US embassy cable - 05SANTODOMINGO4104

C O N F I D E N T I A L SECTION 01 OF 04 SANTO DOMINGO 004104 
 
SIPDIS 
 
DEPT FOR EAP/CM KAYE LEE, WHA/PCP JEFF BISCHOFF, AND 
WHA/EPSC LAWRENCE GUMBINER 
 
E.O. 12958: DECL: 08/08/2025 
TAGS: ECON, PREL, ETRD, ETTC, EINV, ENRG, EAGR, EFIN, PHUM, EMIN, CH 
SUBJECT: SANTO DOMINGO:  CHINESE ACTIVITIES IN DOMINICAN 
REPUBLIC 
 
REF: A. 2005 SECSTATE 138041 
 
     B. 2004 SANTO DOMINGO 06472 
     C. 2004 SANTO DOMINGO 06656 
     D. 2004 SANTO DOMINGO 06298 
 
(C) Summary: The Dominican Republic is one of just 26 
countries that maintain formal diplomatic relations with 
Taiwan.  Beijing's economic, political, and social investment 
in the country has been limited.  The People's Republic of 
China has concentrated its efforts on convincing the 
Dominican government to recognize the PRC formally. 
President Fernandez is interested in the PRC in order to 
expand his nation's economic opportunities and broaden its 
international relationships.  Members of congress have 
recently traveled to the PRC. End Summary. 
 
(C) Following are the Department's questions from reftel and 
our responses: 
 
(C) Q:  What is the frequency of high-level political contact 
between host-country officials and Chinese officials?  Is 
there evidence of political discussion on global policy 
issues or Chinese pressure to support China's view on hot 
button issues?  How does Beijing's effort to constrain 
Taiwan's international space play into Chinese local 
activities and its relationship with host government? 
 
(C) A:  The Dominican Republic is the largest Caribbean 
island nation that maintains diplomatic relations with 
Taipei.  The focus of PRC relations with the Dominican 
political system has been on Beijing's global campaign to 
isolate Taiwan (ref B).   We do not foresee Dominican 
recognition of Beijing in the immediate future, but do not 
rule out the possibility sometime in the next few years (ref 
B). 
 
(C) Over the past year, PRC representative have visited about 
every 3-4 months.  Taiwan has responded at about the same 
frequency, often announcing additional investment or 
assistance. 
 
(C) It appears that PRC discussions are keyed far more to 
linking economic opportunity with recognition than to 
discourse on specific policy issues (for example none of the 
visitors was reported to have made specific demarches). 
 
(C) Foreign Minister Carlos Morales Troncoso commented to the 
Ambassador in November 2004 that Dominican recognition of 
Beijing might be inevitable over the long term, "but not 
right now."  Taiwanese news reports just prior to 
Fernandez,s inauguration in August 2004 speculated that, 
while Fernandez might strengthen ties with the PRC, the new 
president was a "long-time friend of Taiwan" who had promised 
to maintain ties between Taiwan and the Dominican Republic 
after taking office. 
 
(SBU) In January 2005, Morales Troncoso was quoted in the 
Dominican press as saying that the Dominican Republic should 
select which entity, PRC or Taiwan, is more convenient for 
diplomatic and commercial relations.  He said that the PRC is 
a "great reality in the world" and that it has made important 
investments in Latin America. 
 
(SBU) In January 2005, a PRC delegation met in Santo Domingo 
with members of the Partido de la Liberacion Dominicana 
(PLD), and called on President Fernandez at the Presidential 
Palace.  The delegation included Wang Yulin, Sub Director for 
Latin American issues, Wang Jialei and Chen Fafen.  The PRC 
representatives reminded the Dominican government of the 
importance of PRC-Dominican relations and discussed the 
possibilities for commercial cooperation.  Wang said that the 
PRC has formal relations with 166 countries in the world and 
that he hoped the Dominican Republic would be number 167. 
Dominican news report that Reinaldo Pared Perez, Secretary 
General of the PLD, stated that the PRC could be a great ally 
to the Dominican Republic and could provide a solution to 
some of the important problems the country now faces, such as 
the energy crisis. 
 
