AFM HE YAFEI REVIEWS CHINA'S KEY ISSUES FOR THE

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000659

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E.O. 12958: DECL: 02/22/2033
TAGS: PREL PGOV PINR PTER EINV MNUC BM IR KN CH
TW, SU
SUBJECT: AFM HE YAFEI REVIEWS CHINA'S KEY ISSUES FOR THE
SECRETARY'S VISIT

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Classified By: Classified by Ambassador Clark T. Randt, Jr., Reasons 1.
4 (b) and (d).

Summary
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1. (C) In a February 22 meeting requested by the Chinese, PRC
Assistant Foreign Minister He Yafei reviewed for the
Ambassador China's key issues to be raised during the
Secretary's visit to Beijing February 26-27. On North Korea,

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AFM He said that China's top leaders are prepared to have
detailed discussions about "next steps." On the Iranian
nuclear issue, China is considering hosting a Political
Directors meeting in Shanghai in March after the elections in
Iran. According to AFM He, Iran feels "isolated" and this
"solidifies the hardliners." AFM He urged the Secretary to
provide positive news on the Sinopec/Yadavaran deal next
week. AFM He warned that if Sinopec is sanctioned, the
Chinese Government will "retaliate and it would be a disaster
for U.S.-China relations." The Ambassador emphasized the
importance and timeliness of the proposed CT sub-dialogue in
March. AFM He, whose portfolio includes Olympic security,
characterized the recent increase in terrorist activities
aimed at the Olympics as worrisome. China is
"psychologically prepared" for protests, will act in "strict
accordance with Chinese law" and will handle the protests in
a "civilized" manner, AFM He stated. It would be helpful if
the Secretary could repeat publicly the U.S. position on
Taiwan, urged AFM He. If there is a crisis in Burma, China
"suffers" the consequences and the Chinese military is put on
alert, said AFM He. End Summary.

DPRK
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2. (C) AFM He said that China is looking forward to
discussing the North Korean nuclear issue and how to move the
Six-Party Talks forward with the Secretary. President Hu
Jintao is ready discuss the Korean Peninsula nuclear issue
and the future peace and security architecture of the region
and FM Yang Jiechi is prepared to have detailed discussions
on the way forward in the Six-Party Talks. FM Yang hopes to
hear what exactly the United States would like China to press
the North Koreans for and what incentives the United States
might be willing to offer. The Chinese are willing to work
on the North Koreans, he claimed.

Iran
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3. (C) AFM He noted that he will be in Washington next week
to participate in the meeting of the Iran P5-plus-1 Political
Directors. China is considering hosting a Political
Directors meeting in Shanghai in March after the elections in
Iran, he added. AFM He opined that upcoming political
elections in Iran will likely affect the Iranian leadership.
According to AFM He, Iran feels "isolated" and this,
unfortunately, "solidifies the hardliners." AFM He
reiterated the strategic importance of U.S.-China cooperation
on the North Korea and Iran nuclear issues.


4. (C) AFM He urged the Secretary to provide positive news
regarding the USG decision on whether or not to sanction
Sinopec for its Yadavaran oil field deal with Iran during her
meetings in Beijing next week. If Sinopec, one of China's
key energy companies, is sanctioned, the Chinese Government
would "retaliate and it would be a disaster for U.S.-China
relations." The possible sanctioning of Sinopec is a grave
issue and puts China in a difficult position. China lacks
sufficient resources to meet its energy needs, and the
Sinopec deal allows China to import oil. There is no other
purpose to the deal, stressed AFM He. It would be helpful to
"clarify" this issue during the Secretary's visit, urged AFM
He.

Counter-terrorism Cooperation
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5. (C) The Ambassador emphasized the importance and
timeliness of the proposed CT sub-dialogue in March. AFM He,
whose portfolio includes Olympic security, characterized the
recent increase in terrorist activities aimed at the Olympics
as worrisome. China recently arrested some alleged
terrorists in Xinjiang who have close links with the Taliban
and Al-Qaeda, said AFM He. The Ambassador noted that there
is doubt surrounding the continuing existence of SHAT (East
Turkestan Liberation Organization) and that the information
China provided to justify designating SHAT as a terrorist
organization was old. The United States stands shoulder to

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shoulder with China against terrorists, stated the
Ambassador. Apparently stressing that both the United States
and China faced terrorism threats in the region, MFA Korean
Affairs Counselor Ma Mingqiang added that in 2002, Pakistani
intelligence arrested several alleged terrorists who had
seven maps. Three of the maps were allegedly of the PRC
Embassy and the remaining four were of the U.S. Embassy.

Olympic Security
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6. (C) AFM He told the Ambassador that he is focused on
Olympic security. China's priority is the protection of
heads of state, including the President of the United States.
Over 100 countries have confirmed that their heads of state
will attend the Olympics, said AFM He. He expressed
appreciation to the San Francisco City Government for its
assistance in ensuring the success of the torch relay.
Chinese authorities have had very good discussions with the
San Francisco Police Chief.


7. (C) It is "inevitable" that some international NGOs will
"sling mud" at China, AFM He continued. China is
"psychologically prepared" for protests, will act in "strict
accordance with Chinese law" and will handle the protests in
a "civilized" manner. Two days ago, China took some
anti-riot measures in preparation for the China-Japan soccer
match in Chongqing, shared AFM He. Those security measures
were a success.

Taiwan
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8. (C) AFM He confirmed to the Ambassador that the issue of
Taiwan will be raised during the Secretary's meetings in
Beijing. As AFM He put it, "it's not over until it's over."
It would be helpful if the Secretary could repeat publicly
the U.S. position on Taiwan, urged AFM He. AFM He noted that
the Secretary has two press opportunities on February 26 to
make such a statement.

Burma
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9. (C) UN Special Envoy Gambari's March visit to Burma shows
some "movement" on the issue, AFM He said. China wants to
help improve the Burmese people's livelihood, support
national reconciliation and encourage dialogue with Aung San
Suu Kyi. According to AFM He, the Burmese authorities
complain that following each of Gambari's visits to Burma, in
which they accommodate his wishes and implement his
proposals, they are hit with UN Security Council measures.
The Ambassador replied that when there is no pressure on the
Burmese regime, they tend to not make any changes. China
shares a long border with Burma and if Burma is not governed
well, this will lead to problems for China, said the
Ambassador. AFM He agreed, noting that Burma's militias are
not controlled by the Central Government. If there is a
crisis in Burma, China "suffers" the consequences and China's
military is put on alert, AFM He said. There is the
potential for refugee flows into China, AFM He said and noted
with respect to ethnic minority militias that "many of the
Burmese refugees carry automatic weapons."

Sudan
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10. (C) China feels that it has not been treated "properly"
on the Sudan issue, AFM He complained. Various NGOs have
unfairly blamed China. "We aren't scared of Spielberg's
actions. We understand this is the price you have to pay"
for hosting the Olympics. But it would help if friendly
countries could help mitigate or minimize these "forces," AFM
He said.

India, Nepal
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11. (C) AFM He said that after his trip to Washington for the
P5-plus-1 meeting, he will travel to India and Nepal for
bilateral consultations. India is a "big and upcoming
partner," said AFM He. He characterized Nepal as a "trouble
spot" totally dependent on India.
RANDT