TRIET'S PRC VISIT: ACCENTUATING THE POSITIVE

C O N F I D E N T I A L SECTION 01 OF 02 HANOI 001055

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/05/2017
TAGS: PREL PGOV VM CH
SUBJECT: TRIET'S PRC VISIT: ACCENTUATING THE POSITIVE

REF: A. BEIJING 3546

B. HANOI 961

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Classified By: POL/C Marc Knapper per 1.4 (b/d)

Summary
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1. (C) MFA and Chinese Embassy sources are billing President
Triet's May 14-18 trip to China a success, both in
maintaining the momentum of improved political relations
between the two countries and in generating concrete results,
particularly in the areas of trade and investment (Ref A).
At the same time, thorny issues in the bilateral
relationship, such as Vietnam's trade deficit with the PRC,
rival territorial claims in the South China Sea and negative
commentary on China in Vietnam's media indicate that, while
the two sides continue to accentuate the positive, frictions
remain that defy near-term solutions. For GVN policymakers,
maintaining a balance between seeking stable ties with the
PRC and defending Vietnam's national interests will remain a
key challenge. End summary.

Visit Diplomacy Cornerstone of Bilateral Ties
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2. (C) According to Chinese Embassy Political Counselor Zhou
Tong, the Vietnamese president's Beijing visit was a "key
event for China-Vietnam relations in 2007." The overall
positive development of Vietnam-China relations, together
with increased mutual trust in the political sphere, are
reflected in this "tradition" of annual exchanges of
high-level visits. In this case, Triet's trip is a
"reciprocal visit" following President Hu Jintao's 2005 and
2006 visits to Vietnam. MFA Asia I (Northeast Asia)
Department Deputy Director Nguyen Hung Hai also stressed the
importance of these frequent meetings between Vietnam's and
China's leaders, citing their contribution to the bolstering
of mutual understanding.

Main Accomplishments
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3. (C) In addition to strengthening political ties, Zhou
highlighted heightened economic cooperation and the new
target of USD 15 billion in trade by 2010 as major results of
the visit. The value of commercial agreements signed at
business forums held during the visit reached USD 2.6
billion. Furthermore, according to Zhou, the visit reflected
an enhanced role for the China-Vietnam Steering Committee for
Bilateral Cooperation. This committee, co-chaired by Tang
Jiaxuan and Vietnamese DPM/FM Pham Gia Khiem, is responsible
for coordinating the two countries' activities in foreign
affairs, defense, culture, economics and trade. The leaders
also agreed to increase the number of Communist Party and
youth exchanges and to conduct seminars on ideology.

Two Corridors, One Belt
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4. (C) The "two corridors, one belt" project is a Vietnamese
initiative to modernize transportation routes leading from
southern China to Haiphong port. It was proposed by former
Prime Minister Phan Van Khai in 2004, but took on new life
when Nguyen Tan Dzung became Prime Minister last year. The
project involves modernizing colonial-era roads and railways
leading from the border crossings with China near Lao Cai and
Lang Son down to Haiphong. According to the MFA's Hai,
Chinese officials were very positive about the project and
will send a group of engineers to make a survey of possible
routes. Zhou noted that the two sides have not specifically
identified where they will work together. The infrastructure
on the Chinese side is adequate, but improving the railways
from the border to Hanoi would be the first step. Both sides
agreed that transportation and other infrastructure projects
are key, after which they can move ahead to identify other
projects.

Addressing the Trade Imbalance
--------------


5. (C) During their discussions, the Chinese acknowledged
Vietnam's "huge" deficit in their bilateral trade, Zhou
noted, and the two sides agreed to take steps to "adjust
this." China specifically asked Vietnam to increase its
exports of oil, rubber and other raw materials. Zhou

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reported that the Vietnamese took note of the suggestion and
will study it as a way of increasing exports. The Chinese
side also made the point that the trade imbalance is not
created by the government: both countries' economies are
"governed by the market" because both have "market
economies," Zhou averred. In addition, the Vietnamese and
Chinese leaders discussed measures that would encourage a
greater trade volume, such as channeling more trade through
large companies, and discourage the smuggling of small
quantities of goods across the border. Hai noted that
Chinese Premier Wen said China is concerned about the
imbalance and is willing to import more Vietnamese goods and
commodities, such as sea and agricultural products and, "of
course, coal, oil, rubber and minerals." That said, Hai
shared his view that Vietnam will not be able to resolve its
trade deficit because of China's size, competitiveness and
reliance on exports.

Taiwan and South China Sea Issues
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6. (C) As a matter of course, China's leaders always raise
Taiwan "with every country, at every meeting," said Zhou.
President Triet expressed Vietnam's continued support for its
"one China policy." In previous years, this was always
mentioned in the joint statements following high-level
meetings, but its omission this time did not indicate a
policy change, Zhou said. According to Hai, China reminded
Vietnam that, until Taiwanese elections are held in 2008,
there will be "agitation for independence by Taiwan's
leaders," and Vietnam should not play into this by conducting
government-to-government relations with Taiwan, only economic
and cultural relations.


7. (C) The two sides' competing territorial claims in the
South China Sea were only discussed in general terms. Hai
noted that the details of such issues are "left to be worked
out at lower-level negotiations." The two sides agreed to
continue to negotiate and maintain peace and the status quo.
Zhou mentioned that they also agreed to "try to respect" the
spirit of the ASEAN Declaration of Conduct concerning the
South China Sea, and to "increase their cooperation" in the
area with the Philippines. (Note: This is a possible
reference to Vietnam's joining the PRC and the Philippines in
joint oil exploration in disputed waters, a move that the GVN
had previously rejected as diluting its own territorial
claim. End Note.)

Public Diplomacy to Highlight Friendly Relations
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8. (C) The two countries also agreed to use public diplomacy
to publicize their friendly relations. Their "traditional
friendship" is a valuable asset in the relationship, and both
countries need to maintain and appreciate it. Zhou referred
to "elements" in Vietnam who use the press, magazines and
internet to negatively portray Vietnam-China relations,
harkening back to the "difficult period" between the two
countries during the late 70s and 80s. While the PRC
recognizes that such media coverage is "not the GVN's
official position, it nonetheless affects bilateral
relations," noted Zhou. The public diplomacy efforts agreed
to by the two countries will be implemented by
state-controlled mass media outlets, the propaganda
committees of their respective Communist Parties and
publishing houses.

Comment
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9. (C) While warming political relations and expanding trade
and investment ties are the heavily publicized features of
high-level visits and, more broadly, the Vietnam-China
relationship, territorial disputes and vestiges of historical
animosity remain thorny problems that defy near-term
solutions. For example, the GVN is well aware of recent
Chinese efforts to undercut Vietnamese petroleum deals in
disputed South China Sea waters, and VFM Le Van Bang reported
to visiting EAP A/S Hill that the GVN has assured its
partners that "we will protect them" (Ref B). As this
illustrates, maintaining a balance between seeking stable
ties with the PRC and defending Vietnam's national interests
will remain a key challenge for GVN policymakers. End
Comment.
MARINE