(U) SIXTH SENIOR DIALOGUE THIRD SESSION:

C O N F I D E N T I A L STATE 133202


E.O. 12958: DECL: 12/15/2018
TAGS: PREL PGOV CH
SUBJECT: (U) SIXTH SENIOR DIALOGUE THIRD SESSION:
BILATERAL AND SECURITY ISSUES

Classified by EAP Assistant Secretary Christopher R. Hill.
Reason: 1.4 (d)


1. (U) Participants:

U.S.
The Deputy Secretary
Ambassador Clark T. Randt
A/S Christopher R. Hill, EAP
Acting A/S Patricia A. McNerney, ISN
David Gordon, Director of Policy Planning S/P
John J. Norris, EAP DAS
David Sindey, Deputy Assistant Secretary of Defense for
East Asia
Justin Higgins EAP/CM (Notetaker)
Michael Yan (Interpreter)
Grace Gao (Interpreter)

CHINA
State Councilor Dai Bingguo
Ambassador Zhou Wenzhong
Qiu Yuanping, Vice Minister, Communist Party Central
Committee Foreign Affairs Office
Liu Jieyi, Assistant Foreign Minister
Zheng Zeguang, Director-General, Ministry of Foreign
Affairs Department of North American and Oceanian Affairs
Ma Zhaoxu, Director-General, MFA Department of Policy
Planning

Sun Weidong, Deputy Director-General, MFA Department of
Asian Affairs
Xie Feng, Chinese Embassy Deputy Chief of Mission
Wang Lutong, Secretary to State Councilor Dai
Cong Peiwu, Counselor, MFA Department of North American
and Oceanian Affairs
Hong Lei, Counselor, MFA Information Department
Hou Yue, Counselor, MFA Protocol Department
Sun Ning (Interpreter)
Notetakers



2. (C) SUMMARY. Deputy Secretary Negroponte and State
Councilor Dai Bingguo highlighted progress on bilateral
security issues including nonproliferation cooperation and
military ties, but also pressed each other to recognize
their respective concerns in the evolving U.S.-China
security relationship. Assistant Foreign Minister Liu
Jieyi emphasized the importance China attaches to the
United States' working directly with it or through
multilateral institutions on nonproliferation, and
vigorously protested unilateral sanctions of Chinese
companies. Claiming recent moves by China to
institutionalize greater military transparency, State
Councilor Dai chided the U.S. military for its suspicious
approach and exaggeration of Chinese capabilities and
potential negative intentions. State Department and
Department of Defense representatives cited progress on
U.S.-China nonproliferation cooperation and military
exchanges, but regretted China's suspension of military
and nonproliferation dialogues in response to an announced
U.S. weapons sale to Taiwan. END SUMMARY.

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BILATERAL AND SECURITY ISSUES
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3. (C) In the December 15, 2008 meeting, State Councilor
Dai Bingguo led off by asking Assistant Foreign Minister
Liu Jieyi to make remarks on behalf of the Chinese
delegation. Liu emphasized China's opposition to
proliferation, borne out in a host of domestic
regulations. China takes a cooperative approach in
combating the spread of weapons of mass destruction and
has worked closely with the United States multilaterally
on the Iranian and North Korean nuclear issues and
bilaterally on strengthening export controls. He
characterized the U.S.-China relationship as constructive
and cooperative on nonproliferation. Liu did note that
there were some "discordant notes," citing the U.S. policy
of sanctioning Chinese companies for violations of U.S.
domestic law. Liu added that the United States'
sanctioning of three Chinese companies in the past year
and 30 companies overall since 2001 was a "serious
obstacle" to pursuing cooperation based on "mutual
benefit" and hoped the United States would "set the right
conditions" for further cooperation.


4. (C) In terms of military transparency, Liu said that
it is more important to be transparent on intentions than
on capabilities. He asserted that China is fully
transparent, in keeping with its "Harmonious World"
policy, its desire to resolve disputes peacefully, and its
"defensive defense policy." Liu added that China
maintains no troops abroad and opposes arms races.
China's defense budget is fully transparent and China has
released five white papers on its defense policy and three
on nonproliferation (NOTE: According to the ISN Bureau,
China has only released two nonproliferation white
papers). Liu cited China's improvements in transparency,
including its rejoining of the UN Register on Conventional
Weapons and the creation of a Ministry of Defense
spokesman position. Liu concluded by asserting that China
would enhance its peace and security through transparency,
but not concede its "rights" given the military disparity
between China and the United States. Noting that absolute
transparency is impossible, Liu said transparency must be
pursued on a voluntary basis.


