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Viewing cable 07BEIJING1094, FOREIGN ASSISTANCE: OECD VISITOR ON CHINA'S LIMITED

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Reference ID Created Released Classification Origin
07BEIJING1094 2007-02-15 09:35 2011-08-23 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Beijing
VZCZCXRO8506
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #1094/01 0460935
ZNR UUUUU ZZH
P 150935Z FEB 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 4800
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHFR/AMEMBASSY PARIS 4057
RHEHNSC/NSC WASHDC
UNCLAS SECTION 01 OF 02 BEIJING 001094 
 
SIPDIS 
 
STATE FOR EAP/CM AND EB/IFD/OMA 
STATE FOR EAP/EP, AF/EPS, NEA/RA, WHA/EPSC 
TREASURY FOR DEPUTY CHIEF OF STAFF TAIYA SMITH AND OASIA/ISA 
DOHNER/YANG/KOEPKE 
STATE PASS USAID FOR NICHOLSON 
BANGKOK FOR USAID/RDMA WHELDEN 
PARIS FOR USOECD 
NSC FOR SHRIER, TONG 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON EFIN EAID CH XA XB XC XD XE XF DAC
SUBJECT: FOREIGN ASSISTANCE: OECD VISITOR ON CHINA'S LIMITED 
WILLINGNESS TO DISCUSS ITS DONOR ROLE 
 
SUMMARY 
------- 
 
1. (SBU) China has a growing but still limited willingness to 
discuss its emerging role as a donor, to be transparent about its 
programs, and to coordinate development assistance issues with other 
countries, according to Richard Manning, Chair of the OECD's 
Development Assistance Committee (DAC), who visited Beijing February 
8-12.  END SUMMARY. 
 
FIRST OECD-DAC CHAIR VISIT TO CHINA 
----------------------------------- 
 
2. (SBU) Manning, the first OECD DAC Chair to visit China, met with 
Ministry of Commerce (MOFCOM) Assistant Minister Chen Jian and 
MOFCOM Department of Foreign Aid Director General (DG) Wang Shichun. 
 He also held DG-level meetings at the Ministry of Finance (MOF) and 
Ministry of Foreign Affairs as well as additional discussions with 
the China Development Bank and China Export Import Bank. 
 
CHINA AS A DONOR:  THE VIEW FROM BEIJING 
---------------------------------------- 
 
3. (SBU) Manning used a February 9 gathering of diplomats and 
multilateral organization representatives to note a growing 
willingness on China's part to discuss assistance.  There remains, 
however, a reluctance to discuss numbers and share more information 
about specific aid projects.  This likely reflects a centralized 
bureaucracy that is very controlled and hierarchical in terms of 
policy, yet fragmented in terms of information management, e.g., 
whether all involved Chinese Government players know how much 
assistance is given to specific countries, speculated Manning. 
 
4. (SBU) Manning also suggested that players in China's donor 
assistance programs are "reeling" from the rapid expansion of 
contacts with countries in Africa.  The foreign diplomats and 
international organization representatives present for these 
comments widely agreed with both statements. 
 
HOW CHINA CLASSIFIES ITS DONOR ASSISTANCE 
----------------------------------------- 
 
5. (SBU) Manning said that MOFCOM divides China's donor activities 
into four categories (which were used to structure a formal 
presentation given to him): technical assistance, grants, 
interest-free loans, and preferential loans.  The first three are 
managed by MOFCOM itself, although MOF holds the purse strings. 
Management of preferential loans is more complicated, with Chinese 
companies often influencing the process by identifying project 
opportunities and then lobbying for concessional financing. 
 
