S/P Slaughter's Talks with MFA, MOFCOM, NDRC, and Academics

C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 001531

SIPDIS

STATE FOR EAP/CM - THOMAS, FLATT, THORNTON, SHEAR
STATE FOR S/P - CHOLLET, GREEN
STATE FOR E -- YON
STATE FOR D -- PARK
STATE PASS USTR FOR STRATFORD
NSC FOR LOI
TREASURY FOR EUGENE HUANG, CHRIS WINSHIP
PARIS PASS OECD

E.O. 12598: DECL: 06/07/29
TAGS: PREL PARM UNSC ECON EFIN EAID MNUC PTER JP AF PK KS
KN, RS, CH
SUBJECT: S/P Slaughter's Talks with MFA, MOFCOM, NDRC, and Academics
on Strategic Opportunities and Challenges

Classified by Economic Minister-Counselor Robert Luke. Reasons 1.4
(b) and (d).

SUMMARY
--------------


1. (C) In a June 1 meeting with Ministry of Foreign Affairs (MFA) VM
He Yafei, State Department Policy Planning Director Anne-Marie
Slaughter discussed the U.S. proposed agenda for the late July first
meeting of the U.S.-China Strategic and Economic Dialogue (SnED),
noting differences between the two sides on the agenda had narrowed
significantly. MFA Policy Planning DG Le Yucheng, in a separate
discussion, called the planned U.S.-China-Japan trilateral meeting a
"mature" idea but highlighted the need to mitigate potential concern
by the Republic of Korea (ROK) and others. Le welcomed renewed U.S.
engagement on Afghanistan and Pakistan (AfPak),and called for a
greater regional and multilateral role on Pakistan, possibly in a
form modeled on the Six-Party Talks. Ministry of Commerce (MOFCOM)
VM Fu Ziying told Slaughter China is willing to work together with
the United States on specific foreign assistance projects, but wants
to keep it "low-key for now." National Development and Reform
Commission (NDRC) Vice Chairman Zhang Xiaoqiang said China wants to
move forward on climate cooperation and seeks clarity on counterpart
officials and responsibilities now that State has taken over lead
from Treasury. Former Party School Executive VP Zheng Bijian said
China's peaceful development requires good U.S. relations and invited
senior U.S. participation at an energy forum he is organizing. Three
premier Chinese international relations scholars advised Slaughter
that the "responsible stakeholder" term rubbed many Chinese people
the wrong way and suggested reframing the relationship as a focused
"partnership." End Summary.

Discussion with MFA VM on SnED Agenda
--------------


2. (SBU) Director Slaughter delivered a demarche on Pakistan
Displaced Persons (septel) and discussed the plenary session and
strategic track of the SnED in a 90-minute June 1 meeting with VFM
He.


3. (C) VFM He urged the U.S. to arrange for President Obama to kick
off the SnED meeting, promising that PRC President Hu Jintao would
reciprocate in China in 2010. He expressed China's expectation that
China's delegation would also call on the President at the White
House at the SnED's conclusion. VFM He agreed with the U.S. proposed
plenary format with the first hour devoted to remarks by the
President, if that is arranged, followed by the four co-chairs.


4. (C) In a break with the previous Chinese position, VFM He also
agreed to the U.S. proposal that the third hour of the opening
session be a private meeting of the four co-chairs to discuss
President Obama's visit to China in November, the purpose and
direction of the SnED, and other sensitive topics.


5. (C) For the strategic track, VFM He proposed discussing issues in
three "baskets." The first basket would deal with bilateral
relations, including: defining what we mean by a positive,
cooperative and comprehensive relationship; elucidating core issues
of concern (Tibet, Taiwan and Xinjiang for the PRC); and reviewing
our respective strategic security issues, such as energy security,
military strategy and intentions in the Pacific, and broad economic
development strategies. Basket Two would focus on global issues like
energy, environment, climate change, arms control, food security, and
infectious diseases. He added that specific details of cooperation
under the Ten-Year Framework should take place in the economic track.
Basket Three would include international and regional hot spots like
North Korea, South Asia, Iran, Sudan, Africa, and development issues.


6. (C) VFM He said China envisioned the Secretary and State Councilor
Dai talking in a "strategic fashion" and providing guidance to lower
level officials responsible for the Latin America, Africa, and
South/Central Asia sub-dialogues. He made clear that China did not
expect all the issues in each basket to be discussed at the first

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SnED, saying that the two sides could pick and choose in response to
the circumstances.


7. (C) VFM He showed some flexibility on the idea of issuing a joint
statement for the overall SnED, especially after Slaughter indicated
the importance the President and Secretary placed on demonstrating
the SnED's role in driving the relationship forward. VFM He said he
was hesitant to have the principals get bogged down in negotiating a
detailed joint document but was open to the possibility of a short,
concise, and strategic statement.

Policy Planning DG: PRC Positive on U.S.-China-Japan Trilat
-------------- --------------


8. (C) After outlining his department's work, MFA Policy Planning DG
Le Yucheng told Director Slaughter that his office leads China's
planning for the U.S.-China-Japan trilateral meeting. He cautioned
that such a trilateral could cause concern among other countries,
especially the ROK and Russia, and suggested that we proceed
cautiously, seek gradual progress, and accommodate the interests of
these other parties. China was nevertheless positive on the concept,
he emphasized, noting that China proposed the idea in 2007 at the
U.S.-China Senior Dialogue. Calling the idea a "mature" one, he
asserted that recent progress on bilateral relations among the three
would provide a conducive backdrop to the talks. Le said that
developments such as the global financial crisis had put the
spotlight on common challenges that could be addressed in a
trilateral forum.


