DAS CHRISTENSEN'S SHANGHAI VISIT

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 006494

SIPDIS

SIPDIS

STATE FOR EAP/CM
NSC FOR WILDER

E.O. 12958: DECL: 10/13/2016
TAGS: PREL PGOV PHUM CH ECON EFIN
SUBJECT: DAS CHRISTENSEN'S SHANGHAI VISIT

REF: SHANGHAI 6493

CLASSIFIED BY: Simon Schuchat, Deputy Principle Officer, , US
Consulate Shanghai.
REASON: 1.4 (b),(d)




1. (C) Summary. During DAS Christensen's September 12-14 visit
to Shanghai, he participated in a Fudan University roundtable,
and met with Shanghai foreign policy academics, influential
Shanghainese, and representatives of AmCham Shanghai. His lunch
with academics was reported in reftel A. During the Fudan
roundtable, students and faculty discussed Taiwan, North Korea,
and democracy, and urged the USG to be more proactive in
reaching out to the Chinese people. Local Shanghainese
discussed gay rights, rising economic nationalism in China and
the Sino-Japan relationship. AmCham members discussed changing
trends in Shanghai's business climate and also expressed
concerns about growing economic nationalism. End Summary.

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Fudan Roundtable
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2. (SBU) During a lively roundtable with Fudan University's
Center for American Studies (CAS) students and faculty, DAS
Christensen engaged participants on a wide range of issues
including Taiwan, Japan, North Korea, democracy, and U.S. public
diplomacy efforts. In response to a question about former
Deputy Secretary Zoellick's "responsible stakeholder" concept,
DAS Christensen said the USG was using the concept to encourage
China to take a more active role in international institutions.
He added that the United States did not fear China's growing
influence but wanted China to use its power constructively to
help solve global issues.



3. (SBU) Students and scholars were interested in the U.S.
reaction to recent protests in Taiwan that called for President
Chen Shui-bian to step down. DAS Christensen said the USG did
not have a position on Taiwan succession and said our main
concern was that the political process was non-violent and in
accordance with the Taiwan Constitution. He added that the
United States supports Taiwan's Democracy and that the "one
China policy" requires that the two sides of the Taiwan Strait
must find peaceful means to resolve cross-strait issues. On
Japan, DAS Christensen noted that focusing too much on emotional
historical issues had negatively impacted the Sino-Japanese
relationship. Both countries needed to find a way to improve
their relationship.



4. (C) DAS Christensen said that North Korea had essentially
backed-out of the agreement reached during the last round of the
Six-Party talks and was using the sanctions issue as an excuse.
The United States was willing to help North Korea to implement
economic reforms but it must first give up its nuclear weapons
program. China should play a leading role in pushing North
Korea on this issue. CAS Director Shen Dingli (protect)
countered that the United States was not giving North Korea an
opportunity to join the talks and warned that North Korea would
be more dangerous if it decided against participating in the
Six-Party process.



5. (C) CAS Deputy Director Sun Zhe (protect) said some Chinese
believed USG efforts to promote democracy were an attempt to
weaken the country. He claimed China had not rejected democracy
but rather had a different understanding of how to implement it,
and then suggested that the USG provide China a "to-do" list of
steps to take. DAS Christensen said such a list would be too
complex, and stressed that the United States promoted democracy
because it led to stability. Also, people on the mainland
should not be too harsh in criticizing Taiwan's democracy.
While Taiwan's young democracy had many problems, it was still
basically healthy and provided an example for the mainland of
how a democracy can emerge from a one-Party State within a
Chinese cultural context.



6. (SBU) The CAS students stressed the need for more efforts
to improve the U.S. image in China. According to one student,
people living in poorer areas of China had a more negative
impression of the United States then those in urban areas. DAS

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Christensen said that the USG, through its transformational
diplomacy initiative, would become more proactive in reaching
out to Chinese people. Another student urged more
people-to-people programs, noting that she had just returned
from trip to the United States in which she learned more about
the country than in all of her coursework. DAS Christensen
encouraged the students to be proactive in correcting
misunderstandings about the United States and urged them to
consider government service. He said it was important for
people to engage with their government and find ways to shape
policies.


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Gay Rights, Economic-Nationalism and Sino-Japan Relations
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7. (C) At a dinner with a small group of Shanghai "movers and
shakers," DAS Christensen engaged on a wide range of current
topics. Gay rights lawyer and activist Zhou Dan (protect) noted
China's recently enacted legislation improved protection of
rights of people with HIV/AIDS in China. Zhou said there was
still no legislation protecting gay rights, but acknowledged a
general positive trend in China since 2001 when homosexuality
was classified as a psychological disorder. Many of his clients
were couples wanting to divorce because one partner was gay.



8. (C) The Carlyle Group Chief Representative Luo Yi (protect)
saw both nationalism and protectionism as the motivating factors
underlying the new M&A rules. Both he and Eric Li (protect),
the Manager of Chengwei LLC Ventures, a small private equity
firm which handled China investments for several U.S. colleges,
viewed the rules as political posturing leading up to the next
Party Congress and didn't expect any significant change until
after November 2007. Meanwhile, Carlyle would need to
restructure some of its deals to work around the regulations.
Luo said the flare-up over Carlyle's efforts to acquire a
controlling stake in Xugong Manufacturing Group (Ref B) was
unfortunately the most publicized example of this wave of
economic nationalism, and that "he could write a fascinating
book" discussing its travails. Luo opined that the USG bore
some of the blame for the new economic nationalism because of
the failed CNOOC bid. Acknowledging that the deal was not
blocked by the Administration, he said that the common Chinese
person did not differentiate between Congress and the rest of
the U.S. Government. He quipped that China unfortunately had
"learned" from the United States to use "national security" as a
rationale to protect domestic business.



9. (C) Turning to international issues, the group discussed
anti-Japanese sentiments among Chinese. Chief Editor of China
Daily's East China edition Chen Weihua (protect) noted with
bemusement that it was not his parents, who directly experienced
the war with Japan, but his daughter who held the strongest
anti-Japanese attitudes and who had participated in
anti-Japanese protests. Li thought it was clever of China to
take the moral high ground with Japan. Japan would isolate
itself in Asia if it did not face up to its history, but that
was not necessarily bad for China.


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AmCham Breakfast
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10. (SBU) During a breakfast meeting hosted by AmCham
Shanghai, DAS Christensen discussed bilateral relations and
queried AmCham members on the local business environment.
AmCham Chairman Jeff Bernstein first briefed the DAS on three
main trends in Shanghai's business environment: Shanghai's
development into a service economy, the emergence of an R&D
sector in Shanghai (with its accompanying technology transfer
and IPR issues),and the movement of manufacturing away from
Shanghai. Overall, AmCham members rated Shanghai as one of the
best places to do business in China, but acknowledged there were
still transparency issues that made doing business
unpredictable. The group raised the issue of China's
"push-back" on FDI, reflected in China's new M&A regulations.
They discussed the failed CNOOC bid as well as proposed U.S.
rules on export controls as factors fueling China's growing
protectionism.


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11. (U) DAS Christensen has cleared this cable.
JARRETT