MULTILATERALISM INCREASINGLY IMPORTANT FACET OF CHINA'S

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000413

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DEPT FOR EAP/CM, EAP/RSP, EAP/EP
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E.O. 12958: DECL: 9/23/2033
TAGS: CH ECIN ECON EFIN PREL XC
SUBJECT: MULTILATERALISM INCREASINGLY IMPORTANT FACET OF CHINA'S
DIPLOMATIC APPROACH, SAY SHANGHAI SCHOLARS

CLASSIFIED BY: Christopher Beede, Political/Economic Chief, U.S.
Consulate General, Shanghai, Department of State.
REASON: 1.4 (b),(d)




1. (C) Summary: Shanghai scholars regard China's increasingly
active role in multilateral fora as the product of Beijing's
integration into the global economic system and response to the
1997 Asian financial crisis. China's sharper focus on national
interests and the elevation of its international image to the
level of a material interest have further propelled multilateral
engagement. Because institutions with overlapping missions can
result in policy inertia or conflicts of interest, Beijing has
concluded that specific issues ought to determine a multilateral
grouping's mission. China has a particularly strong interest in
discrete multilateral groupings on its periphery that stand to
help China manage relations with its neighbors and to tackle
transnational issues that could disrupt domestic peace and
stability. END SUMMARY.


2. (U) Poloff met with several Shanghai experts on East Asian
and international security affairs in August and September to
discuss Chinese views towards multilateralism. The scholars
included: Chen Dongxiao, Vice President, Shanghai Institute for
International Studies (SIIS); Wu Xinbo, Deputy Director, Center
for American Studies (CAS),Fudan University; and Ren Xiao, CAS
Deputy Dean, Fudan University.

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FROM OUTSIDER TO INSIDER
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3. (C) Shanghai scholars consider China's increasingly active
multilateral diplomacy to be the result of several factors. Chen
Dongxiao regards Beijing's enmeshing into the global economic
system as the first stage of China's international involvement,
a phase that began in the 1980s and culminated with China's
accession to the World Trade Organization (WTO) in 2001. In
recent years, China's international profile on economic issues
has only grown; its International Monetary Fund (IMF) voting
rights have increased, and Beijing has played a key role in
formulating ideas for World Bank/IMF accountability reform. At
the recent G8 Summit, Chen continues, President Hu Jintao, in a
first for a Chinese leader, offered ideas for transforming the
global economic system for the new century. Although China's
higher profile multilateral successes have been economic, China
has been equally active in the security sphere. Chen claims that
Beijing is now "generally regarded as part of the solution, not
the problem" -- qualifying this statement by noting that, on
non-proliferation, on anti-terrorism, and within the Six-Party
Talks, China's role is "at least viewed more favorably" than in
the past.

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FROM CRISIS TO OPPORTUNITY
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4. (C) Ren Xiao, on the other hand, points to the 1997 Asian
financial crisis as the chief catalyst for regional integration
in East Asia and the realization in Beijing that China could
contribute positively to regional development. The crisis,
during which several East Asian currencies abruptly lost their
value, demonstrated that Western institutions "did not have all
the answers," Ren observes, and, further, that cooperation
within the region could offset the negative effects of future
crises and even generate gains for all. Additionally, China's
generous aid -- volunteered to prop up the failing currencies --
illustrated for China's neighbors the kind of constructive role
Beijing might be capable of playing regionally, Ren points out.
That experience helped bring about the ASEAN Plus Three (the
Association of Southeast Asian States, plus China, Japan and
Korea) mechanism, as well as China's decision to work towards a
free trade agreement (FTA) with ASEAN states over the following

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ten years.

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FROM IDEOLOGY TO INTERESTS
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5. (C) Chen also argues that, over the past few decades, China
has achieved a better understanding of what constitutes "the
national interest." During the Mao years, "war and revolution"
carried the day, but former leader Deng Xiaoping's reform and
opening up policy announced in 1978 was responsible for the
emergence of a framework for measuring national interests. Chen
believes that material interests as a goal of foreign policy can
be overstressed, to the detriment of "common interests China
shares with the world," but that they nevertheless provide a
better, more quantifiable yardstick for success.


6. (C) Wu Xinbo distinguishes between material interests -- for
example, ensuring stability in the region and securing energy
resources -- and "ideational interests," which include
encouraging international perceptions of China as a responsible
stakeholder. Both are goals of Chinese foreign policy, Wu
claims, though the latter has more recently become a topic of
debate. According to Wu, China is not concerned with its image
merely for the sake of prestige, nor as a means of arresting
potential opposition from other states to Beijing's pursuit of
material interests. Rather, Beijing recognizes that China's
global image is an element of its "soft power," that Chinese
soft power remains relatively weak, and that enhancing this
influence helps China augment its overall power. Regional and
international multilateral fora, Wu concludes, are key venues
for achieving this goal of increasing national power.

