LI JUNRU ON U.S.-CHINA RELATIONS, UPCOMING CCP

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 003610

SIPDIS

E.O. 12958: DECL: 09/18/2033
TAGS: PGOV PREL CH
SUBJECT: LI JUNRU ON U.S.-CHINA RELATIONS, UPCOMING CCP
THIRD PLENUM

REF: OSC/FBIS CPP20080910346006

Classified By: Ambassador Clark T. Randt, Jr. Reasons 1.4 (b/d)

Summary
--------------


1. (C) Chinese Communist Party (CCP) Central Party School
(CPS) scholars discussed U.S.-China Relations, the Party's
upcoming Third Plenum and domestic reform issues at a
September 11 lunch hosted by the Ambassador for CPS Vice
President Li Junru. The scholars agreed that U.S.-China
relations are "stable and sound" and will continue to improve
under the "responsible stakeholder" and "constructive
partnership" concepts in spite of trade, human rights and
other areas of disagreement. One scholar expressed concern
about "negative" remarks on China by U.S. presidential
candidates. CPS Vice President Li said the Third Plenum (of
the CCP's 17th Party Congress Central Committee selected in
October 2007) will discuss the "Henan model" of rural reform,
which promotes simultaneous industrial and rural development,
and that the Party's priority following the 30th anniversary
of reform and opening will be expanding the private sector by
giving more help to small and medium-size enterprises. Li
said China needed to do more to expand citizens' rights. His
description of possible political reform left the impression
that such plans do not intend to radically alter China's
current political system. End Summary.

U.S.-China Relations "Stable and Sound"
--------------


2. (C) At a September 11 lunch for Central Party School Vice
President Li Junru and CPS scholars, the Ambassador asked his
guests for their views on U.S.-China relations. Professor
Gong Li, Deputy Director of the International Strategy
Institute and an expert on the history of U.S-China
relations, said that since 2001, U.S.-China relations have
been "relatively stable and sound." In Gong's view, the
impact of the "responsible stakeholder" concept offered by
the United States to describe China and of the "constructive
partnership" idea coined by China to characterize bilateral
relations has been very positive. Applying these two
concepts to future relations, Gong said, would bring the two
countries even closer together.


3. (C) Professor Gong acknowledged that continuing problems,
such as trade disputes, ideological differences, and
disagreements over human rights, have the potential to harm
relations. However, he said, it is "normal for two great
powers" to have differences and conflicts in a changing
world. The two countries share strategic interests and face
the same challenges in the context of globalization,
especially the need to cooperate on counter-terrorism, global
warming and economic problems.


4. (C) Turning to the question of Taiwan, Professor Gong said
that even on that issue the two sides can find common
interests and both have contributed to stability in
cross-Strait relations. Neither side "wants war over
Taiwan," Gong said, and such thorny issues can be solved if
"handled well."

Concerns Regarding Presidential Candidates
--------------


5. (C) Liu Jianfei, Director of the Diplomacy Research
Division at CPS and a professor in the International Strategy
Institute, agreed with Gong's positive characterization of
bilateral relations but expressed concern over reported
"negative" remarks made by U.S. presidential candidates
regarding China. Liu noted that while President Bush has
been a strong advocate of better U.S.-China relations, the
reported comments by Senators Obama and McCain raised
questions as to whether the next President would depart from
Bush Administration policy. Liu claimed that Senator Obama
called for protection of American labor from further "loss of
jobs" to China and that Senator McCain criticized China's
human rights and proposed a "League of Democratic Nations."
Such an organization, Liu speculated, "will definitely
exclude China," while protectionist trade policies or an
emphasis on human rights could cause trouble in bilateral
relations. Liu asked for the Ambassador's views on the
future of U.S.-China relations.


6. (C) The Ambassador responded that U.S.-China policy has
been consistent through seven U.S. presidential
administrations, Republican and Democratic, and therefore a
major policy change is unlikely. He stressed that the shared
strategic interests of the United States and China are clear,
and policy will flow from these interests.

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Korea Policy Suggestions
--------------


7. (C) CPS Vice President Li offered suggestions for U.S.
policy toward the DPRK, which he said he visited two years
previously. He urged the United States to engage in direct
dialogue with the DPRK and to replace the armistice agreement
with a peace agreement. The Ambassador responded that the
United States, with its partners in the Six-Party Talks, is
working hard to achieve a peaceful, prosperous and
non-nuclear Korean Peninsula.

Third Plenum: "Henan Model"
--------------


8. (C) In response to the Ambassador's question as to why the
17th Party Congress Central Committee's Third Plenum, to be
held in October, will focus on rural issues rather than on
macroeconomic issues typical of Third Plenums in the past, VP
Li said that rural problems need to be tackled in order to
continue the momentum of economic growth. He stated that
further "integrating social and economic development,"
including rural problems and agriculture, is a high priority
for the Party this year. The influence of China's "feudal"
tradition remains strong in China's rural society and economy
even today, Li added.


