A/S HILL-VFM ZHANG BILATERAL MEETING, OCTOBER 31,

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 006939

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/01/2032
TAGS: PREL PARM ETRD CVIS MASS CH TW KN XV
SUBJECT: A/S HILL-VFM ZHANG BILATERAL MEETING, OCTOBER 31,
2007

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Classified By: DCM Dan Piccuta. Reasons 1.4 (b/d).

Summary
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1. (C) In an October 31 meeting with EAP Assistant Secretary
Christopher R. Hill and the Ambassador, Vice Foreign Minister
Zhang Yesui urged the United States to be cautious on the
Taiwan issue during this sensitive period, expressed
opposition to "protectionist" U.S. Congressional resolutions
and called for the United States to begin issuing visas at
the approved Consulate General in Wuhan as soon as possible.
China hopes the United States will give positive
consideration to China's request to open consulates in
Atlanta and Boston, VFM Zhang said. A/S Hill expressed hope
there would be "major progress" on the Six-Party Talks before
President Bush's visit in summer 2008 and said the United
States hopes to see a Six-Party Ministerial meeting in
Beijing in December. A/S Hill passed to Zhang a letter from
President Bush to President Hu Jintao. A/S Hill and VFM
Zhang exchanged views on the Pacific Islands Forum that both
attended in Tonga October 16-17. End Summary.

U.S. Hopes for Six-Party Ministerial, Major Progress
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2. (C) Meeting with Vice Foreign Minister Zhang Yesui on
October 31, Assistant Secretary Christopher R. Hill,
accompanied by the Ambassador, passed VFM Zhang a letter from
President Bush to President Hu Jintao encouraging U.S.-China
cooperation in the years ahead. A/S Hill said he is in
Beijing to hold consultations on the Six-Party process with
the goal of discussing scope and timing for a ministerial
meeting. A/S Hill added that he hopes to make a great deal
of progress on Six-Party Talks issues before the end of the
year, by which time he hopes all sides would be "very close"
to a final agreement whereby North Korea would abandon its
nuclear programs. The Six-Party talks are a strong element
in the relationship. A/S Hill said he hopes that by the time
President Bush visits China in summer 2008 there will be
"major progress" and we will be able to say that we have
denuclearized the Korean Peninsula.

A Busy Season in Bilateral Relations
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3. (C) VFM Zhang thanked A/S Hill for the letter from
President Bush and promised to pass it to President Hu
immediately. The bilateral relationship is at a critical
moment, and there is a lot to do, Zhang said, reciting a list
of upcoming bilateral events. The third Strategic Economic
Dialogue (SED) will be held in December, preceded by the 18th
Joint Committee on Commerce and Trade and followed by the
fifth round of Strategic Dialogue in January. China also
looks forward to the visits of Defense Secretary Gates
(November 4-6) and, if arrangements for a Six-Party
Ministerial can be worked out for December, of Secretary Rice.

Taiwan
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4. (C) VFM Zhang remarked that the two sides need to work out
differences on some issues. Taiwan is an area of concern, he
said. China hopes that "at this sensitive time," the United
States will not hold official exchanges with Taiwan or
announce any more sales of advanced weapons, which would send
a "seriously wrong signal" to (Taiwan President) Chen
Shui-bian, Zhang said.

Protectionist Congressional Resolutions Opposed
-------------- --


5. (C) VFM Zhang expressed concern about what he called
protectionist aspects of U.S. Congressional resolutions,
which appear to be an effort to politicize trade issues.
Since the beginning of the year there have been over 50
Congressional resolutions targeted at China, he said, and
"many of them have the tone of protectionism." In
particular, the Baucus resolution dealing with anti-dumping
and anti-subsidies entails punitive measures. If such
penalties are imposed on China, it will damage bilateral

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business ties, VFM Zhang warned. China has taken note of
U.S. Government efforts to oppose such measures and asks the
USG to continue to work with Congress to ensure that such
protectionist resolutions do not pass.

Wuhan Approved, China Wants Atlanta, Boston
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6. (C) Zhang informed A/S Hill of the approval for the
opening of the U.S. Consulate General in Wuhan. The new
consular district, which will include Hubei, Hunan, Henan and
Jiangxi Provinces, are in central China and have growing
economies and increasing links to the United States. China
hopes that CG Wuhan will be able to issue visas as soon as
possible. China also hopes the United States will give
positive consideration to China's request to open consulates
in Atlanta and Boston.


7. (C) The United States is pleased with the approval to move
ahead with opening the Consulate in Wuhan, A/S Hill remarked.
The first order of business will be to open the Consulate
General, assign staff, begin working on business outreach and
then "take it from there." He noted the bilateral
relationship is growing on all fronts and mentioned the
arrival of baseball legend Cal Ripken, Jr., who is currently
conducting baseball clinics around China.

Pacific Islands Issues
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8. (C) A/S Hill and VFM Zhang exchanged views on the Pacific
Islands Forum that both attended in Tonga October 16-17.
Both noted the level of Chinese investment there and the
destruction wrought by recent anti-government groups that
left much of the downtown area in burned ruins. VFM Zhang
said that China had approved a request from Tonga for
concessionary loans to rebuild the central business district.
On issues like the Pacific Islands States, A/S Hill said,
the United States and China should coordinate particularly on
economic assistance and disaster relief. "Working together,
the United States and China can move mountains," Hill
remarked.
Randt