CHINA CAUTIOUS ON ASEAN+6 TRADE PROPOSALS

C O N F I D E N T I A L BEIJING 018542

SIPDIS

SIPDIS



STATE FOR EAP, EAP/RPM, EAP/CM

E.O. 12958: DECL: 08/31/2016
TAGS: PREL ECIN ETRD XE JA CH
SUBJECT: CHINA CAUTIOUS ON ASEAN+6 TRADE PROPOSALS

REF: BEIJING 9501

CLASSIFIED BY: POLITICAL MINISTER COUNSELOR DANIEL
SHIELDS. REASONS 1.4 (B/D).


1. (C) SUMMARY: CHINA IS REACTING CAUTIOUSLY TO
JAPAN'S PROPOSALS FOR AN ASEAN 6 FREE TRADE AGREEMENT
AND OTHER EFFORTS TO INCREASE REGIONAL INTEGRATION.
FURTHER DECISIONS ON SUCH STEPS COULD COME AT
DECEMBER'S EAST ASIAN SUMMIT, BUT CHINA WILL CONTINUE
TO LET ASEAN TAKE THE LEAD, FOREIGN MINISTRY OFFICIALS
TOLD US. OUR CONTACTS PREDICT THAT CHINA WILL NOT
REACT PUBLICLY BUT MAY RESIST WHAT THEY SEE AS JAPAN'S
EFFORTS TO FORMALIZE AN ASEAN 6, WHICH WOULD BE THE
EAST ASIAN GROUPING MOST FAVORABLE TO JAPAN'S
INTERESTS. END SUMMARY.


2. (C) CHINA IS CAUTIOUSLY STUDYING PROPOSALS PUT
FORWARD BY JAPAN AT LAST WEEK'S ASEAN ECONOMIC
MINISTERS MEETING FOR AN ASEAN 6 FREE TRADE AGREEMENT
AND A NEW OECD-LIKE REGIONAL GROUPING. CHINA IS
STUDYING HOW JAPAN'S NEW PROPOSALS INTERACT WITH AND
OVERLAP WITH PREEXISTING REGIONAL ARCHITECTURE, MFA

ASIAN DEPARTMENT ASEAN DIVISION DEPUTY DIRECTOR ZHU
JUN TOLD POLOFF AUGUST 28. A FURTHER STATEMENT OF
CHINA'S POSITION WILL LIKELY AWAIT STATEMENTS BY
LEADERS AT DECEMBER'S EAST ASIA SUMMIT (EAS) BECAUSE
THE EAS "LEADERS-LED FORUM" IS THE PREEXISTING ASEAN 6
STRUCTURE, SHE SAID.

"WHAT'S UNIQUE ABOUT ASEAN 6"?
--------------


3. (C) WHILE MAINTAINING AN OPEN MIND, CHINAS
PRELIMINARY VIEW IS THAT ASEAN 6 SHOULD NOT DUPLICATE
PRE-EXISTING GROUPINGS, SUCH AS APEC, ASEAN, ASEAN 3
OR THE ASIA-EUROPE MEETING (ASEM),ZHU SAID. JAPAN
CLEARLY ATTACHES IMPORTANCE TO THE EAS AND THE NEW
PROPOSALS ARE PART OF AN EFFORT TO EXPAND THE
IMPORTANCE OF ASEAN 6, SHE SAID. CHINA HAS NO
INTENTION TO CRITICIZE JAPAN FOR EMPHASIZING A
REGIONAL GROUPING THAT BENEFITS ITS INTERESTS, SHE
SAID, BUT NEEDS TO RESEARCH THE PROPOSALS TO SEE HOW
FEASIBLE THEY ARE.


4. (C) MFA ASIAN DEPARTMENT SOUTHEAST ASIA DIVISION
DIRECTOR CHEN DEHAI TOLD POLOFF THAT FORMATION OF AN
ASEAN ECONOMIC COMMUNITY WILL BE CHALLENGING BECAUSE,
UNLIKE IN THE EUROPEAN UNION, THE CULTURES, ECONOMIES
AND INTERESTS OF ASEAN 3 MEMBER STATES DIFFER
SIGNIFICANTLY. ZHU AGREED, ADDING THAT WIDE VARIATION
IN ECONOMIC DEVELOPMENT AMONG THE ASEAN 6 COUNTRIES
COULD MAKE AN FTA "TECHNICALLY DIFFICULT." MOREOVER,
CHINA, JAPAN AND SOUTH KOREA ARE EACH PURSUING THEIR
OWN ASEAN 1 AGENDAS, INCLUDING FREE TRADE AGREEMENTS,
CHEN ADDED (REFTEL). CHINA HOPES TO FURTHER ITS OWN
SPECIAL RELATIONSHIP WITH ASEAN IN OCTOBER, WHEN ASEAN
HEADS OF STATE VISIT SOUTHERN CHINA'S GUANGXI PROVINCE
FOR A COMMEMORATION OF THE 15TH ANNIVERSARY OF CHINA-
ASEAN RELATIONS, CHEN NOTED.

