EAP DAS CHRISTENSEN AND FISS SECRETARY GENERAL

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 023696

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/08/2026
TAGS: PREL PGOV JA KN CH
SUBJECT: EAP DAS CHRISTENSEN AND FISS SECRETARY GENERAL
CHEN ZHIYA DISCUSS JAPAN AND NORTH KOREA

Classified By: Deputy Chief of Mission David S. Sedney. Reasons 1.4 (b
/d)

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


1. (C) Prime Minister Abe's visit to Beijing was an
"icebreaking event" and momentum in resolving outstanding
differences between Beijing and Tokyo is building very
quickly, Chen Zhiya, Secretary General of the Foundation for
International Strategic Studies (FISS) told EAP DAS Thomas
Christensen in a November 7 meeting. China will maintain a
sober-minded approach to Japan in the run-up to the Japanese
Upper House elections. The "constructive ambiguity"
introduced by PM Abe and endorsed by President Hu Jintao over
the resolution of outstanding historical differences is
allowing the two sides greater flexibility to improve ties.
Chen commented that the DPRK is facing severe domestic
challenges and pointed out that the United States' financial
"sanctions" have been highly effective. At the same time,
Chen argues that the DPRK nuclear test demonstrated that
hardline factions in the DPRK are in the ascendancy. Despite
the nuclear test, China's three operating principles toward
the DPRK nuclear issue have not changed: 1) China opposes a
nuclear Korean Peninsula, 2) China will evaluate the
situation from the perspective of its national security
interests and 3) China will avoid using methods that will
further provoke a crisis. End Summary.

Abe's Visit a Real Ice Breaker
--------------


2. (C) Prime Minister Abe's first trip to China was an
"icebreaking event," stated Chen Zhiya, Secretary General of
the Foundation for International Strategic Studies, during a
November 7 meeting with EAP DAS Thomas Christensen. PM Abe
espoused his "two-wheel" theory for developing political and
economic relations, emphasizing that the two are connected
and must roll forward simultaneously. This is an important
change from former PM Koizumi, who tried to de-link political
development from economic development. Chen cautioned that
there are still issues between the two countries that need to
be resolved and said that the careful application of
ambiguity on these issues will allow both sides more room for
compromise, particularly in resolving differences on the
historical record. Constructive ambiguity helped achieve
break-throughs at the Summit. During PM Abe's trip the two
sides established the first Track-Two dialogue on outstanding
historical issues. For the first time, President Hu publicly
stated that China views post-war Japan to be on the path of
peace and development. According to Chen, President Hu
decided that he did not have to solve permanently the
Yasukuni Shrine issue, he could just "put it on the shelf."
Chen claims that the two sides are showing great flexibility
and the momentum in resolving outstanding differences between
Beijing and Tokyo is building very fast.

China Will Maintain Sober-minded Approach to Japan
-------------- --------------


3. (C) Despite these developments, Chen argued that China
will maintain its careful approach to Japan. Prime Minister
Abe has not clearly stated his personal views on outstanding
historical issues or on visiting the Yasukuni Shrine. PM Abe
is currently enjoying an extremely high level of domestic
support, with public approval ratings standing at 83 percent.
Therefore, he has no domestic political need to visit the
Shrine. But the North Korean nuclear test has strengthened
the hand of Japan's hardliners. Abe could eventually feel
pressured to take a public stand on the Yasukuni issue if his
approval ratings begin to slide. Chen said he is worried
that the history issue could become more important to PM Abe
as Japan's Upper House elections approach and added that he
hopes Beijing's "sober-minded" policy can continue.


4. (C) Nevertheless, Chen believes that the common interests
between China and Japan will allow the two sides to resolve
their differences. Chinese press coverage of Japan has
changed since PM Abe's visit, focusing on positive elements
of the bilateral relationship, Chen stated, pointing out that
the negative press is in Hong Kong and Taiwan publications.
Likewise, Japan's Keidanren business association has
publicized President Hu's positive remarks on Japan and this
is generating a good response among the Japanese population.
Chen noted that China reportedly ranked second only to North
Korea among the Japanese population as least trustworthy
nation.

DPRK Facing Domestic Challenges
--------------


5. (C) Regarding North Korea, the country is facing severe

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domestic challenges, stated Chen. The financial "sanctions"
the United States has enacted against financial institutions
involved with North Korea have been very effective, Chen
said. Pyongyang cannot use U.S. dollars to settle
transactions anywhere in the world and can only exchange
currency for Euros after the financial institution performs a
due diligence investigation. The DPRK, according to Chen, is
unable to deposit or withdraw money from international banks.
At the same time, Pyongyang is facing a significant
shortfall in grain supplies that is even affecting supplies
to the military. Chen said that the winter season will
further exacerbate the DPRK's domestic situation because
Pyongyang will face an oil shortage.

