Cablegate: Visit of Africa Bureau Senior Advisor, Ambassador Ruth A.

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STATE FOR EAP/CM AND AF

E.O. 12958: N/A
TAGS: PREL ECON CH XA
SUBJECT: VISIT OF AFRICA BUREAU SENIOR ADVISOR, AMBASSADOR RUTH A.
DAVIS, TO SHANGHAI, CHINA

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1. (SBU) Summary: In Shanghai from September 8-14, Ambassador
Ruth A. Davis participated in the Vital Voices symposium for
Chinese and African women business leaders, met with Chinese
Africa experts, visited two Chinese companies investing in
Africa and delivered a lecture on U.S.-African policy at East
China Normal University. Both Chinese academics and businessmen
shared the challenges - and objectives - of Chinese economic
involvement in Africa. End summary.

Vital Voices Symposium
----------------------

2. (U) In support of the Africa Bureau's China in Africa
Dialogue, Senior Advisor Ambassador Ruth A. Davis and AF Public
Diplomacy and Public Affairs Director Claudia Anyaso represented
the Bureau at the symposium "Women as an Economic Force: A
Leadership Training and Business Exchange for African and
Chinese Women", Sept 9-12, 2007. Organized by Vital Voices, a
U.S. NGO, the symposium brought together more than 35 Chinese
and African businesswomen to discuss economic development,
encourage trade, and foster accountability and social
responsibility. The symposium was an outgrowth of the Vital
Voices Leadership Summit held in Cape Town, South Africa in
January 2007 that was attended by African women from more than
30 countries, and women from another 12 countries, including
China.

3. (U) Ambassador Davis provided an overview of symposium goals,
which included the value of positive partnerships and fair
business practices as well as the importance of leadership
training to enhance the entrepreneurial success of the African
and Chinese symposium participants. She then moderated a panel
discussion on the theme "China and Africa: Business Trends,
Challenges, and Opportunities" that featured nine of the Chinese
and African participants. One of the outcomes of the symposium
was the formation of a joint African and Chinese businesswomen's
forum to continue communication, dialogue, and mentoring.

BHP Billiton Economist on China-Africa Relations
--------------------------------------------- ---

4. (SBU) On September 13, Ambassador Davis and Ms. Anyaso met
with BHP Billiton Economist and former FSO Robin Bordie to
discuss the impact of Chinese investment in Africa. Billiton, a
large mineral extraction firm headquartered in Melbourne,
Australia, has mining projects in Africa. Its economists,
including Bordie, are doing extensive research on Chinese
investments in Africa and how Africans perceive them. According
to Bordie, poor quality of Chinese products and poor corporate
management is causing a backlash from African publics.
Reluctance of Chinese companies to hire and train local
employees and importing Chinese construction teams and managers
have also created negative perceptions.

5. (SBU) Bordie's research indicates that large Chinese
State-Owned Enterprises (SOEs) are more successful and are
perceived more favorably in Africa than small and medium
Enterprises. Among SOEs there appears to be an emerging
consciousness that Chinese companies need to act more
responsibly. She noted that the real problem in China-African
relations is that cheap Chinese products are undermining small
African entrepreneurs. African textile makers find it hard to
compete with Chinese manufacturers who copy traditional African
textiles and sell them at cut-rate prices. One possible area of
African and Chinese cooperation is biotechnology, as China is
interested but has been unable to grow genetically modified food
due to the small acreage of Chinese farms. Joint ventures
between Chinese and African farmers may be a mutually beneficial
answer.

Chinese Academics: Economic Relationship with Africa Becoming
More Diverse
--------------------------------------------- -------

6. (SBU) On September 13, Shanghai Consul General Kenneth
Jarrett hosted a luncheon for Ambassador Davis with Shanghai
academics interested in Africa. Dr. Ni Jianping, Vice
President, Shanghai Institute of American Studies, said China
must find a way to coordinate its national interests with the
interests of SOEs and private firms, to include modifying its
policy of non-intervention. China also must bridge a "cultural
gap," to include the greater focus African nations accord human
rights, and more effectively convey its culture to the African

SHANGHAI 00000640 002.2 OF 002

people.

7. (SBU) Dr. Mu Tao, Vice Dean and Africa Specialist, History
Department, East China Normal University, said it is a
misperception that China is only interested in Africa for its
resources and that in many African countries, China is trying to
change and diversify the economic relationship to achieve a
"win-win" outcome. He referred to Tanzania where China is
helping local textile makers improve their businesses to compete
with Chinese and other foreign firms. Mu, an advisor to the
2010 Shanghai World Expo where many African countries will have
exhibitions, said that Expo organizers are trying to assist
African participants in identifying their best products and
marketing these products at the Expo. On the national level, he
said that the Chinese Government recognizes the importance of
corporate social responsibility and is intervening accordingly,
to include requiring Chinese private enterprises to obtain
export licenses before they can operate in Africa.

Chinese Companies: Different Approaches
---------------------------------------

8. (SBU) Ambassador Davis and Ms. Anyaso also visited two
Shanghai companies investing in Africa. The first company,
Shanghai Electric, is one of the largest suppliers of power
generation equipment in China and has just begun to enter the
African market. According to Shanghai Electric Assistant to the
President Andrew C.K. Li, the company signed a contract with
Tanzania to provide the country with thermal power generation
equipment in January 2007. Li finds that the biggest challenge
of doing business in Africa is the lack of infrastructure and
lack of equipment and parts in the local market. Li said
Chinese are employed rather than local workers because the
company provides equipment assembled in China. He said it saves
time and is easier to have Shanghai staff handle service
problems.

9. (SBU) Ambassador Davis and Anyaso also visited ZTE, a
telecommunications company that sells mobile phones, wireless
equipments and terminals. ZTE has much more experience in
Africa than Shanghai Electric and is taking a more long-term
approach to Africa. Two-thirds of ZTE's revenue comes from
overseas sales, the bulk of those being in Africa. ZTE, in
partnership with Siemens, recently signed a contract with
Vodaphone to sell two million mobile phones to Kenya, South
Africa, Tanzania and the Congo.

10. (SBU) Vice General Manager Zhao Yizhe said ZTE has a strong
sense of social responsibility and has adopted a "localization"
strategy. It has 20 local offices in Africa and more than 50
percent of its employees in the offices are from the local
community. It sends engineers to provide training to local
staff and, at times, also pays for African staff to travel to
ZTE's training center in Shenzhen in southern China. In
addition to training local employees, ZTE also outsources its
projects to African companies and tries to pass on its
technology to these companies.

Lecture at East China Normal University
---------------------------------------

11. (U) On September 14, Ambassador Davis gave a lecture on
U.S.-Africa relations to approximately 60-70 graduate students
at East China Normal University. She stressed that U.S. goals
for Africa dovetail with African nations' own interests and
include freedom, rule of law, and security. She noted that the
United States is working successfully with African nations to
further economic development and end conflicts, and that
together the U.S. and China can contribute to the continent's
continued success. Ambassador Davis described the official
talks that AF Assistant Secretary Frazer has had with her
Chinese counterparts, in which they discussed areas of potential
cooperation such as agriculture, health, and Darfur. Ambassador
Davis noted that there is a common perception in the United
States that China is only interested in Africa in order to
extract resources and has failed to encourage transparency and
the rule of law. High student interest kept Ambassador Davis
fielding questions for almost an hour.
JARRETT

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