the United States. Liu Junfeng, Director, Department of Aid to
Foreign Countries, Ministry of Commerce (MOFCOM), said he is
optimistic about future cooperation and expressed his appreciation
for Aanenson's overview of development cooperation between the
United States and Japan. (Note: Prior to the Peel meeting in May,
MOFCOM's Department of Aid to Foreign Countries routinely refused
Embassy requests for meetings. Liu Junfeng, who also participated
in Peel's May 9 meeting with the Department's Director General, Wang
Shichun, met with Aanenson in place of Wang, who was traveling on
August 2. End Note.)

USAID'S COOPERATION WITH JAPAN
------------------------------

3. (SBU) Aanenson explained to Liu that his office's role in Tokyo
is to develop bilateral cooperation projects with Japanese aid
agencies and to avoid duplication of work in the developing world.
While Japan's economic assistance strength is its yen loan program,
the United States' strength is technical assistance. The United
States Government is eager to learn if it can forge a similar
partnership with China, Aanenson said.

OPPORTUNITIES IN AFRICA
-----------------------

4. (SBU) Liu thanked Aanenson for his overview of the United States'
development cooperation with Japan, and he reiterated China's
foreign aid priorities as stated by Wang in the May 9 meeting
(reftel). Liu pointed to Africa as a region where development
cooperation between the United States and China might be most
effective, as China's advantages with regard to strong bilateral
relations and low project costs could be partnered with technical
assistance from the United States. Liu said that China and the
United States should further explore possible cooperation in Africa
and begin to identify specific projects and perhaps propose
feasibility studies to recipient countries. Liu offered the caveat
that such cooperation would of course be subject to the agreement of
the recipient country. He asked Aanenson to provide a list of
specific countries and specific projects as examples of possible
cooperative ventures, saying he would discuss the idea further with
his superiors.

NOTE: MORE ON AFRICA
---------------------

5. (SBU) According to Liu, 48 countries in Africa have accepted ODA
from China to date, but the number of projects is not very large.

BEIJING 00005176 002 OF 002


He reemphasized a point Wang made previously that MOFCOM is under a
tremendous amount of pressure to deliver aid to Africa following the
November 2006 China-Africa Forum. A July 26 Caijing magazine
article reported that the China Development Bank launched the
China-Africa Development Fund in June with an initial investment of
USD 1 billion and a goal of reaching USD 5 billion. In doing so,
CDB broadened the scope of its international outreach, which CDB
officials had highlighted to Peel in May (reftel). END NOTE.

RANDT

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