SENATOR LIEBERMAN MEETING WITH VFM ZHANG YESUI ON

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 005307

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/13/2017
TAGS: PREL PGOV PMUC PTER PHUM IN IR TW CH
SUBJECT: SENATOR LIEBERMAN MEETING WITH VFM ZHANG YESUI ON
IRAN, TAIWAN, TRADE ISSUES, INDIA

Classified By: Deputy Political Section Chief Ben Moeling. Reasons 1.4
(b/d).

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


1. (C) Senator Joseph Lieberman (ID-CT) urged Vice
Foreign Minister Zhang Yesui to "do everything
possible" to stop the Iranian supply of weapons,
particularly Chinese-made weapons, to insurgents in
Iraq and Afghanistan. Senator Lieberman advised Zhang
to take Congressional bills on trade with China very
seriously. VFM Zhang said Iran is ready to establish
diplomatic relations with the United States and stated
that Renminbi (RMB) appreciation will not solve U.S.-
China trade differences. VFM Zhang reiterated China's
concern over Taiwan's application for UN membership.
He noted that the Mainland prefers the KMT's Ma Ying-
jeou to Frank Hsieh of the DPP in Taiwan's March 2008
Presidential election, but conceded that Hsieh's
support for Taiwan independence is not as firm or
direct as Chen Shui-bian's. End Summary.

Iran
--------------


2. (C) Senator Lieberman discussed the Iran threat,
the Taiwan Presidential race, United States-China
trade issues, Sino-Indian relations and other topics
related to energy and environment with VFM Zhang Yesui
on August 8. Senator Lieberman pressed VFM Zhang to
"do everything possible" to stop the Iranian supply of
weapons, particularly Chinese-made weapons, to
insurgents in Iraq and Afghanistan. Senator Lieberman
emphasized that this issue is as important to the
United States as the Taiwan issue is to China. VFM
Zhang said he understands the Senator's concern and
assured the Senator that China has stringent
regulations on the sale of weapons to other countries
and that exports of conventional weapons are "quite
small."


3. (C) VFM Zhang stated that "dialogue is better than
not talking at all," and that "according to what (the
MFA) has learned," Iran is ready to establish
diplomatic relations with the United States. Senator
Lieberman said the United States also desires dialogue
but noted that discussion must be followed by action.
Senator Lieberman stressed that the United States does
not want to take military action but warned that
"unless they (Iran) alter their behavior, it will
happen."

Taiwan
--------------


4. (C) VFM Zhang reiterated MFA talking points on
Taiwan, stating that this year and next constitute a
"period of high risk" in cross-Strait relations. VFM
Zhang described Taiwan's recent application for UN
membership as an importan step toward de jure
independence and changing the status quo, which could
have a "serious impact" on the peace and stability of
the Strait and region. Senator Lieberman assured
Zhang that the majority of Congress supports our one-
China policy, but suggested that the United States'
longstanding relationship with Taiwan creates
"awkwardness" within the policy that can be solved
"through time."


5. (C) VFM Zhang declared that the Mainland prefers
the KMT's Ma Ying-jeou to Frank Hsieh of the DPP in
Taiwan's 2008 Presidential election, but conceded that
Hsieh's support for Taiwan independence is not as firm
or direct as Chen Shui-bian's.

VFM Zhang Calls for "Economic Restructuring"
--------------


6. (C) VFM Zhang called attention to a number of
"protectionist" bills in Congress and noted that the
roughly ten percent appreciation of the RMB since 2005
has had little effect on the U.S.-China trade deficit.
VFM Zhang said there needs to be "economic
restructuring" to solve U.S.-China trade problems.
Emphasizing the importance of the U.S.-China trade
relationship and expressing his general support for
free trade, Senator Lieberman advised Zhang to take
the Congressional bills on U.S.-China trade seriously

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and urged China to take immediate steps, such as
allowing RMB appreciation, to "reassure the American
people" that China is working to improve the
situation. China should also price capital at a
mature rate and continue to expand U.S. companies'
access to the Chinese market. He stressed that
despite the strong, steady state of the U.S. economy,
the American public is anxious about the economic
future.

Energy and Environment
--------------


7. (SBU) Both sides discussed the importance of
cooperating on issues related to energy and the
environment, particularly in developing clean,
efficient sources of energy. VFM Zhang remarked that
94 percent of China's current energy consumption is
supplied domestically and that China intends to
increase nuclear energy from 2 to 4 percent of
domestic energy consumption. He lamented that China
continues to waste and pollute its water supply,
despite having one of the lowest per capita water
resources rates in the world.

China Fears "Double or Triple Standard" in Nuke Deal
-------------- --------------


8. (C) VFM Zhang said the recent U.S.-India "123
Agreement" on civilian nuclear energy use is a
bilateral issue between the United States and India.
He added that China hopes the Nuclear Non-
Proliferation Treaty will be upheld and a "double or
triple standard" will not arise out of the deal. VFM
Zhang described India-China relations as "very good."
The border dispute is the main problem between the
sides, he said, but there has been "recent progress."

Bilateral Cooperation
--------------


9. (C) Senator Lieberman thanked VFM Zhang for China's
contributions to progress in the Six-Party Talks and
the Darfur issue. Both sides were upbeat about
prospects for cooperation in the bilateral
relationship. Senator Lieberman voiced his hope that
future "differences of opinion" between the United
States and China will be merely "differences between
friends."


10. (U) Senator Lieberman's delegation cleared this
cable.
RANDT