MISSING TEXT SOURS CHINA-JAPAN ECON DIALOGUE

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 005532 SIPDIS SIPDIS STATE PASS USTR FOR AUSTRS CUTLER AND STRATFORD USTR ALSO FOR DUSTRS BEEMAN AND WINTER USDOC FOR 4410/ITA/MAC/OJ/NMELCHER TREASURY FOR IA/CARNES AND POGGI PARIS FOR USOECD GENEVA FOR USTR E.O. 12958: DECL: 12/11/2022 TAGS: ECON ETRD PGOV PREL JA CH SUBJECT: MISSING TEXT SOURS CHINA-JAPAN ECON DIALOGUE OUTCOMES REF: A. BEIJING 7382 ¶B. TOKYO 4863 Classified By: Amb. J. Thomas Schieffer. Reason: 1.4 (b/d) ¶1. (C) Summary: Potentially exacerbating impressions many have here regarding the ability to work with China, Japanese media December 9 carried reports noting the Chinese text of the December 1 Japan-China High-level Economic Dialogue (HED) communique dropped language found in the Japanese version, in particular Japan's call for faster appreciation of the Chinese currency. The GOJ responses to the deletions have been sharp but measured and downplayed the possible impact on the Prime Minister's expected upcoming trip to China. A Japanese Foreign Ministry official involved in the talks told emboff opposition from China's "senior levels" and the People's Bank of China led to the deletions even though Chinese negotiators had agreed earlier to the language appearing in the Japanese version of the text. The official said Japan is reluctant to issue its own Chinese-language version of the communique to avoid escalating the dispute. He, like other Japanese officials, including at senior levels, characterized the HED as a success even though China had rebuffed a number of Japan's policy suggestions, notably those from the Japanese Trade Ministry calling for greater central-local coordination in China on regulatory matters. End summary Japanese Media Reveals Discrepancy in Texts -------------- ¶2. (U) Japanese media December 9 revealed two parts of the Japanese version of the joint press communique emerging from the December 1 Japan-China High-level Economic Dialogue (HED) were missing from the PRC's Chinese language text. In the Japanese version, the Japanese side "expressed the hope that China would make efforts toward accepting a faster pace of appreciation of the renminbi's effective exchange rate." In addition, the Japanese text states "The Japanese side pointed to the significance of China's participation in the Energy Charter Treaty." Both clauses did not appear in the Chinese text, which was made public by the Chinese Ministry of Commerce (MOFCOM),China's coordinating agency for the HED. MOFCOM issued the text December 3, a day later than the release of the Japanese version by Japan's Ministry of Foreign Affairs (MOFA) ¶3. (SBU) The GOJ's response to the differences in the two texts has been sharp but measured. Foreign Minister Masahiko Koumura indicated Dec. 9 the GOJ was consulting with Beijing about the discrepancies. Speaking to reporters Dec. 10, Chief Cabinet Secretary Machimura stated the deletions from the Chinese version of the communique were "unthinkable from the viewpoint of customary international practice and inexplicable." Nevertheless, Machimura indicated the HED "had not lost its significance" and the incident had no bearing on plans for PM Yasuo Fukuda to visit China in the near future. In a separate meeting with the press late December 10, Administrative Vice Foreign Minister Shotaro Yachi noted the Chinese government had made no indication it would amend the Chinese version of the communique. TOKYO 00005532 002 OF 003 Chinese Negotiators Not Empowered -------------- ¶4. (C) The inability of MOFCOM to control other agencies of the Chinese government is the underlying reason behind the unexpected changes to the language of the joint communique, according to MOFA China Economic Division Director Morio Matsumoto. Meeting with econoff Dec. 10, Matsumoto, who had led the negotiations of the communique, said his partners from both MOFCOM and the National Development and Reform Commission (NDRC) had agreed to the Japanese language on urging faster appreciation of the renminbi as well as the clause noting the value of Chinese participation in the Energy Charter Treaty. When MOFA asked MOFCOM Dec. 7 to revise the Chinese text released earlier in the week, PRC officials replied that while there had been agreement at the working level on the text, "senior levels" in China had not approved the language, which led to the deletions. ¶5. (C) Apparently, after the final Chinese language text was completed, the People's Bank of China (which did not participate in the HED),objected to the language on appreciation of the renminbi, even though, Matsumoto noted, the NDRC negotiator on the communique -- NDRC Public Affairs Director-General Li Bohua -- had claimed NDRC Chairman Ma Kai himself had blessed the clause. Furthermore, it was apparently NDRC that decided to drop the language on the Energy Charter Treaty from the final Chinese text as well, Matsumoto added. ¶6. (C) The Japanese side never saw a complete final Chinese language text of the communique until MOFCOM released it on December 3, Matsumoto said. As the GOJ had wanted a document to emerge from the HED, they had provided the original draft in Japanese and had worked from it during the negotiations. Chinese translations only of individual sections had been prepared. In general, Matsumoto noted, the Chinese side had resisted including any Japanese suggestions regarding Chinese policy in the document. The lesson for the future, he indicated, is always to provide a Chinese language text and to secure agreement on that as well. ¶7. (C) The GOJ, however, does not want to escalate the issue of the difference in the communique texts, Matsumoto stated, although it reserves the option of issuing its own Chinese version. As China is unlikely to issue a revised version, Japan's position, he stressed, is simply that the Japanese version is the agreed text despite the deletions by Beijing. He downplayed the dispute as a small incident which would not seriously affect overall relations with China. HED Success in Clarifying Japan's Aims -------------- ¶8. (C) Matsumoto, in fact, characterized the HED as a success. Although no concrete work plan had emerged, the meeting did clarify Japan's positions on those issues for the somewhat suspicious Chinese and highlighted areas of convergence. On the GOJ side, he acknowledged the least satisfied of the participants was the Ministry of Economy, Trade, and Industry (METI). At the talks, METI Minister Akira Amari, citing Japanese firms' frustrations, suggested China TOKYO 00005532 003 OF 003 establish a mechanism to strengthen central government information-sharing and control over regulatory entities at the provincial and local levels. He also proposed a joint Japan-China study to investigate inconsistencies between central government and local rules and regulations. The Chinese side, however, "gently" rejected both proposals, Matsumoto said. ¶9. (C) One take from the incident is that Tokyo hit a nerve in its discussions on the renminbi. For example, one senior METI official, speaking Dec. 7 before the discrepancies in the Chinese text became common knowledge, pointed to the language in the Japanese version of the HED communique on accelerating the renminbi's appreciation as a noteworthy development. He interpreted China's ostensible acceptance of the wording as a sign of growing understanding among China's policymakers of the need for the value of the Chinese currency to rise. In addition, Economic and Fiscal Policy Minister Hiroko Ota reportedly argued, in response to Chinese questions at the HED, that the appreciation of the yen following the 1985 Plaza Accord had not been the main cause of Japan's "bubble" of the late 1980s. China's decision not to acknowledge publicly Japan's call for faster appreciation of the renminbi indicates ongoing sensitivity to outside pressure directed toward its currency policy. Comment -------------- ¶10. (C) Show has been more important than substance in the HED exercise for the Japanese (reftels),but, with the incident over the missing language from the Chinese version of the text, even the show has left many in Japan feeling dissatisfied. Although this fracas is unlikely to derail PM Fukuda's plans to travel to China or other more substantive activities, nevertheless, it will reinforce the common perception inside and outside government in Japan of Chinese untrustworthiness. SCHIEFFER