US embassy cable - 04RANGOON886

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, Economy 
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