AFTER THE JAPAN ELECTIONS, PRC CONTACTS FORESEE

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 005140

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/07/2032
TAGS: PREL PGOV ENRG ECON SENV CH JA
SUBJECT: AFTER THE JAPAN ELECTIONS, PRC CONTACTS FORESEE
CONTINUED STABLE RELATIONS, FOR NOW

REF: A. BEIJING 1841

B. BEIJING 2481

C. BEIJING 2680

Classified By: Minister Counselor for Political Affairs
Aubrey Carlson. Reasons 1.4 (b/d).

Summary
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1. (C) Following the Liberal Democratic Party's (LDP) upper
house election defeat on July 29, most PRC officials and
analysts we spoke with predicted stability in the
Sino-Japanese relationship. The election results themselves
will not have much impact on the current positive trend in
bilateral ties, but the prospect of PM Abe (or his successor)
visiting the Yasukuni Shrine to placate his political base
remains a concern. Our contacts disagreed on the impact of a
hypothetical Democratic Party of Japan (DPJ) government,
balancing the reality of symbiotic economic relations against
a perceived greater DPJ support for Taiwan. PM Abe's planned
visit to China in the fall will strengthen the relationship.
Plans are underway to hold a high-level economic dialogue
before the end of 2007, with a date to be set after Abe's
Cabinet reshuffle. Embassy contacts are pessimistic on the
historical issue, anxious about Taiwan and uncertain about
progress on the East China Sea disputes. End Summary.

Reactions to the Election: Domestic Woes at Fault
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2. (C) Japanese domestic issues were solely responsible for
the LDP's upper house election defeat on July 29, Embassy
contacts told Poloff in a series of meetings on July 30 and
August 3. Public scandals and unpopular educational and
constitutional reform proposals accounted for the loss, said
MFA Japan Division Deputy Director Lu Guijun on August 3.
Foreign policy did not factor into the election, he added.
On the contrary, the strengthening Sino-Japanese relationship
is one of PM Abe's major political achievements, and "the 30
percent of the vote that his party did garner is largely due
to this improvement." Jin Linbo, a Japan scholar at the
MFA-affiliated think tank China Institute of International
Studies (CIIS),expressed similar sentiments on July 30. The
results were far worse than expected, he said, but the
trouncing was due to domestic issues rather than Abe's China
policy. Other scholarly contacts also dismissed the notion
that relations with China played any role in the election
outcome.

Little Impact on Sino-Japanese Ties for Now
--------------


3. (C) In the near term, most of our contacts predicted
stability in the relationship, envisioning a Cabinet
reshuffle rather than Abe's resignation. The MFA's Lu, who
was in Manila for the ARF earlier in the week, remained
especially sanguine about bilateral ties. The results will
not have much bearing on the basic stability and the improved
direction of the relationship, and "relations will continue
to develop," Lu said. The outcome will not influence
Sino-Japanese relations because neither side wants the
relationship to sour, Peking University (PKU) Professor Liang
Yunxiang affirmed on August 3. In fact, he said he believes
the election could actually benefit China if it results in
LDP restraint in the areas of constitutional reform and
overseas troop deployments.


4. (C) CIIS's Jin was more cautious, emphasizing that an
environment of "instability" now exists in which Abe may
increasingly bow to his domestic constituency to maintain
power. Abe's core supporters will encourage Yasukuni Shrine
visits, which would reverse the recent improvement in
bilateral ties. Barring that, Jin foresaw no change in
China's policy toward Japan. China will be careful not to be
seen as overtly supporting Abe, lest that complicate his
predicament. Major steps forward in the relationship are
unlikely in this unstable environment, Jin said.


5. (C) Contacts disagreed on the impact of a hypothetical DPJ
takeover of Japan's lower house. If the DPJ comes to power
in Tokyo, it will not have a major effect on the bilateral
relationship, because both the DPJ and LDP support the
moderating influence of the U.S.-Japan alliance, PKU's Liang
said. Liang also cited the "symbiotic" economic
relationship. Japan scholar Jin was more pessimistic,
warning that the DPJ's desire to differentiate itself from
the LDP and its support for Taiwan could cause major ripples
in Sino-Japanese ties. The DPJ will almost certainly be
harsher on China, he said.

Next Steps for Beijing and Tokyo

BEIJING 00005140 002 OF 002


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6. (C) PM Abe still plans to visit China later this year and
"take another step forward in consolidating the
relationship," declared the MFA's Lu. He emphasized the
importance of 2007 as the 35th anniversary of PRC-Japan
relations and told Poloff that there will be thousands of
"reciprocal tourist trips," cultural exchanges and even a
"Japanese Culture Day" in September. The Chinese Government
wants to help Abe's standing at home by inviting him to visit
China soon, Professor Liang asserted. Abe is a known
quantity to the Chinese leadership, and the possibility that
any successor would visit Yasukuni Shrine makes the current
PM all the more attractive, he said.


7. (C) Before the end of the year, China and Japan will
inaugurate their high-level economic exchange, confirmed MFA
Japan Division Deputy Director Lu. China wants to hold the
talks as soon as possible, but Japan has delayed setting a
date pending the upcoming Cabinet reorganization. The two
sides have not yet decided on concrete topics for discussion,
but likely subjects include macroeconomic policy, possible
joint ventures, energy conservation and environmental
protection, among others, Lu stated.

Old Problems Persist: History, Taiwan, East China Sea
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8. (C) Our academic and analyst contacts were pessimistic on
the WWII historical legacy issue. This issue is not solvable
in the near term, Japan scholar Jin stated. Anger and
resentment toward Japan is real and not drummed up by the
Chinese Government for political gains, he said. Overcoming
this obstacle will not be easy. The China-Japan Joint
History Dialogue is not likely to make substantive progress,
because neither side has discussed the issues at the heart of
the dispute, PKU's Liang commented. The Chinese leadership
is concerned about Japan increasingly looking outward
militarily, Li Dunqiu of the State Council Development
Research Center (SCDRC) said on August 3. Japan is "selfish"
and "very dangerous," and its "expansionist mindset" has not
changed, he told Poloff. The Japanese strategy is to wait
until the time is right to expand its influence outward. Li,
who makes policy recommendations to China's State Council,
confided that "many people on the State Council feel this way
in their heart, but would not say it to foreigners."


9. (C) The Taiwan issue, itself part of the a historical
legacy of Sino-Japanese ties, remains a wild card in the
relationship, according to our contacts. There have been
slight shifts in Japanese policy to allow more semi-official
and official visits of Taiwan leaders to Japan, noted Lu of
the MFA. Lu was confident of future stability between
Beijing and Tokyo, but he saw Taiwan as the greatest
long-term threat to that stability. Li of the SCDRC took a
harder line: Japan is supporting Taiwan independence "behind
our back."


10. (C) Embassy contacts noted a lack of substantive progress
on the East China Sea issue. The ninth round of energy
exploration talks concluded in June without resolution, and
another round has not been scheduled. China cannot yet see
the way forward on the East China Sea territorial disputes
and needs to do "more analysis," MFA's Lu admitted to Poloff.
During Premier Wen Jiabao's April visit to Tokyo, he and PM
Abe agreed to develop a plan for joint exploration by the
fall. Both sides will be under increased pressure to reach a
solution, possibly even before Abe visits China. The
territorial issues are more serious now than they were in the
1980s and 1990s, said Li of SCDRC. Nonetheless, China wants
to avoid conflict in that area, declared CIIS's Jin. The
Chinese Government's recent strategy has been to "economize"
the sovereignty issue, said Professor Liang, supporting joint
energy exploration without overtly discussing territorial
claims.
RANDT