ASEAN-CHINA SUMMIT MEMORIALIZES COOPERATION; TEES

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 023631

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/07/2016
TAGS: PREL ETRD ENRG EAIR EAID KWMN CH
SUBJECT: ASEAN-CHINA SUMMIT MEMORIALIZES COOPERATION; TEES
UP BILATERAL ENERGY, DEFENSE AND AID DEALS

REF: A. BEIJING 22370

B. BEIJING 23354

Classified By: Political Unit External Chief Edgard Kagan.
Reasons 1.4 (b/d).

Summary
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1. (C) Heads of state from all ten ASEAN member countries
attended the largely ceremonial October 30-31 ASEAN-China
15-year anniversary Summit hosted by Premier Wen Jiabao in
China's Guangxi Province. The leaders signed a joint
statement pledging to enhance strategic cooperation, to
support a nuclear-free Southeast Asia, to strengthen a 2002
code of conduct for the South China Sea and to establish a
Free Trade Area by 2010. For the most part, the pledges in
the joint statement were not new, but an MFA official said
the event injected new momentum into Chinese initiatives for
regional integration, which did not include APEC. Premier
Wen pledged USD 2 million to support infrastructure and
training in ASEAN countries and Chinese companies signed
billions of dollars in contracts. Indonesia's President
agreed to Chinese energy and defense initiatives, the
Philippines proposed joint oil exploration near the Spratly
Islands, Singapore pushed for a Southeast Asian transport
corridor, and Cambodia and Laos sought further development
aid as part of separate bilateral agendas. End Summary.

Joint Statement on Trade, Security Issues
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2. (C) Leaders from all ten ASEAN member states agreed at the
October 30-31 China-ASEAN Summit to establish the China-ASEAN
Free Trade Area on time by 2010 and to progressively
liberalize trade in goods and services (ref A). In a joint
statement, Chinese and ASEAN leaders agreed to enhance
political and security partnerships and to try to strengthen
the 2002 Declaration of Conduct for Parties in the South
China Sea. China reiterated its intention to accede to a
Southeast Asia Nuclear Weapon-Free Zone treaty, but the
protocol banning possession, development or transport of
nuclear weapons in Southeast Asia will not open for signature
unless other nuclear weapons states express an intention to
join, MFA Asia Department Deputy Director for ASEAN Affairs
Mao Ning told poloff.


3. (C) The Summit's announcements largely codified previous
Chinese commitments with respect to Southeast Asia but gave
new momentum to key Chinese initiatives for regional
integration, MFA's Mao said. But Beijing felt the Summit was
a success and believes the joint statement is an important
document memorializing achievements in the past 15 years of
the China-ASEAN relationship and setting a course for the
next 15 years of the relationship, she added.

PM Wen Offers Funds for Infrastructure, Training
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4. (C) In his speech to the Summit, Premier Wen said that
China-ASEAN relations have never been better. Premier Wen
announced that China would provide USD 2 million to fund
regional integration projects, with half going to
infrastructure development for the newest ASEAN members
Vietnam, Cambodia, Laos and Burma. Wen also pledged that
China would train 9,000 students and professionals from ASEAN
countries over the next five years, Mao said.

Regional Architecture, Issues
--------------


5. (C) On regional issues, the leaders discussed East Asian
cooperation, endorsing regional architecture such as the
ASEAN Regional Forum, ASEAN-Plus-Three and the East Asia
Summit, but they did not endorse APEC or the Japanese
proposal for an accelerated ASEAN-Plus-Six Free Trade Area,
Mao noted. Premier Wen briefed ASEAN leaders on the
improvement in China-Japan relations resulting from PM Abe's
visit to China and the parties also discussed the DPRK
nuclear issue, Mao said.