CHINA LETTING ASEAN TAKE THE LEAD IN EAST ASIAN SUMMIT
-------------- --------------


5. (C) CHINA'S ATTITUDE TOWARD THE COMING EAST ASIAN
SUMMIT IS SUMMARIZED IN FOUR POINTS, ZHU ADDED.
FIRST, CHINA WILL LET ASEAN PLAY A LEADING ROLE. THIS
IS IMPORTANT TO CONTRIBUTING TO A STABLE ENVIRONMENT
WITHOUT CHINA'S DOMINATION OF THE PROCESS, WHICH WOULD
PRODUCE RESISTANCE, SHE SAID. SECOND, CHINA WILL
MAINTAIN A FLEXIBLE AND OPEN ATTITUDE AND URGE THE EAS
TO LEARN FROM OTHERS' EXPERIENCES. THIRD, THE SUMMIT
SHOULD ADHERE TO THE TWO DECLARATIONS ADOPTED LAST
YEAR AT THE FIRST EAS SUMMIT. FINALLY, CHINA IS
FLEXIBLE ABOUT PARTICIPATION BY OTHER NATIONS THAT
HAVE SHOWN AN INTEREST. CHINA DOES NOT OPPOSE THE
UNITED STATES OR THE EUROPEAN UNION BECOMING OBSERVERS
AT THE EAS AND JOINING IN MINISTERIAL MEETINGS AND IT
SUPPORTS RUSSIA'S APPLICATION TO PARTICIPATE AT THE
EAS, SHE SAID.

SCHOLAR: ASEAN 6 IS JAPAN'S PREFERRED ARCHITECTURE
-------------- --------------


6. (C) JAPAN'S PROPOSALS TO ESTABLISH AN EAST ASIA
PARTNERSHIP AGREEMENT, INCLUDING A FREE TRADE ZONE,
ARE PART OF A JAPANESE EFFORT TO FIND A REGIONAL
ORGANIZATION IT CAN LEAD, CHINA ACADEMY OF SOCIAL
SCIENCES SCHOLAR JIN XIDE TOLD POLOFF. ASEAN 6 IS THE
IDEAL GROUPING FOR JAPAN WITHIN EAST ASIA AND
PROPOSALS THAT EMPHASIZE FREE TRADE ISSUES PLAY TO
JAPAN'S STRENGTHS, HE SAID. CHINA'S PEOPLE'S DAILY
EDITORIALIZED AUGUST 26 THAT JAPAN IS EAGER TO
ESTABLISH A FREE TRADE AGREEMENT TO MAINTAIN ITS
DOMINANT POSITION IN EAST ASIA. THE EDITORIAL SAID
JAPAN WAS "SCRAMBLING" TO CONTAIN CHINA AND SOUTH
KOREA AND TO RESTRICT ASEAN BY ADDING THREE NEW
MEMBERS TO THE EAST ASIAN GROUPING TO ADVANCE ITS OWN
INTERESTS.


7. (C) JIN PREDICTED THAT CHINA WILL TAKE A "WAIT AND
SEE" ATTITUDE TOWARD THE LATEST PROPOSALS BECAUSE IT
DOES NOT THINK ASEAN MEMBERS WILL AGREE TO THEM.
"WHATEVER CHINA SAYS, IT WILL LEAVE EITHER JAPAN OR
ASEAN UNHAPPY," JIN CONCLUDED. THE PEOPLE'S DAILY WAS
MORE BLUNT, SAYING THAT CHINA AND ASEAN WOULD OPPOSE
THE 10 6 MODEL AGAIN, AS THEY HAVE IN THE PAST, TO
THWART WHAT IT CALLED A JAPANESE POLITICAL AGENDA THAT
"INCREASES THE CONCERNS OF EAST ASIAN COUNTRIES."

SEDNEY