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 SIPDIS SIPDIS 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 SIPDIS 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. TOKYO 00001555 002 OF 003 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 TOKYO 00001555 003 OF 003 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