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Cablegate: Chinese Engagement in the Drc and Potential Areas For

VZCZCXRO4982
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0194/01 0472047
ZNR UUUUU ZZH
R 162046Z FEB 10
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 0171
INFO RWANDA COLLECTIVE
SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHEFDHP/DIA DHP-1 WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 KINSHASA 000194

SENSITIVE
SIPDIS
SIPDIS
AF/C FOR CLAMORA
AF/RSA FOR LMAZEL, LGRIESMER, AND RBOWLES
OES FOR ESHAW

E.O. 12958: N/A
TAGS: ECON EAID EINV EMIN SENV PGOV PREL CH CG
SUBJECT: Chinese Engagement in the DRC and Potential Areas for
Cooperation

REF: STATE 10152; 09 KINSHASA 1112; 09 KINSHASA 520; 08 KINSHASA 918
08 KINSHASA 426; 09 KINSHASA 399

1. (SBU) Summary: Chinese engagement in the Democratic Republic of
Congo (DRC) is strong and growing. China's highly visible presence
is largely focused on extractive industries, infrastructure and
construction projects, including those financed through
multilateral development banks (such as the World Bank), bilateral
assistance programs, and private investments. The multi-billion
minerals for infrastructure agreement concluded by the governments
of the DRC (GDRC) and China in early 2008 (Refs B-E) serves as the
largest example of Chinese engagement in the DRC. There are also
an increasing number of Chinese merchants and, prior to the
collapse of minerals prices in late 2008, small-scale investment in
the mining sector. Two examples of China's decade-old relationship
with the DRC (Ref E) include the Chinese-constructed Parliament
building and a major sports stadium, both of which are still
currently in use. A key area for potential US-Chinese cooperation
in the DRC is the environment sector. End Summary.

2. (SBU) The most prominent example of Chinese engagement in the
DRC is the Sino-Congolese Cooperation Agreement (SCCA), signed in
April 2008. The original agreement totaled $9.2 billion, composed
of a $3.2 billion mining project and $6 billion in infrastructure
projects to be implemented in two phases. The agreement was
amended in late 2009 in response to donor concerns over the
agreement's compatibility with debt sustainability: in addition to
the removal of the agreement's sovereign guarantees, the amended
agreement removed the second phase of infrastructure projects.
Thus, the infrastructure portion of the agreement now totals $3
billion, to be implemented between 2009 and 2014. The agreement
creates a joint venture called SICOMINES, comprised of the DRC
state-owned mining company (GECAMINES) and a consortium of Chinese
companies. In addition to the mining and infrastructure projects,
the agreement includes a $250 million signing bonus, which is being
provided to the GDRC treasury in several tranches. Details on the
SCCA, including the mining concessions under the agreement and
specifics related to the infrastructure projects, have not been
made public. China's Ambassador regularly highlights the SCCA as
an example of China's alternative model for development assistance
(Refs B-E).

3. (U) A number of additional infrastructure and construction
projects are also currently being planned or implemented by the
Chinese. Because many projects in the DRC are not awarded through
international tenders, combined with the large number of projects,
it is often difficult to know the source of financing for specific
projects. The Chinese implement projects through formal bilateral
assistance programs, awards from multilateral development banks,
and through private (or quasi private) investment. Chinese
companies had also been active in the mining sector, principally in
small-scale operations in the DRC's copper sector in Katanga
province. As noted in Ref F, many of these private operators left
the DRC after the collapse of international minerals prices due to
the global economic crisis. Chinese merchants, often operating in
violation of DRC laws that restrict some small-scale commercial
activities for Congolese businesses, are also on the rise.
Finally, there have been press reports about Chinese in the
agricultural sector, including palm oil.

4. (SBU) Key potential areas for U.S.- Chinese cooperation in the
DRC are the environment and clean energy sectors. The USG, through
the efforts of USAID's Central African Program for the Environment
(CARPE), the Office of Environment and Science (OES) and Embassy
Beijing, has already initiated discussions with the Chinese
government about a joint initiative to support fuel wood
development to combat deforestation in eastern DRC. A workshop
jointly sponsored by the DRC, US and Chinese governments on
alternative energy and fuel wood development in the DRC had

KINSHASA 00000194 002 OF 002


tentatively been scheduled for October 2009, but was postponed due
to administrative and scheduling issues. The DRC government has
expressed strong interest in fuel wood development and improved
stoves as a principal strategy to prevent further deforestation.
Post strongly supports working cooperatively with the Chinese to
enhance GDRC efforts in this area.
GARVELINK

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