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Cablegate: Vietnam Consul in Kunming Fears Hanoi Might Be Left Behind

VZCZCXRO7161
PP RUEHGH RUEHVC
DE RUEHCN #0309/01 3500206
ZNR UUUUU ZZH ZDS
P 160206Z DEC 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC PRIORITY 3639
INFO RUCPDOC/USDOC WASHDC PRIORITY 0038
RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 4355

UNCLAS SECTION 01 OF 02 CHENGDU 000309

(C O R R E C T E D C O P Y - PARA 02 PORTION MARKINGS)

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV EAGR PREL CH VM
SUBJECT: VIETNAM CONSUL IN KUNMING FEARS HANOI MIGHT BE LEFT BEHIND
IN CHINA TRADE DUE TO SLOW HIGHWAY DEVELOPMENT

CHENGDU 00000309 001.2 OF 002


1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.

2. (SBU) SUMMARY: The development of highway links between Yunnan
province and Vietnam is moving slowly on the Vietnam side, a
Vietnam Consul in Kunming told Consular Officer. This slowness,
and the earlier completion of the Bangkok-Kunming highway (and
corresponding expansion of Thailand-Yunnan trade), made the
Consul concerned that Vietnam would be "left behind" other ASEAN
countries in its trade with China. A number of U.S. food
exporters are interesting in developing a cold storage
logistical chain when the road from Haiphong to Kunming is
completed. Tran also discussed Vietnam-China border trade and
current demand for visas to Vietnam in Southwest China. END
SUMMARY.

Vietnam's Highway Links to Kunming

Moving Forward, But Slow Progress is a Concern

--------------------------------------------- -

3. (SBU) On November 18, ConOff met with Vietnam Consul Tran Kim
Bang at the Vietnam Consulate General in Kunming, Yunnan
Province. While the primary purpose of the visit was to discuss
consular issues in Southwest China, ConOff and Tran also
discussed Kunming's highway links with Vietnam. According to
press reports, in 2007 the Asian Development Bank approved a 1.1
billion USD loan to Vietnam to develop a road from Kunming to
Haiphong, Vietnam, which is the closest deep water port to
Kunming. Press reports state that the planned highway would cut
the trip from Kunming to Hanoi from 2-3 days to less than a day,
and that the planned completion date for the road was 2012.
According to recent information posted on the Asian Development
Bank's Greater Mekong Subregion website, the Chinese side of the
Kunming-Haiphong highway should be completed in 2010.

4. (SBU) According to Tran, increasing road and rail links
between Vietnam and Yunnan province have been hampered by the
cost of improving road infrastructure in Vietnam. He stated
that both sides have the desire to improve highway links between
Yunnan and Vietnam, but that he did not know when the
Kunming/Haiphong project would be completed. According to
Tran's colleagues in Hanoi, funding concerns may be an issue in
completion of the Kunming/Haiphong highway. In July, 2009, the
Vietnam Expressway Corporation failed for the fourth time in a
month in a corporate bond sale, Tran said.

5. (SBU) Tran also stated his concern that the slowness in
completing the Kunming to Haiphong highway might have a negative
impact on Vietnam, causing it to become "left behind" other
ASEAN neighbors in its trade with China.

Vietnam's Trade with China: Promising, Focused on Border

--------------------------------------------- -----------

6. (SBU) Tran stated that Vietnam has a number of advantages in
trade with China, including geographic location, and a positive,
on-going dialogue between leaders of Vietnam and China on
economic ties. Trade between Vietnam and Yunnan province,
according to Tran, is currently focused at Vietnam/China border
cities. (Note: According to Chinese press reports, China and
Vietnam recently signed an agreement officially demarcating
their 1,300-kilometer land boundary, and agreed to further land
border cooperation. End Note.)

7. (SBU) Tran said that Yunnan exports a number of agricultural
products to Vietnam, and that Vietnam also exports fruit and
other agricultural products to Yunnan. Tran also stated that,
after the planned road links between Kunming and Vietnam are
completed, Yunnan would also be able to import seafood from
Vietnam's coast.


CHENGDU 00000309 002.2 OF 002


U.S. Ag Exporters Interested in Cold Storage Logistical Chain

--------------------------------------------- ----------------

8. (U) According to ConGen Chengdu's Senior Commercial Officer
(SCO), who was recently posted in Ho Chi Minh City, development
of a cold storage logistical chain from Haiphong to Kunming was
hampered by the lack adequate highway infrastructure. A number
of U.S. food exporters are interesting in developing such a
logistics network when the road from Haiphong to Kunming is
completed, the SCO said.

Applications for Visas to Vietnam Lower

In Kunming Compared to Vietnam's Other China Posts

--------------------------------------------- -----

9 (SBU) Tran also discussed his office's demand for visas to
Vietnam. According to Tran, despite Kunming's proximity to
Vietnam, his office in Kunming sees far less demand for visas to
Vietnam than Vietnam's Embassy in Beijing and Vietnam's
Consulates in Guangzhou, Hong Kong and Nanning. Tran stated
that the Vietnamese Consulate General in Kunming processes about
50 Vietnamese visas a day, and that many of the applicants are
third-county nationals who plan to travel from Kunming to
Vietnam by bus. Tran attributed the lower demand to Kunming's
lower level of economic development compared to China's coastal
regions. Tran stated that last year's global economic downturn
depressed demand for Vietnamese visas, but that he expects
longer-term growth in visa demand.
BROWN

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