PREMIER WEN,S APRIL VISIT TO JAPAN

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 001555

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E.O. 12958: DECL: 04/09/2017
TAGS: ECON PREL CH JA
SUBJECT: PREMIER WEN,S APRIL VISIT TO JAPAN

REF: A. TOKYO 01524


B. TOKYO 01472

C. TOKYO 1518

Classified By: Deputy Chief of Mission Joseph R. Donovan. Reasons: 1.4
(b)(d).


1. (C) Summary: Premier Wen Jiabao's April 11-13 visit is
an important step in further "warming" the bilateral
relationship following the "cool" Koizumi years. Despite
earlier press speculation to the contrary, the East China Sea
dispute over energy resource development is unlikely to be
resolved before Wen's arrival, according to Japanese
government sources. The most significant "deliverable" will
be the Chinese agreement to start a regular economic
strategic dialogue exchange, along the lines of the
U.S.-China Strategic Economic Dialogue. Japan plans to boost
cooperation on environmental issues, focusing on energy
efficiency. New aviation routes, including between Tokyo's
Haneda Airport and Shanghai's Hongqiao, will also be
addressed. Although Wen will mention Taiwan and
history-related issues, Japan expects neither to overshadow
the positive aspects of the visit. Japan hopes Wen's visit
will keep Sino-Japan relations moving forward and pave the
way for an eventual President Hu Jintao visit to Japan. End
summary.


2. (C) During his April 11-13 visit, Wen Jiabao, the first
Chinese Premier to visit Japan in seven years, will meet with
Prime Minister Shinzo Abe, hold talks with leaders of both
ruling and opposition parties (including LDP
Secretary-General Hidenao Nakagawa and opposition Democratic

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Party of Japan head Ichiro Ozawa),and become the first
Chinese leader to address the Diet. According to MOFA China
Division Director Takeo Akiba, Wen will also meet with
Daisuke Ikeda, the 79 year-old honorary chairman of Soka
Gakkai, Japan's largest lay Buddhist organization and the
force behind the New Komeito Party. (Note: Ikeda and the
Komeito have historically had close ties with China.)
Following his full schedule April 11-12 in Tokyo, Wen will
travel to Kyoto where he will meet on March 13 with Kansai
business leaders in the morning and visit cultural sites
before departing in the afternoon. Akiba explained that Wen
would be accompanied by a sizeable contingent of Chinese
CEO's, including many from the energy sector.

East China Sea
--------------


3. (C) Despite earlier media reports predicting a
breakthrough in the deadlocked talks on gas and oil
development in the East China Sea, prospects for resolution
prior to Premier Wen's visit are unlikely, Akiba told
Political Section officers on April 5. (Ref A reports METI
sources on the same issue). The March 29 DG-level meeting to
discuss the dispute failed to bring the two sides closer to a
solution. As long as China remains unwilling to alter its
position that its border lies at the edge of its continental
shelf, there is little room for compromise, he lamented.
Japan is willing to take the dispute over its exclusive
economic zone (EEZ) demarcation line to the International
Court of Justice (ICJ),if necessary. While China has never
accepted the jurisdiction of an international court, Japan
would be willing to accept an ICJ judgment, Akiba relayed.


4. (C) Tokyo believes that the only solution to the East
China Sea energy-related dispute is joint development without
prejudice to respective legal positions on territorial
claims. China, however, appears unwilling to budge. Akiba,
who accompanied Foreign Minister Taro Aso on his trip to
India, noted the April 3 meeting between Aso and his Chinese
counterpart Li Zhaoxing made no progress on the dispute. A
panel of technical experts from both countries met in Beijing
on April 6 to discuss whether, as China claims, a geological
fault line lies in the middle of the oil and gas field in the
East China Sea that prevents gas on one side of the median
line from spilling over into the other side, but the
technical meeting did little to advance the broader energy
talks (Ref A).

Economic Strategic Dialogue
--------------


5. (C) The major deliverable from the Wen visit will be
convening the first bilateral economic strategic dialogue
talks, similar to the U.S.-China Strategic Economic Dialogue
(SED),Akiba related. Tokyo is pushing China to elevate this
dialogue to the same level as the one China holds with the
U.S., which is led by Treasury Secretary Paulson and Chinese
Vice Premier Wu Yi. As a Vice Premier and member of the
Communist Party Politburo, Wu ranks significantly above an
average minister. China, however, is resisting.