5. (C) Citing the Iranian and North Korean situations,
State Councilor Dai asked how the P5 nuclear states could
encourage non-nuclear states to give up their nuclear
ambitions. He hoped that P5 countries could embrace
China's "no first use/no threatening of non-nuclear
states" policy. Dai believed that the United States has a
better understanding of China's limited capabilities than
other countries do and hailed the 1998 agreement that
neither country would target the other with nuclear
weapons. Criticizing the U.S. military as being too
sensitive, Dai said that the Deputy Secretary understands
China's intentions but that the military focuses on bad
intentions, thereby creating mistrust. Dai concluded that
the U.S. military should stop spending money on its own
military expansion.


6. (C) Deputy Secretary Negroponte invited Acting
Assistant Secretary for International Security and
Nonproliferation Patricia McNerney to present the U.S.
position on nonproliferation. AA/S McNerney cited "real
growth and progress" in U.S.-China cooperation on non-
proliferation, including China's trimming of conventional
military sales to Iran and the ongoing Megaports
Initiative. Regrettably, Chinese entities remain a
significant source of dual-use materials that Iran puts to
use in its nuclear and missile program. She urged China
to be stricter in enforcing UN Security Council
resolutions, including accepting back illicit cargos
intercepted in third countries while en route to Iran.
China's suspension of nonproliferation discussions this
fall was particularly unfortunate given the progress that
has been made as a result of frank official exchanges and
the State Department's direct engagement with NORINCO on
its internal compliance program and the de-listing of
China Great Wall Industries Corporation (CGWIC) from U.S.
Treasury Department sanctions following a convincing
presentation on March 20 from the President of CGWIC on
the steps the company has taken to prevent proliferation.
AA/S McNerney pressed China to rigorously enforce domestic
nonproliferation laws, particularly on the vexing case of
Dalian Sunny (aka LIMMT). She noted that Acting Under
Secretary John Rood had raised this issue with the Chinese
in June during the Security Dialogue and that the United
States has mandatory sanctions that it would need to
execute if the Chinese failed to take action. AA/S
McNerney concluded by emphasizing U.S. concern over
China's recently announced nuclear cooperation with
Pakistan, stressing the critical importance of not
undermining the Nuclear Suppliers Group by proceeding with
he announced projects.


7. (C) Deputy Assistant Secretary of Defense David Sedney
cited advances in U.S.-China military relations, including
the establishment of the Defense Telephone Link this year,
the commencement of a U.S.-China dialogue on nuclear
strategy and policy, and continuation of numerous
dialogues and exchanges. Secretary of Defense Gates
supports these exchanges and the U.S. military is
committed to a positive, constructive relationship. DASD
Sedney noted that he is looking forward to his own
discussions with Chinese military counterparts in Beijing
later this week and the release later this year of China's
next Defense White Paper. He stressed that transparency
and reciprocity are the keys to mitigating areas where our
interests do not coincide, such as U.S. naval activity
within China's exclusive economic zone (EEZ).
Acknowledging that there is no such thing as absolute
transparency, DASD Sedney explained that "the bigger the
country, the more valuable transparency is." When a
country's military capabilities match its stated
intentions, it is reassuring; when they do not, the
imbalance creates doubt and uncertainty. DASD Sedney
cited Secretary Gates' forthcoming article (a copy of
which he passed to the Chinese) as showcasing the serious
choices the U.S. military will have to make in order to
protect the U.S. people and play a leading role in the
world.


8. (C) Deputy Secretary Negroponte concluded the session
by insisting that the United States and China not give up
on our joint nonproliferation work, even though issues
such as Iran and North Korea have proven difficult.
Setbacks are accompanied by success, such as Libya and
South Africa giving up their nuclear programs. A North
Korean nuclear arsenal and Iran's acquisition of a nuclear
weapons capability would "complicate and threaten" our
mutual interests. Military transparency is supported by
the talks that DASD Sedney will conduct in Beijing. State
Councilor Dai intervened to warn DASD Sedney that the
Chinese military will likely complain about the recent
weapons sale to Taiwan, and that he should present "fresh
thinking" since "restating the U.S. position will not be
sufficient; the situation has changed."


RICE