Indonesia Pledges Energy, Defense Cooperation
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6. (C) Prior to the Summit, Indonesian President Yudhoyono
and Chinese Vice Premier Huang Ju signed some USD4 billion in
energy-related contracts at the October 28 China-Indonesia
energy forum in Shanghai, Indonesian poloff Santo

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Darmosumarto told us. The deals, originally announced during
the Indonesian Vice President's April visit to China and
subsequently resubmitted for competitive tender, will provide
Indonesia with several new coal-fired power plants to help
offset electricity shortages in areas outside Jakarta, he
said. Indonesia earlier this year agreed to provide more
than 2 million tons of liquefied natural gas (LNG) to China's
Fujian Province annually.


7. (C) In a bilateral meeting during the Summit, Premier Wen
offered to increase military cooperation and defense
exercises with Indonesia, an offer Santo said Jakarta views
skeptically, especially if it involves exercises in the
Malacca Straits. Jakarta may accept Chinese offers of
support for defense industries related to shipbuilding and
rocketry, but is likely to restrict any proposed military
exercises to humanitarian and search-and-rescue missions, he
said. Chinese rocket technology is especially appealing for
Indonesia's commercial satellite industry that supports many
facets of telecommunications across the archipelago, Santo
said.

Philippines-China Relations Best Ever
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8. (C) Philippines President Gloria Macapagal-Arroyo said
China-Philippine relations are at their best level ever, Mao
said. During Arroyo's bilateral visit prior to the Summit,
she proposed joint oil and gas exploration by all those with
an interest in the disputed Spratly Islands and urged that
the proposed Code of Conduct for the South China Sea be much
stronger than the 2002 declaration of conduct currently in
force. However, Indonesian and Singaporean diplomats who
attended the Summit told us that the "strengthened" code
discussed during the Summit does not differ significantly
from the 2002 declaration on conduct and primarily urges
maintaining the status quo.

Land Transport Corridor, Free Skies Deal
--------------


9. (C) Singapore poloff Patrick Lim said Singapore found
significant the joint declaration's emphasis on creating an
economic and transportation corridor through mainland
Southeast Asia, including completing a rail line connecting
Singapore to Kunming, China. The railroad is complete except
for rails that Malaysia previously agreed to provide to
Cambodia, Lim said. The rails for the Cambodian part were to
have been given in cooperation with Thailand, but the interim
Thai government has not yet implemented this promise so it
remains unclear when the final piece of the rail line can be
built, he said. Noting that rail and road corridors to
Singapore do nothing for Indonesia, Indonesian poloff Santo
said the joint statement's push for regional "Free Skies"
agreements was more significant for promoting future regional
tourism and transport.


10. (C) Singapore PM Lee's bilateral visit prior to the
Summit took him to Chengdu, Guangzhou and Guangxi, Lim said.
As reported ref B, Lee held a bilateral meeting with interim
Thai PM Surayud. A serious point of friction during the
October 31 bilateral meeting was deposed Thai PM Thaksin's
sale of assets to a Singaporean company run by PM Lee's wife,
Lim said.

Aid for Laos, Cambodia
--------------


11. (SBU) Separately, Premier Wen promised to provide
financial assistance to Laos during the Summit for a bridge
over the Mekong River necessary to complete a Bangkok to
Kunming highway. Cambodian Prime Minister Hun Sen asked Wen
for an additional USD 100 million in Chinese aid to support
Cambodian infrastructure, according to state media reports.

Summit Followed by Trade, Customs, Women's Forums
-------------- --------------


12. (SBU) The Summit was followed by a week of related
China-ASEAN activities in Nanning, which China hopes to bill
as a future hub of its relations with Southeast Asia. The
October 31 to November 3 China-ASEAN Expo resulted in signing
of 132 project contracts involving investment of over USD5.8
billion in ASEAN economies, according to state-run media.
More than 100 women entrepreneurs attended the October 31
China-ASEAN Women Entrepreneurs' Forum October 31, which
included a pledge to open more training centers for female
entrepreneurs in the region. A customs and agricultural

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forum resulted in a consensus to harmonize inspection and
quarantine standards to facilitate free trade.
Randt