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plants, flue gas desulfurization and the development of oil and gas reserves; and transportation studies including ports, highways and alrports.
TDP has also provided funding for technical seminars, reverse-trade missions to the United States by Chinese specialists and trade-related training. For example, in FY 1988, TDP provided two grants of $500,000 and $750,000 to cover a portion of the training costs related to the development of a cool-fired power plant project in Shidongkou, China. The $500,000 training grant assisted Combustion Engineering (CE) of Connecticut to win a $100 million contract to design and manufacture boilers. CE subcontracts for the project included companies from the states of Alabama, Connecticut, Illinois, Kansas, New York, Ohlo, Pennsylvania, and Tennessee. The $750,000 training grant helped Sargent & Lundy of Illinois to win a $100 million contract for the balance of plant portion of the project, including engineering services and assorted equipment. Companles benefiting from the subcontracts for this project are from the states of California, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, Texas, Vermont, and Wisconsin,
Another successful trade-related training project involved a $125,000 grant to train individuals in the Chinese coat Industry on the continuous mining technique. As a result of the training, the Chinese have begun to implement continuous mining in four underground coal mines and have made an Initial order of over $10 million in mining equipment from the United States for use in these four
In addition to the grants provided to Chinese ministries for feasibility studies on major development projects, TDP also offers direct financing to U.S. companles for teasibility studles connected with potential investments in China. Such feasibility studies may be partlaily financed (up to 50%) by TDP to provide assistance to potential U.S. investors in Investigating and developing prospective investment projects. Under current policy. TDP financing is in the form of a four-year Interest-free loan, secured by the potential Investor's promissory note. Since 1984, TDP has supported four investor feasibllity studies in China totalling $800,000.
We are aware that other industrialized nations have programs in China similar to the TDP program. Specific data on the size of these programs is not generally available, and any information we have obtained is not easily reconciled because the programs, although simllar, are not directly comparable. We do know that the Canadian International
Development Agency (CIDA) has a $4 million annual program In China modelled after TDP. We also know that the Japanese are very active in China, funding feasibility studies and training projects through the Japanese International Cooperation Agency (JICA).
Because of the recent events in China, TDP has temporarily suspended all new obligations and the implementation of three obligated projects for which there are not yet contracts in place. We have not taken any action which would abrogate existing TDP funded contracts between U.S. companles and Chinese organizations. If the United States were to discontinue the TDP program in China, this action could have an impact on China's development goals. It is also likely that China would look to other donor nations to fund
the studies which TDP would otherwise have funded.
Mr. GEJDENSON. Thank you all for your testimony. Mr. Zeder, never admit you have a nice pile of cash up here on Capitol Hill because somebody will want to take it from you if you are not careful.
I asked a friend a couple of years ago who had an amount of resources available to him about investing in one of our Latin American neighbors that needed investment. It was actually Mexico. He said we looked around and decided there were lots of other places to invest your money where you could make money with a lot less trouble and they decided not to invest in Mexico. It seems to me that we give TDP and all
limited budgets. There are lots of places in the world where we can expand America's commitment and in some ways it may be relatively easier not to initiate new programs in China in the near term. It is not that TDP could not spend the limited amount of money we give them elsewhere in the globe.
When it comes to Export-Import, it seems that Export-Import is the least inclined by law, according to Mr. Ryan, to restructure its operations to avoid loans to China at the moment. If Export-Import were to stop all activity in China, you would not have a lot of excess capacity left, would you?
Mr. RYAN. No.
Mr. GEJDENSON. So it is not as if by stopping China we would have Export-Import idle in any way. According to your statement if a U.S. company applied for Export-Import assistance tomorrow and could demonstrate it would lose the contract without your help, you would provide that assistance, correct?
Mr. Ryan. Yes. I would say there is a timing element. It takes a long time to process it.
Mr. GEJDENSON. So as a result of the way you read the statute that governs your operation, unless the President or the State Department tells you otherwise, the Export-Import continues to do business as usual in China. You feel that is your legal obligation?
Mr. RYAN. Yes, sir.
Mr. GEJDENSON. In your discussions with the State Department and the White House, have they given you any indication that they are going to change that policy?
Mr. RYAN. Yes, well, the indication is that it is constantly under review. There is a task force that meets daily.
Mr. GEJDENSON. Why did they decide-obviously Mr. Zeder and Ms. Frame feel within the statutes there is direction for them, and clearly the Administration supported their actions. Why do you think the Administration has chosen to suspend both TDP and OPIC and not Export-Import?
Mr. RYAN. I cannot speak for the others but I think there is a competitive element involved in our closing. It is one thing to close off aid monies which I think all the G-7 countries have done, to my knowledge. It is quite another thing to cut off competitive financial bids for export orders. This the G-7 countries have not done with the two exceptions I mentioned. Only Holland and France have done it. In fact, there was a Summit meeting of the 12 countries of the economic community toward the end of June at which they discussed China and China policy. They expressed their outrage and that group recommended that the 12 countries involved carefully
consider going off cover as far as aid and export credits are concerned.
My feeling is that aid projects have stopped. Certainly Germany has stopped. Export credit assistance has not stopped. Again it would put us at a competitive disadvantage if we stopped and others stayed open.
Mr. GEJDENSON. That is my question to you. Would we really be at a competitive disadvantage globally if you took your limited resources and moved from helping folks in a competitive situation in China and gave more of an opportunity in other parts of the world? While China has always been the great attraction, there is a billion people there but they are a billion people without money.
Forget what happened in Tiananmen Square. Even though it is a billion people it is about 10 percent of our economy. Let's just take your Export-Import money and help America be competitive in Africa,
the rest of Asia and in other places. Mr. RYAN. To some extent that would make sense but I think the industrial countries look to China as a huge market in the future despite its backwardness now. As I mentioned, they run their affairs pretty well. They have substantial foreign exchange reserves. We find banks are willing to lend for long-term projects, perhaps without our funding but not without our guarantee.
Admittedly, we have limited resources. We could use them somewhere else but I don't think you will find the American business community wants to turn off on China unless it is absolutely necessary.
It has been a great market for investment to the tune of $3 billion and exports follow investment. Hopefully, these terrible events of recent months will soon be behind us and we will continue that investment. I feel confident that it will.
Mr. GEJDENSON. I yield to the Chairman.
Mr. ZEDER. Mr. Chairman, may I add a point of clarity to your statement? The statement was made, and I have heard it a number of times here today, that the Administration is restricting or telling OPIC to cease operations in China.
Now I have never received such a directive. I believe, if I am interpreting it properly, that we have been admonished not to do any business under the statutory agreements that this Congress very wisely put on us.
So I don't think it has been necessary to tell us to stop doing something we can't do anyway.
Mr. GEJDENSON. I like the way you are operating so I am not complaining but hadn't the President at one point indicated that he was suspending OPIC and TDP? Am I wrong?
Mr. ZEDER. I think he is saying it was not necessary to issue additional orders because we are under suspension right now.
Mr. SOLARZ. Thank you for yielding. I want to be sure I understand this, right now OPIC and the TDP are not suspending existing contract but not issuing new ones, correct?
Mr. ZEDER. We are honoring the contracts that we have but not issuing new ones.
Ms. FRAME. That is correct for TDP as well.