VIEWS ON BILATERAL DONOR COORDINATION 
------------------------------------- 
 
6. (SBU) There was much discussion in both meetings with Manning 
about the terms under which China might engage with other countries 
on donor assistance issues.  Several participants in one meeting 
focused on China's history as a developing country that has 
emphasized solidarity with other countries working to move beyond 
their colonial histories.  One attendee commented that this makes 
China generally unwilling to engage in a "donor-led context" but 
still receptive to working with donors on specific issues such as 
joint efforts to alleviate poverty.  This participant observed that 
when a specific country receiving assistance is keen for 
coordination among donors, China is willing to send representatives 
to local meetings held in that country. 
 
CHINA AND THE OECD DEVELOPMENT ASSISTANCE COMMITTEE 
--------------------------------------------- ------ 
 
7. (SBU) In a February 12 Beijing roundtable with diplomats and aid 
agency representatives, Manning underscored that when engaging 
emerging donors such as China on aid cooperation, it is important 
for the OECD to distinguish between expansion of dialogue and 
expansion of membership.  Manning said that while China is not a 
member of the OECD, it is imperative for the DAC to engage China on 
foreign aid.  It is increasingly nonsensical to talk about 
development assistance without including China, he said. 
 
BEIJING 00001094  002 OF 002 
 
 
 
8. (SBU) Manning emphasized that government officials from China, as 
well as other emerging donors such as India and Brazil, participate 
in many of the DAC's committees.  From the DAC's perspective, China 
is a top priority for engaging on aid coordination because it has 
the largest and most developed assistance program of any of the 
Middle Income Countries.  Contacts between China and other donor 
countries on assistance issues, however, remain limited, as China 
chooses to move independently in expanding its own aid program, 
Manning said. 
 
BACKGROUND ON CHINA'S ROLE IN DONOR ASSISTANCE 
--------------------------------------------- - 
 
9. (SBU) Although China has over the years been thought of as a 
developing country that receives foreign assistance, it has at the 
same time had a continuous role as an aid provider.  In the 1950s 
and 1960s, for example, China often provided agricultural and 
technical assistance to developing countries in Asia and Africa. 
More recent activities reflect the context of China's own economic 
opening to the world, with focus on the expansion of economic ties. 
Chinese Government figures show that in 2004, China provided USD 
731.2 million in "expenditure for external assistance," but the 
accuracy of this figure is widely questioned, and our contacts in 
Beijing uniformly assert a lack of transparency in China's 
assistance that makes assessing the magnitude of its programs 
difficult. 
 
10. (U) MOFCOM is officially in charge of China's efforts to provide 
aid to foreign countries and regions.  Its responsibilities include 
formulation and implementation of foreign aid policies and plans as 
well as managing China's foreign aid fund, concessional loans, 
special funds, and other funds.  MOFCOM's Department of Foreign Aid 
(DFA) has functions similar to that of USAID.  MOF is  responsible 
for setting the central government budget and managing all external 
development assistance from the multilateral development banks. 
 
11. (U) The China Development Bank (CDB) is the largest of China's 
three state-owned policy banks (the other two are China ExIm Bank 
and the Agricultural Development Bank of China).  It provides 
long-term funding for medium- and large-sized projects in key 
sectors of the Chinese economy.  The policy banks are the only 
financial institutions other than the People's Bank of China (PBOC) 
that report directly to the State Council.  The State Council, 
through the National Development and Reform Commission (NDRC), 
recommends projects, although CDB has some autonomy in its 
operations.  CDB's annual lending targets are set in consultation 
with the PBOC and NDRC. 
 
12. (U) China Exim is authorized by the Chinese Government as the 
sole lender (and logistical coordinator) of concessional loans 
(medium and long-term, low interest rate credit extended under the 
designation of the Chinese Government to the Government of the 
borrowing country as official assistance).  The objective is to 
promote economic development and improve living standards in 
developing countries and boost their economic cooperation with 
China. 
 
13. (U) A useful paper on China's foreign aid history and 
organizational structure, written by the National Committee on 
U.S.-China Relations, is available at: 
http://www.ncuscr.org/Publications/ China_Policy_series.htm 
 
SEDNEY