9. (C) Li said that Henan Province's recent success in
promoting the simultaneous development of industry and
agriculture caught the central leadership's attention, and
that the Plenum will discuss the "Henan model," which
demonstrates that rapid urbanization serves rural interests.
Li noted that Party General Secretary Hu Jintao just
completed an official visit to the province. (Note: See ref
for Xinhua's report on Hu's September 8-10 visit to Henan.)

30th Anniversary of Reform: Focus on Private Sector
-------------- --------------


10. (C) Asked whether the Party's commemoration in December
of the 30th Anniversary of reform and opening would include
any new reform initiatives, VP Li said there will be a push
to further "liberate" the private sector with a focus on
small and medium-size enterprises (SMEs). He said that as
part of this initiative, the Government recently abolished
some of the fees required of SMEs and will soon earmark one
billion RMB (USD 146 million) in the Central budget for
financial support to SMEs. Both measures, he said, were
recommendations to the Central Committee from a CPS working
group headed by CPS Research Center Deputy Director Zhou
Tianyong.


11. (C) Li stated that as labor intensive industries decline
as a result of new technology, private SMEs will absorb
excess labor. He said the strategy of boosting the private
sector rests on "two legs": high-tech innovation and moving
more SMEs into the ranks of China's top 500 companies. In
response to the Ambassador's comment that service sector
employment has been one of the solutions to similar
developments in the United States, Li said China pays close
attention to U.S. economic trends.

Emancipating the Mind
--------------


12. (C) Li said the basic meaning of the reform slogan
"Emancipate the Mind," endorsed by the October 2007 17th
Party Congress and heavily emphasized by Hu Jintao since
then, is "liberation from the Soviet model of development"
and the establishment of "China's own model." In 1979, he
said, the world's two largest communist countries, the Soviet
Union and China, made historic decisions with respect to
their future development. The Soviet Union invaded
Afghanistan, and China launched the era of reform, economic
development and opening to the outside world. The results,
Li declared, "are clear to everyone."


13. (C) Li said that in his view the "deeper meaning" of the
slogan is that China still has much work to do in four
respects: establishing a market economy, including all-round
development, not just GDP growth; developing an "advanced"
culture; achieving good governance; and promoting political
reform. The goal of political reform, he asserted, is
"democracy."

What is Political Reform and Democracy?
--------------


14. (C) Cautioning that the final form of democratic politics
in China will be "suited to the realities of China," Li

BEIJING 00003610 003 OF 003


talked primarily of China's need to focus on "citizens'
rights" and "empowerment," rights that he noted are
guaranteed in China's Constitution. He said the four main
kinds of rights that China needs to ensure are the rights to
information, to participation, to expression and to
"supervision" (codeword for a citizen watchdog function over
government). Achieving these rights, he said, requires
"redesigning institutions."


15. (C) In response to the Ambassador's observation that the
Party's focus on "people as the foundation" (yi ren wei ben)
in making policy may raise expectations regarding rights that
cannot be satisfied in the short run, Li acknowledged that in
the past the Party did not sufficiently protect these rights.
This was especially true of local officials, he said, who
even now are not laying enough emphasis on solving the
problems of "the weak." China is moving from an
over-emphasis on the collective to greater attention to
individual needs, such as property rights, rights to
expression and other rights contained in the Constitution, Li
claimed.


16. (C) However, Li said, collectivism is still China's core
social philosophy, so the challenge is how to meet individual
needs within this framework. China is facing new problems in
providing aid to "weaker" individuals and groups in the
market economy. Although local officials are paying
attention to these groups, they do not see them as a priority
or as their main responsibility. He said the Center's policy
is that people are responsible for their own fate, but the
Government should provide them with the means to help
themselves. To help fulfill this policy, China has finally
moved to the point where it can pay more attention to
reforming social institutions. The reform and opening era
launched by Deng Xiaoping first addressed the injustices of
the Cultural Revolution, then dealt with the country's basic
needs such as food, and now has turned to reforming political
and economic institutions and systems.


17. (C) With respect to political institutions, Li said,
China is considering two types of democracy, "electoral
democracy" and "consultative democracy." Saying that China
is looking into various forms of voting procedures, he
mentioned unspecified "breakthroughs" in National People's
Congress elections and cited progress in the role of the
Chinese People's Political Consultative Conference as
examples of "participatory" democracy. (Comment: These
examples suggest that intended political reforms will result
in little departure from the current political structure.)

Biographical Information
--------------


18. (C) CPS Vice President Li Junru has visited the U.S. east
and west coasts many times but for the first time will soon
visit Texas, where he has been invited to speak. The trip
will also take him to speaking engagements in Mexico and
Cuba. Two years ago, Li visited the DPRK and shared his
impressions with Stanford University Professor John Lewis.


19. (C) Professor Gong Li has been a professor at the Central
Party School for 20 years and prior to that was a professor
in the Heilongjiang Province Academy of Social Science. He
is an expert on the history of U.S.-China relations. He is
Deputy Director of the CPS Research Institute on
International Strategy. Gong has visited Harvard's Fairbank
Center for East Asian Studies "many times."
RANDT