POOR DPRK ATTENDANCE, SOME SHIPPING NEWS, AT

C O N F I D E N T I A L SECTION 01 OF 03 SHENYANG 000123

SIPDIS

E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION
TAGS: PREL PGOV EWWT ENRG KN KS JA RS CH
SUBJECT: POOR DPRK ATTENDANCE, SOME SHIPPING NEWS, AT
NORTHEAST ASIAN MEETS

Classified By: CONSUL GENERAL STEPHEN B. WICKMAN.
REASONS: 1.4(b)/(d).


1. (C) SUMMARY: Pyongyang's delegation to the Northeast
Asia Investment and Trade Expo, held last week in Jilin
Province, appeared smaller that last year's. North Korean
diplomats at the expo privately praised China's grain
harvest, with one claiming the DPRK's crop was also "good."
In a keynote speech, PRC Vice Premier Wang Qishan was vague
but promoted energy as a "strategic focus." In experts'
sessions, PRC scholars evinced disappointment with Moscow's
energy policy, while proposals for regional cooperation in
energy/logistics pointedly excluded the DPRK. The expo saw
the inking of a PRC-Russia-ROK-Japan agreement to open an
added shipping corridor through the Sea of Japan, a plan
already hamstrung by poor demand and cooperation. The
corridor was also discussed a week before at a revived
Tumen River expo, held jointly with another regional event
in China's Yanbian Korean Autonomous Prefecture. The North
Koreans were no-shows at these events, but interest there
in software and other collaboration with the DPRK was high.
END SUMMARY.


2. (U) CG and Congenoffs traveled September 1-3 to
Changchun, capital of Jilin Province, for the fourth annual
Northeast Asia Investment and Trade Expo--what has become
the premier trade event in northeast China for China,
Japan, Russia and the two Koreas. The CG and Congenoff
traveled to Yanji, seat of Jilin's Yanbian Korean
Autonomous Prefecture, for two smaller regional expos
August 26-28.

THE NORTH KOREANS AT THE MAJOR NORTHEAST ASIA EXPO
-------------- --------------


3. (SBU) North Korean officials proved the lone regional
holdouts from much of the Northeast Asia Trade Expo's
official summitry, which this year focused on Northeast
Asian cooperation in energy and logistics. Heading the
North Korean delegation to the expo's September 1 "high-
level forum" was Ministry of Trade Foreign Economic
Cooperation Bureau chief CHOI Yon, who unlike all the other
Northeast Asian representatives did not deliver remarks.
No North Korean scholars attended the more substantive
experts' workshop on regional energy/logistics
collaboration. A Chinese participant based at the Jilin
Academy of Social Sciences, which hosted the session, told
us the North Korean side declined the Chinese invitation to
participate, citing the need to stay in Pyongyang to
prepare for the DPRK's 60th anniversary celebration.


4. (SBU) North Korean Consul General RI Gi-beom told Jilin
Party Secretary WANG Min September 1 that the Northeast
Asia Trade Expo attracts the largest North Korean
contingent of any trade show in China. Evidence, however,
seemed to indicate otherwise. Unlike any of the other
country pavilions, the DPRK's introductory pavilion had no
staff or promotional literature, and within the expo
itself, fewer North Korean firms appeared to participate
compared to last year. A walk-through of the North Korean
trade stalls on September 2 suggested roughly half the
number of participants last year. Goods on offer canted
heavily toward minerals/mining, seafood and herbal
medicines. A small sampling of DPRK participants: the
Taedonggang Trading Corporation; the Korea Sungri Joint
Venture Company; the Korea Ferrous Metals Export-Import
Corporation; the Kumsan Joint Venture Company; and the
Pyongyang Thosong Pharmaceutical Export Factory. On offer
to passers-by at one stall was the most recent issue of
"Foreign Trade of the (DPRK)," which featured
advertisements for everything from stainless steel tubes
and SUVs by the Peace Motors Corporation to mining tools
and roofing tiles.


5. (C) Shenyang-based North Korean diplomats repeatedly
raised grain issues during meetings for the diplomatic
corps hosted by Chinese officials. Meeting with Jilin
Party chief Wang Min, for instance, North Korean Consul
General Ri praised the province's "beautiful" corn crop,
which he had viewed with satisfaction along the four-hour
drive from Shenyang. Ri claimed the healthy harvest was
"important" during this period of shortages and rising
grain prices. Another North Korean diplomat reprised the
theme at a September 2 luncheon, when he suddenly announced
to our Chinese hosts, unsolicited, that North Korea's grain

SHENYANG 00000123 002 OF 003


crop this year has been "good."

NORTHEAST ASIA: INTEGRATION AND ITS DISCONTENTED?
-------------- --------------


6. (SBU) Northeast Asian officials at the expo's keynote
"high-level forum" (the second such event) repeatedly cited
the need for regional cooperation and coordination on
energy, infrastructure development and logistics, but
proffered little in the way of implementing measures beyond
vague generalities. PRC Vice Premier WANG Qishan, for
instance, said deepening cooperation with Northeast Asian
neighbors on energy/resources would be a "strategic focus"
for the future but stopped short of proposing practical
steps.


