U/S JEFFERY DISCUSSES NEXT ROUND OF STATE-NDRC DIALOGUE

UNCLAS BEIJING 007486 SIPDIS SENSITIVE SIPDIS STATE FOR EB U/S JEFFERY STATE FOR EAP DAS CHRISTENSEN TREASURY FOR OASIA/CUSHMAN USDA/FAS/ITP FOR SHEPPARD E.O. 12958: N/A TAGS: ECON EINV ENRG PGOV SOCI CH SUBJECT: U/S JEFFERY DISCUSSES NEXT ROUND OF STATE-NDRC DIALOGUE WITH NDRC VICE CHAIRMAN ZHANG XIAOQIANG SUMMARY -------------- ¶1. (SBU) Under Secretary of State for Economic, Energy, and Agricultural Affairs Reuben Jeffery and the Vice Chairman of China's National Development Reform Commission (NDRC),Zhang Xiaoqiang, met on the margins of the Strategic Economic Dialogue (SED) on December 12 to discuss the upcoming 7th Round of the State-NDRC Dialogue. On Dialogue topics, both sides agreed to focus on: (1) the bilateral investment environment, (2) macroeconomic issues of concern and (3) energy and the environment in the next round, which is tentatively scheduled for late February. End Summary. STATE-NDRC DIALOGUE AN IMPORTANT MECHANISM -------------- ¶2. (SBU) Vice Chairman Zhang stated that the State-NDRC Dialogue has been an important mechanism for discussing economic reform issues since 2003. Dialogue toics have covered a wide range of issues, he sid, including economic reform, industrial structural reforms, energy policy, agricultural development, information technology, and economic development. The NDRC is very interested in maintaining the dialogue mechanism, and Zhang said the NDRC is looking forward to the 7th Round of the State-NDRC Dialogue in the United States in early 2008. U/S Jeffery agreed that the State-NDRC Dialogue has been very constructive and is especially useful because it is flexible and complements existing dialogues. FOCUSING ON THE INVESTMENT ENVIRONMENT -------------- ¶3. (SBU) Zhang welcomed U/S Jeffery's proposal to discuss investment issues during the next round of the State-NDRC Dialogue. The investment environment is very important for economic development right now, U/S Jeffery said, and the State-NDRC Dialogue presents a special opportunity to talk about investment rules in an open and direct way. Both sides need to clearly outline the facts and realities of their respective investment environments and separate those facts from rhetoric that is protectionist and nationalistic, U/S Jeffery said. Vice Chairman Zhang agreed that investment is an important issue of mutual interest, and the State-NDRC Dialogue would be a good venue for discussing in general terms how to move forward in several areas. (Note: On December 13, Vice Chairman Zhang shared some of his concerns about improving the bilateral investment environment during Session VI of the SED. Septel to follow. End Note.) UNDERSTANDING THE MACROECONOMIC SITUATION -------------- ¶4. (SBU) Vice Chairman Zhang and U/S Jeffery also agreed that the 7th Round of the State-NDRC Dialogue should continue to focus attention on macroeconomic concerns, particularly during a period when there are economic difficulties in both the United States in China. The next round of the Dialogue could lead to a better understanding of NDRC's views on socioeconomic development in China following the 17th Party Congress as well as thoughts at the State Department and other government agencies on the economic situation in the United States (especially the impact of the sub-prime mortgage crisis and rising oil prices). In addition, other issues of mutual concern such as energy and the environment possibly could be included in the Dialogue. WORKING OUT THE DETAILS -------------- ¶5. (SBU) U/S Jeffery and Vice Chairman Zhang agreed that the 7th Round of the State-NDRC Dialogue would be held in Washington in late February. NDRC is likely to be represented by Vice Chairman Zhu Zhixin, who was traveling on December 12 but was the interlocutor for five of the previous six rounds. (Note: In a separate conversation, contacts at NDRC said that Zhu is one of two potential successors to NDRC Chairman Ma Kai, who is slated to be elevated to the State Council. End Note.) Both sides will continue to share thoughts on a more detailed agenda for the next round but will have to finalize the agenda by late January due the Chinese Lunar New Year Holiday that begins on February 7. RANDT