CHINESE LESS NEGATIVE THAN JAPANESE ON OUTCOME OF

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 004560

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/11/2026
TAGS: PREL ENRG CH JA
SUBJECT: CHINESE LESS NEGATIVE THAN JAPANESE ON OUTCOME OF
EAST CHINA SEA TALKS

REF: TOKYO 1295 (NOTAL)

Classified By: Political Minister Counselor Daniel Shields. Reasons 1.
4 (b) and (d).


1. (C) Summary: In contrast to the negative Japanese
assessment of the March 6-7 Japan-China East China Sea
Talk reported reftel, MFA Japan Division Deputy
Director Xue Jian claimed some progress had been made.
China and Japan reached consensus on the principle of
joint development, although both sides recognize the
difficulty of agreeing on a specific plan.
Complaining about media reports on the lack of
progress and about strongly negative public statements
by senior officials from both sides, Xue said China
wants the dispute to be resolved quickly. If Japan is
willing to share some of the costs incurred to date by
China in developing the Chunxiao fields, there is room
for further discussion. Japanese Embassy Political
Counselor Suzuki said the Japanese were furious
because the PRC counterproposal for joint development
did not cover the disputed gas and oil fields and
because the proposed southern zone was entirely in
waters surrounding the Senkaku/Diaoyu Islands. He is
intrigued, however, by the northern joint development
zone proposed by Beijing, as a very small part may
extend into the PRC side of the median-line claimed by
Japan. If Japanese experts confirm this is the case,
it might represent an indication of PRC flexibility,
Suzuki said. End Summary.


Fourth Round of Talks
--------------


2. (C) On March 10 MFA Japan Division Deputy Director
Xue Jian briefed poloff on the March 6-7 talks
(reftel) on East China Sea issues between MFA Director
General for Asian Affairs Hu Zhengyao and MOFA
Director General for Asian and Oceanian Affairs
Kenichiro Sasae. Representatives from the PRC
National Development and Reform Commission (NDRC) and
Japan's Natural Resource and Energy Agency, as well as
MFA and MOFA treaty and law officials, participated in
this fourth round of talks. The two sides agreed to
meet again as soon as possible, with the exact date to
be set through diplomatic channels. Xue said the MFA
is briefing the USG, and no other third country
governments, on the talks because the PRC recognizes
the keen U.S. interest in China-Japan relations.

Some Progress Made
--------------


3. (C) In contrast to the negative Japanese
assessment of the talks reported reftel, Xue claimed
some progress had been made during the talks. China
and Japan had reached consensus on the principle of
joint development, although both sides recognize the
difficulty of agreeing on a specific plan. It will
take time to solve the dispute, made more complicated
by disagreements over the Senkaku/Diaoyu Islands and
the EEZ demarcation line. Xue confirmed reports that
China made a counterproposal to Japan's previous offer
of jointly developing the gas fields largely on the
PRC side of the Japan-proposed median line of the
disputed exclusive economic zone (EEZ). Instead,
China offered to jointly develop fields around the
disputed Senkaku/Diaoyu Islands and fields in the
northern part of the East China Sea. Xue said China
would maintain its earnest and constructive attitude
toward the talks.

Negative Press, Comments by Senior Officials
--------------


4. (C) Complaining about media reports on the lack of
progress and about strongly negative public statements
by senior officials from both sides, Xue said the
progress was real and China wants the dispute to be
resolved quickly. According to Xue, both sides agreed
at the end ofthe talks that it would be beneficial if
information on the Chinese proposal stayed out of the
press. Blaming the Japanese side for leaks and
pointing out that China had kept the details of the
previously proposed Japanese plan out of the press,
Xue said the media reports left both sides little
choice but to take strong public stances and reject
the other's proposal, thus making it appear that the
had talks failed.

BEIJING 00004560 002 OF 002



Sharing Costs of Chunxiao Development?
--------------


5. (C) Responding to poloff's question about why
China's offer did not cover the Chunxiao gas fields at
the center of the dispute to date, Xue said China has
been developing those fields for thirty years and it
is impossible to give in to Japanese demands to halt
operations. Expressing annoyance at Japan's "sudden"
complaints starting two years ago, Xue said China
would incur significant costs to stop and then restart
operations. If Japan is willing to share some of the
start-up, operational and development costs incurred
to date, then there is room for further discussion.
Reviewing Japan's request for subsoil data on the gas
fields, Xue said the fields are four to five
kilometers from the Japan-proposed demarcation line
and that Chinese activities, which only cover a one-
kilometer circle in the large fields, are not
affecting undersea resources in the Japan-claimed
area. Xue claimed Japanese experts agreed with this
assessment and noted that the Chinese side became
angry during the talks when Japan continued to push
for the data because "there might be an effect 100
years from now."

Demarcation Line a Complicating Factor
--------------


6. (C) Xue said China would never accept the median
line established by Japan's domestic legislative body
to demarcate the EEZ. Japan complicates the talks on
joint development by EEZ-related issues in their
proposals. Although treaty and law experts from both
sides have joined the talks, Xue said neither side has
raised the demarcation line as a specific issue during
the talks.

Japanese Embassy: "Tough" Talks, Possible Flexibility
-------------- --------------


7. (C) Japanese Embassy Political Counselor Kazuhiro
Suzuki, echoing the comments of Japanese officials
reported reftel, characterized the talks as "very
tough," saying the Japanese had been disappointed by
the PRC proposal. During a March 9 discussion, he
said that the METI participants were particularly
upset because Trade Minister Nikai had left Beijing
after his recent visit believing that the PRC had
signaled a willingness to take a softer position on
the East China Sea. Suzuki noted that the MOFA
participants were less surprised by the PRC position,
a reversal from earlier talks where the METI
representatives had far lower expectations than their
MOFA colleagues. The Japanese were furious because
the PRC counterproposal for joint development did not
cover the disputed gas and oil fields and because the
proposed southern zone was entirely in waters
surrounding the Senkaku/Diaoyu Islands. The PRC is
well aware that this is completely unacceptable to
Japan, according to Suzuki.


8. (C) Suzuki commented that he is intrigued by the
northern joint development zone proposed by Beijing,
as a very small part may extend into the PRC side of
the median-line claimed by Japan as the demarcation of
the EEZ. Noting that Japanese experts are analyzing
the PRC proposal to determine the exact location of
the northern zone with respect to the median line,
Suzuki commented that, if true, this might represent
an indication of PRC flexibility. He added that the
Japanese proposal was an opening bid that Tokyo
recognizes is unacceptable to the PRC because it only
covers four fields that China has already explored and
taken steps to develop. Unfortunately, the PRC
"overreach" on the southern zone obscured the fact
that Beijing has accepted the idea of joint
development, according to Suzuki, who said that this
may offer the opportunity for both sides to make
compromise proposals in future discussions.
RANDT