AMBASSADOR RAISES HUMAN RIGHTS, STABILITY WITH

C O N F I D E N T I A L BEIJING 004758


E.O. 12958: DECL: 03/10/2016
TAGS: PGOV PHUM ECON SOCI CH
SUBJECT: AMBASSADOR RAISES HUMAN RIGHTS, STABILITY WITH
LIAONING PARTY SECRETARY LI KEQIANG

Classified By: Ambassador Clark T. Randt, Jr. Reasons
1.4 (b/d).

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


1. (C) During a March 9 dinner hosted by the
Ambassador, Liaoning Party Secretary and potential
"Fifth Generation" leader Li Keqiang candidly
discussed the economic development and stability
challenges he faces. Liaoning has the largest number
of urban poor in China, a substantial number of rural
poor and more than its share of unrest and protest
incidents. Revitalization of Liaoning's industrial
base continues to be Li's top priority with state-
owned enterprise reform the most important task.
Liaoning hopes to land a major investment by Intel
aimed at China's domestic market and to further
develop its neglected coastal areas. Li expressed
optimism about U.S.-China relations but said that
Taiwan remains the biggest obstacle and warned that
Chen Shui-bian is pushing Taiwan toward independence.
In response to the Ambassador's query, Li acknowledged
that the Chinese legal system lacks transparency but
maintained that the Party does not formally approve or
review court decisions. Li did not directly address
the Ambassador's question about labor activists Xiao
Yunliang and Yao Fuxin but agreed to allow Consulate
personnel to observe some court proceedings in
Liaoning. In response to the Ambassador's question
about Li's January meeting with DPRK leader Kim Jong-
Il at the border, Li said the encounter was brief and
formal. End Summary.

Liaoning's Development Challenges
--------------


2. (C) Liaoning Party Secretary and potential "Fifth
Generation" leader Li Keqiang candidly discussed the
development and stability challenges he faces with the
Ambassador on March 10. Li was in Beijing to attend
China's annual National People's Congress (NPC)
session and said that Liaoning's priority at the
session continues to be the revitalization of
Liaoning's industrial base. The 11th Five Year Plan
being discussed at the NPC includes several major
projects for Liaoning, including petrochemical, steel
and nuclear power plants. The most important issue is
continued state-owned enterprise (SOE) reform, Li
stated. Sixty percent of Liaoning's SOEs have already
gone through the reform process and last year Liaoning
eliminated foreign ownership ceilings in order to spur
foreign investment.


3. (C) Foreign direct investment in Liaoning
increased 172 percent in 2005, but this figureis
calculate from a very low base, Li noted. Li said
U.S. investment in Liaoning is signiicant and noted
that Intel is considering building a wholly-owned chip
plant in Dalian city for production aimed at the
Chinese domestic market. If that deal is concluded
successfully, the United States will lead foreign
investment in Liaoning. In response to Li's concerns
about potential restrictions on high-tech exports from
the United States, the Ambassador noted that export
license requests for China that are denied in terms of
value equal less than one percent of our bilateral
deficit.


4. (C) Li described plans to develop Liaoning's 2,200
kilometer long coastline, asserting that no other
Chinese province can boast of comparable development
potential for coastal areas. In tandem with the
reform of SOEs, attracting new ventures to the coastal
development zone will be a major task for the future.
In response to the Ambassador's question about the
importance of the leadership's New Socialist
Countryside initiative, Li was fairly dismissive.
Liaoning has China's highest number of urban poor with
a 56 percent urbanization rate and has a significant
number of rural poor. Building the New Socialist
Countryside is a long-term task that goes along with
the process of China's modernization. This will take
50 years, Li said, noting that China's preoccupation
with its own development means that China will not
pose a threat to other countries.

U.S.-China Relations Solid, But Taiwan
--------------


5. (C) Li expressed optimism about U.S.-China
relations, noting that areas of common interest far
outweigh differences. The Ambassador noted that
President Bush agrees with Li's statement and is
pursuing constructive bilateral ties.