(SBU) The PLD hosted a celebration in the Presidential Palace 
for the Chinese delegation.  When asked by press if the 
Dominican government relationship with Taiwan would hinder 
relations with China, Perez stated that the PLD would 
maintain and strengthen relations with the PRC. 
 
(SBU)  In mid-2004 Dominican Ambassador to the United States 
Hugo Guilliani Cury visited the PRC seeking investment in 
export-oriented factories in the Dominican Republic (ref B). 
This visit was followed by that of nine Dominican senators 
including Senate President Andres Bautista, who spent 7 days 
in the PRC, visiting Beijing, Guaylin, Shenzhen, and 
Shanghai.  The group was accompanied throughout the visit by 
Vice Foreign Minister Ji Peiding.  Many PRC officials, 
including the National People's Assembly president, 
reportedly expressed their government's desire for diplomatic 
relations with Santo Domingo.  Dominican senators had been 
guests of Taipei authorities on a previous trip, in mid-2004, 
and caused a brief stir when a Taipei legislator reported 
speculation by Dominican Revolutionary Party (PRD) Senator 
Ramon Albuquerque that the incoming administration might want 
to recognize the PRC. 
 
(U)  The following 4 questions are answered jointly, below. 
 
(C) Q:  What is the composition and value of host country's 
trade with China (imports and exports)?  Please indicate 
source of statistics and whether this includes trade with 
Hong Kong. Please also advise on the trend line in key 
resource areas, especially energy, but also steel, cement, 
timber/timber products, etc., and supply statistical data. 
 
(C) Q:  What is the value of Chinese investment in host 
country? In which sector(s) is it concentrated?   Is there 
data to distinguish between portfolio investment and 
investment in productive sectors?  Please include figures for 
realized investment as well as for contracted investment if 
possible. From the host country perspective, what types of 
financial or policy support does the Chinese government 
provide for Chinese companies seeking to invest in Latin 
America? 
 
(C) Q:  Does the local response to China's increasing demands 
pose the risk of potential environmental degradation and/or 
create long-term health hazards?  Does China contribute to 
helping address environmental and health-related concerns 
that stem from its economic engagement with host country? 
 
(C) Q:  Has host country and/or China sought preferential 
trade arrangements, either bilateral or as part of a 
sub-regional or regional arrangement? 
 
(SBU) A:  The PRC commercial office in Santo Domingo has a 
staff of three PRC nationals and two local hires.  Cai 
Weiquan, the principal PRC commercial officer in Santo 
Domingo, has told journalists that the absence of diplomatic 
relations has prevented the development of a legal framework 
to facilitate trade and investment (ref C). Still, Cai stated 
that PRC exports to the Dominican Republic amount to some USD 
250 million annually and are more likely to grow than 
Dominican exports to China.   Chinese exports include 
electronics, furniture, clothes, and automobiles.  In 2004, 
total Dominican exports to China amounted to USD 20 million, 
and included coffee, tobacco, sugar, minerals, and iron. 
 
(SBU)  Recently the PRC has made some attempts at investment 
in the Dominican Republic.  Earlier this year a Chinese firm, 
China Minmetal, proposed USD 5 billion to purchase worldwide 
operations of the Canadian company Falconbridge, which 
operates a nickel mine located in Bonao, an hour north of the 
capital.  The deal did not materialize. 
 
(C)  In another instance this year, Mainland Chinese and Hong 
Kong firms attempted to buy a 35 percent share of the 
Dominican Caucedo port, one of the newest most modern in the 
Caribbean (ref D).  Three Chinese companies bid on Caucedo: 
Hutchison, China Merchant, and Cosco Pacific.  Caucedo,s 
local partners told Embassy Officer that they did not want a 
"Chinese" partner because this might have a negative impact 
on Caucedo,s close ties with the United States.  None of the 
Chinese companies was selected; instead, the 35 percent share 
was sold to DPI Terminals of Dubai. 
 