Nuclear Test Shows DPRK Hardliners are in the Ascendancy
-------------- --------------


6. (C) Chen noted that Kim Jong-Il held a conference that
included over 30 minister-level officials to discuss the
nuclear test. The results of the meeting were then discussed
at the deputy level. Kim held these meetings to unite
domestic elements in Pyongyang and to shore up his hardline
support in the face of possible challenges from "reformers."
These "reformers" were outside the country at the time of
this conference, at which the decision was made to conduct
the first nuclear test, Chen said. He argued that Kim
Jong-Il's ability to handle military pressure is much weaker
than his father's, saying that Kim "can't keep the military
in the box." Chen confirmed that Pyongyang only gave Beijing
a 20-minute warning before the DPRK conducted the nuclear
test and said that Kim apologized to State Councilor Tang
Jiaxuan for the short notice, but not for conducting the test
itself.

Kim's Strategy Based on Wrong Assessment
--------------


7. (C) Chen argues that Kim Jong-Il acquired nuclear weapons
and demonstrated them in a "show of muscle" to compel the
United States to return to talks. In Kim's mind, the nuclear
issue is now a foreign policy issue rather than a military
one. Kim is acting as if the DPRK is already a nuclear
power. During the Kim-Tang meeting, only three participants
from the Ministry of Foreign Affairs were present. Kim's
ultimate goal, according to Chen, is to achieve a
higher-level of economic development and security guarantees.
He believes that his "bullying" approach will further the
DPRK's economic interests. Chen firmly disagreed with Kim's
strategy, saying it is based on a fundamentally wrong
assessment of the situation. Chen is concerned that if Kim
views the situation as not progressing and hopeless, then he
is likely to conduct a second test. If that produces no
results, Kim will likely attempt to weaponize his nuclear
capacities. Chen stated that this must be avoided.

China's Three Operating Principles on DPRK
--------------


8. (C) Beijing has three operating principles it applies to
its negotiations on the DPRK nuclear issue. First, China
will never change its position that Beijing opposes a nuclear
Korean Peninsula. Second, China will not use ideology to
assess the situation and will put China's national interests
first. Third, China will avoid using methods that will cause
the worst possible situation. When pushed on "worst case"
scenarios, Chen envisioned a collapsed DPRK, two million
armed people on the loose and a flood of refugees into China.
Chen said Beijing views cooperation with the United States
on UNSC Resolution 1718 and renewing the Six-Party Talks as
positive.

Pyongyang Responded to Beijing's Pressure in the Past
-------------- --------------


9. (C) Chen stated that in the 1960's Pyongyang began making
radical statements and actions that Beijing opposed. Beijing
condemned the statements and cut off aid to the DPRK.
Pyongyang quickly "changed its attitude," Chen said. Now,
Beijing must handle opposition from China's Korean War
veterans towards taking a tougher stand on relations with the
DPRK. DAS Christensen responded that China needs to
establish a marketplace of ideas to allow the public to
accurately assess China's historical relations with the DPRK.
China's historical relationship with the DPRK is the source
of many of the challenges China is currently facing. For
example, Kim Il-sung tricked Mao Zedong into supporting the
DPRK's invasion of South Korea. Chen replied that this
version of history is discussed in some journals and
magazines with a limited circulation but is not openly
reported in academic journals that discuss "official
history." Chen added that Chinese academics are allowed to
discuss the issue among themselves but not with outsiders.

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Second Test Reaction?
--------------


10. (C) Chen said China's academic circles are heatedly
discussing the likelihood of a United States military attack
on DPRK nuclear facilities in the event of a second nuclear
test. DAS Christensen responded that the United States wants
a diplomatic resolution to the nuclear problem and Pyongyang
must seize the opportunity to achieve one. Chen said that
there are two schools of thought on how China should handle a
second test. First, many academics argue that Beijing should
end its relations with Pyongyang if the DPRK conducts a
second test, because China would stand to lose more than it
can gain from this relationship vis--vis the international
community. The second school of thought contends that China
needs to keep the DPRK as a strategic buffer zone and
therefore must maintain good relations with Pyongyang
regardless whether the DPRK tests a second nuclear weapon.
Chen added that some people at the Academy of Military
Science are the strongest advocate of this position.

Arm Sales to Taiwan
--------------

11. (C) Chen raised the Director of the Americn Institute
in Taiwan's October 26 press confrence comments on the
prospect of United States arm sales to Taiwan. DAS
Christensen responded that the comments accurately represent
United States Government policy and widely held U.S. views on
the importance of serious consideration in Taiwan of Taiwan's
long-term defense needs. U.S. concerns about the defense of
Taiwan are reflected in the Taiwan Relations Act and have
long been an important part of the United States' one-China
policy.


12. (U) DAS Christensen cleared this cable.
Randt