PRODI IN CHINA DISCUSSES ARMS EMBARGO, TRADE AND

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 020898

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/27/2016
TAGS: PREL EU IT CH
SUBJECT: PRODI IN CHINA DISCUSSES ARMS EMBARGO, TRADE AND
ENHANCED COOPERATION


Classified By: Classified by Acting Political External Unit Chief Mark
Tesone. Reasons 1.4 (b/d).

Summary
--------------


1. (C) Italy leans to lifting the embargo of arms sales to
China, said Italian Premier Romano Prodi, in China from
September 13-19 with a 500-person Italian trade delegation.
In Beijing, Prodi met with President Hu Jintao, Premier Wen
Jiabao and Communist Party Central Committee head Wang
Jiarui. Prodi attended trade forums in Nanjing and
Guangzhou, visited educational and cultural institutes in
Shanghai and toured a transportation and logistics hub in
Tianjin, with the stated goal of turning Italy into Europe's
"door to the East." Noting positively Prodi's decision to
make China his first non-EU visit since he became Prime
Minister in May, Premier Wen Jiabao called the Sino-Italian
relationship better than ever. End Summary.

LIFTING THE EU ARMS EMBARGO
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2. (C) Italian President Romano Prodi said Italy leans to
lifting the EU Arms Embargo against China during his
September 13-19 visit to Nanjing, Guangzhou, Shanghai,
Tianjin and Beijing. In Beijing on September 17-18, Prodi
met with President Hu Jintao, Premier Wen Jiabao and Wang
Jiarui, head of the International Department of the Communist
Party Central Committee (CPC). At a joint press conference
with Premier Wen, Prodi complimented China for its troop
contribution to the UNIFIL force in Lebanon and said the arms
embargo issue should be resolved as soon as possible.


3. (C) Prodi's comment about lifting the arms embargo is an
expression of continued Italian policy, according to Antonio
Bartoli, a Political Officer at Italy's Embassy in Beijing.
Noting that Italy has long favored lifting the arms embargo
and that Prodi was repeating what both Italy's former
President and Foreign Minister said during Wen Jiabao's visit
to Italy in December 2004, Bartoli emphasized that Italy
recognizes that lifting the embargo is an EU decision and
Italy does not presume to speak for the EU on the matter.

ITALY'S NEW APPROACH TO CHINA
--------------


4. (C) Beijing noted positively Prodi's decision to make
China his first non-EU visit since he became Prime Minister
in May, MFA Italy Desk officer Qi Han told poloff. China has
a long tradition of friendship with Italy and launched a
strategic partnership during Premier Wen's 2004 visit to
Rome, Qi said. During Prodi's recent visit, China and Italy
signed fifteen cooperation agreements covering topics ranging
from Small and Medium Enterprises (SMEs) to education,
culture, environmental protection and trade, Qi added. In
his press conference, Wen encouraged both countries to give
more support to SMEs, to expand bilateral trade and minimize
trade frictions, to increase trade in services and to
strengthen bilateral cooperation in agriculture,
transportation, logistics, urban planning and construction,
according to Qi. Qi noted that Prodi's delegation included
four ministers, several undersecretaries, a dozen regional
representatives and several hundred business people.


5. (C) Prior to his arrival, Prodi pledged to come to China
"with an absolutely new strategy on political, cultural and
economic levels." While in China, Prodi repeatedly told
reporters that he planned to turn Italy into Europe's "door
to the East" by expanding Italy's business presence in China
and attracting more Chinese investment to Italy. This
approach is in marked contrast to that of former Italian PM
Silvio Berlusconi, whom Beijing found difficult to work with,
according to Wu Baiyi of the China Foundation for
International and Strategic Studies. In particular,
Berlusconi's comment that communists "boiled babies to
fertilize the fields" in Mao's China had offended many
Chinese, according to western media.

THE SINO-ITALIAN TRADE RELATIONSHIP
--------------


6. (C) Both President Hu and Premier Wen are positive about
the Sino-Italian relationship and admire Prodi's decision to
make Rome's relationship with Beijing a priority, according
to MFA's Qi Han. Prodi praised China's economic and
political achievements, stating that his visit aimed to lift
Italy-China economic ties to a new level, said Qi. During
the visit, Prodi attended trade forums in Nanjing and
Guangzhou on September 14-15, visited educational and

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cultural institutes in Shanghai September 16 and toured a
transportation and logistics hub in Tianjin on September 17.
Note: According to Chinese media, the China-Italy trade
volume hit 13.4 billion U.S. dollars from January to July
this year, up 24 percent from the same period last year.
According to western media, China is Italy's largest source
of imports after OPEC members and Italy posted a deficit with
China of 1.07 billion Euros in July; Chinese exports to ItaQ
grew 17.1 percent in July compared with a year earlier. End
Note.)
SEDNEY