7. (SBU) Most notable at the more substantive follow-up
workshop for Northeast Asian experts was what was
explicitly left unsaid. Numerous Chinese scholars evinced,
with varying degrees of obliqueness, frustration with the
state of Russian cooperation on energy. This stood in
contrast with the Russian representative's sunny view of
healthy PRC-Russia strategic energy cooperation, which he
argued would only deepen in the Medvedev era. Notable too
in comments by Chinese, South Korean and Japanese scholars
was considerable dismay with the DPRK's unhelpful role in
regional collaboration. Most of their ambitious proposals
for regional energy cooperation--ranging from a shared
Northeast Asian energy reserve to collective bargaining
with oil-producing nations and a common regional energy
market--pointedly excluded the DPRK.


NEW PRC-RUSSIA-ROK-JAPAN SHIPPING CORRIDOR: IMPLICATIONS
-------------- --------------


8. (SBU) Beyond the USD 15 billion in trade/investment
contracts signed during the event, one of the few
substantive cooperative deliverables was the inking of a
quadripartite PRC-Russia-ROK-Japan agreement on a transport
corridor through the Sea of Japan. The new cargo and
passenger route will link the PRC's Hunchun by rail/bus
with Russia's far eastern port of Zarubino, just slightly
southwest of Vladivostok; outbound freight will then enjoy
direct sea connections to the ROK's Sokcho and Japan's
Niigata. Initial press reports hailed the route, to be
opened in March 2009 and operated by way of an ROK-majority
quadripartite joint venture, as a landmark agreement that
will slash transport times and costs.


9. (SBU) Northeast China's landlocked Jilin and
Heilongjiang provinces would appear, a priori, to be
beneficiaries of this venture: the new route theoretically
spares them the burden of first shipping Japan/ROK-bound
goods by land to the sea ports of Dalian or Dandong for
outbound shipping. Jilin and Heilongjiang, after all,
lack--and remain in strategic pursuit of--an outlet to the
Sea of Japan, a point emphasized repeatedly by Chinese
officials at the expo from Jilin Party Secretary Wang Min
down. But the agreement, for which a framework was signed
two years ago, may be less than meets the eye. For all
practical purposes, the new route appears merely to extend
to Japan the extant Dongchun Shipping Line, the
cargo/passenger ferry that since 2000 has sporadically
linked Hunchun and Zarubino with Sokcho, in northeastern
South Korea.


10. (C) Difficulties appear likely to confront the shipping
corridor. An official in Jilin's Yanbian--home to Hunchun-
-pointed out the most serious challenge: generating
sufficient demand. To date, the Dongchun line to Sokcho
has encountered a shortage of cargo--and thus profit,
explained the official by phone September 5. (A paucity of
cargo has also required underweight Dongchun vessels to
cling close to coastlines in order avoid ocean turbulence,
which in turn has led to "trouble" from North and South
Korean naval forces, he added.) Insufficient demand for
the Dongchun route is likely to mean the same for the new
extended route to Niigata, speculated the official, who
dubbed the agreement a "vanity project" ("mianzi
gongcheng"). Shipping fees remain another potential area
of concern. The Dongchun line temporarily suspended
operations earlier this year after Russia--citing growing
costs--demanded a massive increase in fees, according to
online reports by the Yanbian and Hunchun governments.

SHENYANG 00000123 003 OF 003


PRC-ROK-Russia negotiations eventually settled the issue,
but a new agreement will need to be re-explored when it
expires at the end of the year.

REGIONAL EXPOS IN YANBIAN
--------------


11. (SBU) A Dongchun Shipping representative also made a
presentation at the Fourth Tumen River International Trade
and Investment Expo, which has been dormant since 2004.
The expo, held in Yanji, was revived this year and held
jointly with the Second Annual Yanji International Trade
and Investment Expo. One notable attendee was Sung L. Kim
of the Federation of Korean Associations
(www.koreanfedus.org),who led a large group of Korean-
American business representatives scouting somewhat
skeptically for opportunities. Also notable was Dr. Chan-
Mo Park, a member of the yet-to-be opened Pyongyang
University of Science and Technology's Committee of
Founding Members. Park is a frequent traveler to Yanbian
and has worked for years to foster cooperation with North
Korean software engineers. He is also a Special Advisor
for Science and Technology to South Korean President Lee
Myung-bak, a former President of the Pohang University of
Science and Technology (POSTECH) and an American citizen.


12. (C) The North Koreans, however, were no-shows at both
Yanbian expo events. Yanbian Vice Governor XIMEN Shuji
told the CG that all the invited local North Korean
officials and business representatives wanted to attend but
that Pyongyang's central authorities would not give them
permission. He claimed they were only allowed to attend
the far larger Changchun event. Regardless, regional
presentations about the development of the Tumen River area
were decidedly lackluster and, as usual at such fora in
China, there was almost no discussion allowed in the formal
sessions.
SWICKMAN