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ISSUES DETERMINE THE MISSION
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7. (C) Chen argues that China takes a "pragmatic approach to
multilateralism," which has led Beijing to conclude that
specific issues ought to determine a multilateral grouping's
mission. Regionally and globally, there has been "a mushrooming
of multilateral institutions," but not necessarily of solutions,
Chen observes. This is due in part to a lack of focus, but also
because institutions with overlapping missions result in policy
inertia or conflicts of interest. Thus, Chen reasons, the best
institutions are those whose mandates are targeted to specific
problems. Even if an institution is not that effective, Chen
notes, Beijing still regards membership as beneficial because
China can make more progress on a given issue than if China were
to "go it alone."


8. (C) The scholars caution critics against underestimating the
importance in Asia of simple exchanges of views. Wu recognizes
that the United States measures a multilateral institution's
worth by the results it produces, but in Asia, "talk in and of
itself is considered useful." Chen agrees this is important to
keep in mind, particularly since many of China's neighbors are
wary of its growing strength. Beijing must approach its new
leadership role carefully, Chen concludes, and the "ASEAN Way"
-- taking steps to achieve consensus among states through prior
consultation -- offers China the best way to make progress in
multilateral fora.

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PERIPHERAL GROUPINGS A PRIORITY
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9. (C) These Shanghai scholars claim that China has a strong
interest in establishing discrete multilateral groupings on its
periphery. Ren believes this focus is part of Beijing's overall
strategy -- "wending zhoubian," or "stabilizing the surrounding
areas" -- intended to help China manage relations with its
neighbors and tackle transnational issues that could disrupt
domestic peace and stability. For this reason, China prefers

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ASEAN Plus Three and the ASEAN Regional Forum (ARF) as the
primary methods for tackling Southeast Asian challenges such as
Burma, and works through the Shanghai Cooperation Organization
(SCO) to counter terrorism and instability in its northwest
border areas. Chen observes that cultivating strategic
relationships with Japan and India, two major powers on China's
periphery, will also be a central part of Beijing's strategy in
the coming years, though as yet there is little to be done in a
multilateral context.


10. (C) Ren regards ASEAN Plus Three as a prime example of a
regional grouping of appropriate size keenly focused on a few
discrete issues. At the same time, Ren argues, the "Plus Three
countries" have benefited as much from the configuration as has
ASEAN. Since 1999, a tripartite meeting has taken place among
the Chinese, Japanese, and South Korean heads of state,
immediately preceding the annual ASEAN Summit. In fact, Ren
reports, the Northeast Asian leaders had intended to meet this
year as well, but the sudden resignation of Japanese Prime
Minister Yasuo Fukuda has left Japan without an obvious
representative, so the meeting has been postponed. The
trilateral innovation has proven so popular with all three
countries, Ren notes, that some have raised the possibility of
holding additional meetings outside the ASEAN framework. In
Ren's view, the attractiveness of the trilateral dialogue stems
from its filling a perceived regional niche. Northeast Asia
lacks an established multilateral forum, and the prospects for a
Northeast Asian Peace and Security Mechanism (NEAPSM) emerging
from the Six-Party Talks remain unclear.


11. (C) In contrast, Ren continues, Beijing is skeptical of
groupings like the Asia-Pacific Economic Cooperation (APEC)
forum, which has "gradually lost steam" since its 1989 founding.
Open to all economies bordering the Pacific Ocean, encompassing
non-state entities such as Taiwan and Hong Kong, and boasting an
agenda that initially included a Pacific FTA, APEC was quite an
ambitious undertaking, Ren admits. The problem is that APEC has
been "simply too big" to accomplish anything meaningful. After
years of relative inactivity, many member economies gradually
came to question its grand agenda, Ren asserts, and subsequently
lost interest.

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COMMENT
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12. (C) The view from Shanghai suggests Beijing would like to
see a proliferation of smaller, and thus more easily manageable,
multilateral mechanisms that are regionally based and, at least
nominally, focused on one or two specific Chinese foreign policy
objectives. In practice, the mechanisms may produce only slow
concrete progress and bear the risk of devolving into mere talk
shops. Still, their efforts can only serve to reinforce China's
individual efforts to address common challenges and realize its
material interests. To the extent China's multilateral partners
come to see Beijing as a willing consultant and a listener, such
fora also stand to burnish Chinese soft power.


13. (C) In prior discussions with Ren Xiao and other Shanghai
scholars as well, Poloff has noticed these interlocutors talk
about "engagement with the region," and only in the course of
conversation does it become clear they are specifically
referring to the ASEAN Plus Three mechanism. Though perhaps
merely the product of linguistic differences, the conflation of
one with the other may offer some confirmation that these
Shanghai scholars indeed regard ASEAN Plus Three as the
principal venue for Chinese regional multilateral engagement.
CAMP