US embassy cable - 05MAPUTO1297

UNCLAS SECTION 01 OF 02 MAPUTO 001297 
 
SIPDIS 
SENSITIVE 
AF/S - TREGER, AF/RSA - NAY, EAP/CM - CRANE 
E.O. 12958: N/A 
TAGS: EAID, PREF, PREL, CH, MZ 
SUBJECT: CHINESE TIES WITH MOZAMBIQUE 
 
REF: A. STATE 153199 
B. 2004 MAPUTO 406 
Sensitive But Unclassified - Handle Accordingly 
1. (U) Summary: China has extensive political, economic, and 
military ties with Mozambique, and its visibility appears to 
be growing. Mozambique,s President and Prime Minister have 
each met with their Chinese counterparts in the last two 
months. End Summary. 
 
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Political Relations 
------------------- 
2. (U) China supported FRELIMO in its independence struggle 
in the 1960s and 1970s and quickly recognized the new 
government after independence. In recent years, China has 
financed the construction of a number of high-profile 
government buildings, including the Chissano International 
Conference Center in 2003 (at a reported cost of USD 5 
million) and the Foreign Ministry in 2004 (USD 12 million). 
 
3. (U) On September 14, President Guebuza met with Chinese 
President Hu Jin Tao on the margins of the UNGA high-level 
event in New York. Both agreed that they would seek to 
improve and deepen bilateral relations, according to press 
reports. Much of their discussion focused on economic 
matters, with Guebuza emphasizing the need for improved 
relations in the areas of agriculture, aquaculture, and 
infrastructure. Hu pointed to the complementarity of 
Mozambique's undeveloped natural resources and China's 
experience and technology in these areas. Both said that 
they shared the same views on the Millennium Development 
Goals and on UN reform, including reform of the UN Security 
Council. 
 
4. (U) Prime Minister Luisa Diogo visited China in late 
August and in late September received a delegation of the 
Chinese Communist Party, led by Political Bureau member Yu 
Zhengsheng. 
 
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Trade and Investment 
-------------------- 
5. (U) Trade between China and Mozambique is growing rapidly, 
according to statements made by Diogo and Chinese Prime 
Minister Wen Jia Bao after they met during Diogo's five-day 
trip to China. Diogo was in Beijing to attend the tenth 
anniversary of the Beijing UN Conference on Women, but 
apparently devoted considerable attention during her visit to 
encouraging greater Chinese trade and investment in 
Mozambique. On September 2, at the close of the visit, Prime 
Minister Wen told reporters that trade between the two 
countries had increased by 110 percent in the first six 
months of 2005 compared with the same period in 2004. While 
Wen gave no figures for the six-month period, he said that in 
2004, trade between the two countries amounted to USD 205 
million, of which USD 120 million was in the export of 
Chinese goods and services to Mozambique and USD 85 million 
in Mozambican imports. (Comment: These figures are 
significantly higher than Mozambican national statistics 
institute (INE) figures for 2002 and 2003. The INE cites 
approximately usd 46 million in Mozambican imports from China 
and Hong Kong combined and usd 11 million in Mozambican 
exports to China and Hong Kong combined. We do not know the 
composition of trade. We suspect Chinese road construction 
work here (see para 8) figures prominently in Chinese 
exports, as does clothing. Main Mozambican exports to China 
are thought to be seafood (shrimp, sharks) and high-value 
timber, but we do not have figures. End comment.) 
 
6. (U) At the same press conference, Wen announced that the 
Chinese government had decided that starting in 2005, 187 
Mozambican products would receive duty-free entry to China. 
The product types were not given, but, according to a 
journalist, include raw materials for use in the production 
of heavy machinery. 
 
7. (U) For her part Diogo was full of praise for Chinese 
products. During the visit she announced that the Mozambican 
government would soon purchase 70 Chinese buses for use in 
Maputo, and indicated that further bus purchases could 
follow. Diogo reportedly called for greater investment in 
Mozambique, which she said China "would never regret," in a 
meeting with Chinese business representatives. During the 
meeting it was mentioned that a recent survey in China of 
2,000 small and medium-sized businesses concluded that Ghana, 
Tanzania and Mozambique were considered the most attractive 
African countries for investment. Also, members of the 
Mozambican delegation held talks with China's health ministry 
over the importation of health equipment and drugs, and the 
possibility of increasing the number of Chinese doctors 
working in Mozambique (see ref B for more on Chinese medical 
teams). 
 
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Infrastructure 
-------------- 
8. (SBU) A Chinese construction company is resurfacing a 
section of the main north-south highway in Inhambane, Sofala, 
and Zambezia provinces. The repair work is to be completed 
in 2006. Total estimated cost is USD 106 million. Another 
Chinese company is working on the water system in Beira, the 
country,s second largest city. 
 
9. (U) Martyn Davies, Director of the China Studies Center at 
the University of Stellenbosch in South Africa, claims the 
Chinese casino magnate Stanley Ho is interested in acquiring 
part of Mozambique's giant hydro-electric generating 
facility, the Cahora Bassa dam, according to a mid-August 
press report. He is said to be awaiting, however, the 
outcome of discussions between the Mozambicans and the 
Portuguese on sale of the dam to Mozambique. (Note: 
Mozambique owns 18 percent of the stock of Hidroelectrica 
Cahora Bassa and Portugal 82 percent. The Portuguese say 
they are owed USD 1.7 billion in debt for the period when the 
facility was not operational during Mozambique,s civil war, 
and they have made repayment a condition of any deal with 
Mozambique. End note.) In addition, Davies claims that a 
group of Chinese investors has expressed interest with the 
Mozambican government in developing a large part of the 
Zambezi river valley. Incidentally, Davies' figures for 
Chinese trade with Africa may be of interest: USD 29.5 
billion in 2004, an increase of 59 percent above total trade 
with Africa in 2003. Davies states that Chinese trade with 
Africa has been growing, on average, by 31.2 percent since 
2001. (Comment: We do not know how much of this increase is 
due to oil price increases. End comment.) 
 
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Military and Police 
------------------- 
10. (SBU) In June 2005 Defense Minister Tobias Dai announced 
the receipt of a grant of USD 1 million worth of Chinese 
military assistance. Details of how the aid will be used 
have not been fully settled, but some will go to support 
50-100 scholarships each year for Mozambican military 
officers to study in China, according to press reports. 
Defense Minister Dai traveled to China earlier in June on a 
seven-day goodwill visit. We also have heard unconfirmed 
reports that the Chinese help the military grow rice in Gaza 
province,s Chokwe district. 
 
11. (SBU) The Chinese have recently supplied Mozambique,s 
police force with 200 or 300 (accounts differ) motorcycles 
and outfits that are being used in Maputo and another city. 
The motorcycle patrols have significantly increased the 
visibility of the police, and we have heard reports that the 
Mozambican government is seeking additional motorcycles. 
 
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Perceptions of China and the Chinese 
------------------------------------ 
12. (SBU) One Mozambican newspaper recently carried a glowing 
account of China's economic accomplishments by a journalist 
who evidently traveled with the Prime Minister on her August 
trip to Beijing. The tone of the article is that China is 
the model for the future, in contrast the United States, 
which will be eclipsed one day. Other reports praising China 
as a development success are regularly carried by the local 
media. Nonetheless we believe that Mozambicans have more 
mixed views toward the increasing numbers of Chinese working 
in the country. A recent story about Mozambicans beaten by 
their Chinese employers received prominent media coverage. 
And many Mozambicans, we understand, resent that Chinese 
laborers are used in the construction industry at a time when 
only around ten percent of the Mozambican workforce holds 
jobs in the formal sector. 
La Lime