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Consequently, the first session will simply be a "kick-off"
meeting to be held in conjunction with the Wen visit. FM
Taro Aso (who has the lead for Japan's WTO negotiations) will
head this inaugural meeting on the Japanese side. Ma Kai,
head of the National Development and Reform Commission, will
lead the Chinese delegation, although Japan still expects
subsequent sessions to be led by a Vice-Premier equivalent,
Akiba stressed. Japan's interagency team will also include
Minister of Finance Koji Omi, METI head Akira Amari, and
Minister of State for Economic and Fiscal Policy Hiroko Ota.


Strengthening Commercial Ties
--------------


6. (C) Premier Wen and PM Abe will work to maintain the
momentum gained from their January meeting in Cebu by
identifying new ways to promote economic and business ties,
Akiba observed. Since that meeting, China lifted its ban on
the import of Japanese rice, which had been in place since
2003 when insects were discovered in a Japanese shipment.
The Chinese also agreed to initiate formal negotiations on a
three-way investment agreement with Japan and South Korea,
the first round of which took place March 22-23.


7. (C) In response to a Chinese request, Tokyo will conduct
a seminar in conjunction with the Wen visit geared at
enhancing economic ties among business leaders and companies,
Akiba explained. Japanese press reports suggested 100
energy-related companies will participate in the seminar,
which will provide a showcase for Japanese companies
specializing in energy-saving technologies. Apart from the
commercial opportunities, helping China become more energy
efficient is in Japan's interest because of the direct
environmental impact of Chinese pollution on Japan, Akiba
explained. China's energy efficiency stands at only about 13
percent, he claimed, and the nation presents a huge potential
market for Japan's advanced energy-saving technology. Japan
will move forward cautiously with technology transfers,
however, due to IPR concerns. Japan would also like to
increase medical cooperation with China, since China's severe
pollution problems will lead to an increased demand for
medical care, Akiba noted.


8. (C) Increasing aviation routes between China and Japan
will be discussed during Wen's visit. Japan is pushing for
direct flights between Haneda Airport to Hongqiao, Shanghai's
domestic airport, to promote business opportunities, Akiba
said, hinting that he expects an agreement to be reached.
LDP Secretary General Nakagawa and Komeito Secretary General
Kitagawa also pressed this issue during their March 16-19
trip to Beijing (Ref B).

Taiwan and History Issues
--------------


9. (C) Although Wen may feel obliged to raise Taiwan and
"history issues" in passing, Beijing has been moderate in its
recent public statements on comfort women and other history
issues, Akiba remarked. China is taking a moderate stance to
aid Abe in an election year, and in turn Japan feels a sense
of obligation toward China, Akiba commented. China did not
raise the comfort women during Nakagawa's trip to Beijing
(Ref B). In response to Nakagawa's assurance that Japan
would not back down from the Kono Statement and Murayama
Statement, China counterparts expressed an understanding of
the history issue in Japan. However, while Abe's policy of
not announcing whether he will visit Yasukuni remains
unchanged, Akiba shared he was personally not convinced Abe
would refrain from visiting the shrine.


10. (C) Abe and Premier Wen will release a joint document
highlighting bilateral mutual respect and showcasing new
areas for increased cooperation, including exchanges. It
will outline agreed-upon steps to deepen economic ties and
strengthen environmental cooperation, particularly on
pollution control and energy conservation. China pushed MOFA
to "upgrade" Tokyo's usual formulation regarding one-China
and Taiwan, to say that Japan "opposes" Taiwan independence,
Akiba remarked, but MOFA refused. Even without a deliverable
on the East China Sea, Japan views Wen's visit, itself, as a
successful episode in Sino-Japan relations. Tokyo hopes
Wen's visit will pave the way for Chinese President Hu Jintao
to visit Japan. Abe welcomes the opportunity to return to
China, but such a visit would be unlikely before the July
lower house Diet elections. Hu is eager to visit Japan,
Akiba relayed.

Comment
--------------


11. (C) Absence of an agreement on East China Sea energy

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development will diminish some of the hoped-for luster from
the Wen visit. Nonetheless, the visit will take a positive
step forward in a relationship that had been stalled through
the chilly Koizumi years, affording an opportunity to address
important issues, including Six-Party Talks and UNSC reform,
at the highest level. China is clearly playing its usual
hard-ball, wringing the visit for all its worth by making
MOFA wait until the last minute to resolve important issues
like the level of the new economic dialogue. That said,
Beijing's down-playing of historical issues and Wen's
high-profile Diet speech signal that China, too, wants to get
the relationship back on a constructive path.
SCHIEFFER