(SBU) In June 2005 the Dominican press reported that 
Commercial Officer Cai Weiquan was promoting two PRC 
investment projects here valued at USD 100 million.  In the 
first instance, a Chinese firm proposes to open a cement 
factory at a cost of USD 50 million in the Dominican province 
of San Cristobal.  Cai stated the cement factory would use 
the latest technology and would follow international 
environmental standards.  The other proposed investment, also 
worth USD 50 million, is from a Shanghai company that plans 
to provide five cranes to be used at Caucedo port. 
 
(C) The PRC does not have any current projects or investments 
in the agricultural sector in the Dominican Republic, 
according to a planning director in the Dominican Ministry of 
Natural Resources and the Environment. 
 
(SBU) A Chinese delegation visited the Dominican Republic in 
January and according to Cai, offered technical assistance on 
ocean areas, environment and natural resources, education, 
health, and other matters.  The technical delegation is 
reported to have met with the Dominican ministers of 
environment, industry and commerce, and sports.  The PRC 
commercial officer suggested creating a mixed commission to 
oversee these efforts. 
 
(C) Another possible area for investment by the PRC here is 
tourism. In late 2004, a Dominican undersecretary for tourism 
informed Emboffs that PRC investors are looking at tourism 
investments in the country "if the Dominican Republic 
recognizes Beijing." 
 
(SBU) The PRC is involved in the Dominican Free Trade Zones 
areas (FTZ).  According to Dominican Council on Free Trade 
Zone Exportation (CNZFE), in 2004 PRC had accumulated 
investments of  USD 4,657,762 in Dominican FTZs.  CNZFE also 
reports that 16 PRC companies bought FTZ exports in 2004. 
Additionally, 67 FTZ businesses buy primary materials from 
the PRC, which as a provider of raw materials to the FTZ's is 
second only to the United States. 
 
(SBU) The Embassy has not heard of any PRC suggestions of 
preferential trade treatment or bilateral trade agreements. 
 
(C) Q:  What if any assistance is China providing to host 
country?  What is the breakdown between grants and loans? 
Does the Chinese government typically propose aid or does the 
host country request it?  Who proposes specific projects?  Do 
the Chinese push certain types of projects and shy away from 
others even if the host country has requested them? 
 
(SBU) A:  No aid is expected from the China until the 
Dominican Republic formally recognizes the PRC.  There is no 
indication that this is likely in the near term. 
 
(SBU) Journalists have suggested that the January 2005 
technical delegation mentioned above was considering a 
possible Chinese purchase of Dominican bonds but we have seen 
no evidence of this. 
 
(C) Q:  What are official and popular attitudes to the 
Chinese presence?  What are expectations for future relations 
with China? 
 
(SBU) There are no strong popular attitudes to the small 
Chinese population in the Dominican Republic. The current 
government is interested in maintaining good relations with 
the PRC, short of formal recognition for now, in hopes of 
mutually beneficial trade and investment relations. 
 
(C) Q:  What is the extent of military contact and assistance 
between China and the host country? 
 
(SBU) There appears to be little or no PRC-Dominican military 
contact or assistance. 
 
(C) Q:  Describe Chinese military-to-military contacts and 
efforts to sell weapons in your host country. 
 
(C) A:  There appears to be no PRC efforts to sell weapons to 
the Dominican Government. 
 
(C) Q: We also welcome additional information on China's 
engagement with host country, cultural ties, education 
exchanges, etc. 
 
(U) A:  A Chinese music and dance troupe performed in the 
Dominican Republic in November 27-30, 2004. The PRC 
commercial delegation arranges well-publicized events during 
the year, such as the celebration of PRC,s national day. 
 
End Cable. 
HERTELL