6. (C) Li noted that Taiwan remains the biggest
obstacle to improved relations. The United States has
reiterated its one-China policy, Li noted and said
that the United States and China have common interests
in preserving stability in the Taiwan Strait. Li
warned that Chen Shui-bian is taking a dangerous path,
wants to change the status quo and is pushing Taiwan
toward independence. Li asserted that Chen has
incorrectly assessed the current situation. With
regard to Chen's recent decision to cease functions of
the National Unification Council, Li asserted that the
last "no" is now gone. Li maintained that China is
prepared to discuss anything with Taiwan, provided the
context is under the One-China Principle. Li said
China has been sincere in its quest to maintain peace
in the Strait, asserting that any non-peaceful
approach would only be targeted at Taiwan's
secessionist forces.

WWII, History and Japan
--------------


7. (C) The Ambassador stated that evidence from KGB
archives has emerged proving that allegations of U.S.
use of chemical weapons during the Korean War were
products of a Soviet disinformation campaign. He
asked Li when the Korean War history museum in Dandong
would remove the display making this false allegation.
Li said he was aware of the Ambassador's concerns but
believes this issue should be left to historians and
that bilateral relations should look forward.


8. (C) The Ambassador noted that this was not China's
position with respect to Japan. In response, Li
reviewed the Japanese record of atrocities in China
over the past 100 years, noting that the cruelty of
the Japanese record is very difficult for Chinese
people to accept. This makes the situation with Japan
unique, Li argued. In contrast, Li said, the Chinese
people will never forget the assistance rendered by
the United States during World War II. Without the
U.S.-supported supply lines, China's rear defenses
would have collapsed.

Stability
--------------


9. (C) Citing the increasing number of protest
incidents in China, the Ambassador asked about
stability in Liaoning. Liaoning has more protest
incidents than other provinces, Li replied, the vast
majority of which involve money. People protest for
heating subsidies, increased retirement benefits and
other compensation issues. A small percentage of
incidents are linked to problems with the justice
system, Li acknowledged, but officials as well as
common people have many complaints about the courts.
Every year the approval votes at the NPC for the
Supreme People's Court and Supreme People's
Procuratorate are the lowest, Li remarked.

Transparency Lacking in Justice System
--------------


10. (C) In response to the Ambassador's comment about
the lack of judicial independence in China's legal
system, Li acknowledged that this is a problem. He
maintained, however, that the Party does not formally
approve or review court decisions and said that, if
officials are found to have interfered in court
decisions, they will be sanctioned. Ten years ago
court decisions would have been openly discussed in
Party meetings, Li stated, but now this is not the
case. Trial committees at the provincial level have
10-20 judges, who must sign their names to decision
votes. These decisions may not be altered. Li said
he couldn't rule out that judges might be approached
informally before the decision, but this is not
permitted and can lead to reprimand or worse for the
judge if discovered.


11. (C) Li said that outsiders had paid relatively
little attention to the sweeping powers of judges in
China to render verdicts and hand down sentences.
Judges' powers are vast and must be effectively
supervised, Li said. Any power without supervision
gives rise to corruption, he observed.

Human Rights Cases
--------------


12. (C) The Ambassador noted that Article 306 of the
criminal code, which makes defense lawyers vulnerable
to prosecution for misleading the court, has a
chilling effect on the work of defense attorneys. Li
claimed to be unfamiliar with the article, but said he
had heard of cases in which lawyers who committed or
assisted in perjury were prosecuted. Li did not
directly address the Ambassador's question about labor
activists Xiao Yunliang and Yao Fuxin but agreed that
judicial transparency is a problem. In response to CG
Kornbluth's request, Li said he would permit Consulate
personnel to observe some court proceedings in
Liaoning.

Encounter with Kim Jong-Il
--------------


13. (C) Asked by the Ambassador about Li's January
meeting with Kim Jong-il at the DPRK border, Li
responded that he had only met Kim briefly at the
railroad station in Dandong. Li said he only shook
hands and exchanged ceremonial greetings with Kim for
a few minutes before Kim's train moved on.


RANDT