9. (C) On agenda items, Le proposed the global financial crisis,
global governance, energy security, climate change, and anti-pirate
coordination. He advised against media outreach in relation to the
talks and against a joint statement. He suggested a successful start
to the talks could eventually lead to its escalation to the AFM or
even ministerial level.

Multi-lateralizing Af/Pak
--------------


10. (C) Turning to regional security, Le said China's neighboring
countries had been negatively impacted by the global economic
turbulence. Pakistan had suffered from regional fragmentation and
fragmentation of its political structure. He expressed alarm at the
current security situation in Pakistan, adding that Chinese workers
there faced increased threats. Le said China worried that a chaotic
Pakistan could cause "Afghanistan-ization" of other countries in the
region, and China welcomed and supported the increased U.S.
engagement on Af/Pak.


11. (C) Le suggested that more multilateral engagement on Af/Pak
would be useful, possibly in the form of an international conference
or mechanism modeled after the Six-Party Talks. He pointed to the
importance of regional engagement, including with India and Russia,
to ensure the influence of regional powers is coordinated with U.S.
efforts. Le sought insight into whether there was truth to the
"rumors" that the U.S was engaging with elements of the Taliban.

Ready to Go on Limited Development Assistance Cooperation
-------------- --------------


12. (SBU) VM Fu Ziying told Dr. Slaughter that MOFCOM is the
appropriate agency to discuss development assistance, though he asked
her to keep in mind that China is a poor country, and thus does not
have the same financial resources available for overseas development
assistance as the United States. Nonetheless, he said China is
willing to collaborate with the United States at the working level on
identifying one or two projects for joint work, leveraging China's
comparative advantage in human resources and America's in financial
resources. He warned against including this as an agenda item for
the first SnED, saying it would be better to start off small and
concrete rather than risk getting entangled in high-level talks on
philosophical differences. He said both China and the United States
share a commitment to reducing poverty around the world, and that

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this forms a solid basis for cooperation.

NDRC Wants Clarity on Climate Counterparts
--------------


13. (C) Vice Chairman Zhang Xiaoqiang said NDRC is eager to move
forward on climate cooperation and hopes for clarity on counterpart
officials and responsibilities now that State has taken over lead
from Treasury. Zhang noted Vice Chairman Xie Zhenhua had given U.S.
Special Envoy for Climate Change Todd Stern a draft memorandum of
understanding (MOU) during Xie's recent DC visit and that he hopes
Stern will respond to it during Stern's early June visit to Beijing,
adding that the MOU could be an important part of the first SnED.
Zhang added NDRC would like to maintain the State-NDRC Dialogue.
China's Peaceful Development Requires Good U.S. Relations
-------------- --------------


14. (SBU) Former Party School Executive Vice President Zheng Bijian
told S/P Director Slaughter that China is focused on its peaceful
rise on the world stage. He noted, however, there are many
challenges on China's development path including shortcomings in the
areas of democracy, culture, and civil society. China hopes to
realize a moderately well-off society by 2020 and become a modern
society by 2050, and China's leadership has a clear picture of what
it will take to reach these goals, Zheng said. China will pursue
good relations with the United States to help realize the stable
conditions required for development. Although bilateral differences
exist, U.S.-China relations can make progress if handled correctly.


15. (SBU) Asked by Slaughter how China will balance being
simultaneously a developing country and a world power, Zheng replied
that it is only through cooperation with countries like the United
States that China can realize its goal of peaceful development.
Zheng noted that a successful bilateral relationship requires an
emphasis on practical results and, as an example, emphasized his role
in organizing a U.S.-China Energy Partnership Forum in early
September which is co-sponsored by the Brookings Institution and the
China Institute of Strategy and Management.

Scholars Recommend Calling Relationship a "Partnership"
-------------- --------------


16. (C) In a roundtable discussion with international relations
professors Chu Shulong (Tsinghua University),Zhu Feng (Peking
University),and Jin Canrong (Renmin University) (strictly protect
all),the three scholars unanimously suggested that any new
description of U.S.-China relations use some form of the word
"partner," even if conditioned by another word or phrase. They
thought the U.S. calling on China to be a "responsible partner" would
be an improvement over the "responsible stake-holder" formulation,
which they claimed had taken on negative connotations to Chinese
observers. Chu stressed that any formulation needed to be persuasive
and Zhu Feng added that it should also be meaningful at an emotional
level to ordinary Chinese citizens. Jin suggested using
issue-specific formulations instead of a single over-arching
catch-phrase. Chu and Zhu agreed that the issue was the wording and
that China should indeed play a more responsible role in the global
system.

Avoid Marginalizing Japan, Give it a Greater Role
-------------- --------------


17. (C) Chu Shulong argued that Japan needed to have a greater role
in regional and global governance systems given its economic
importance, and that constraining Japan too much diplomatically could
be dangerous; he acknowledged, however, that his was a minority view
in China. He said that a U.S.-China-Japan trilateral meeting could
play a helpful role in engaging the Japanese on regional issues. He
reported that Chinese and Japanese leaders had "agreed to discuss" UN
Security Council reform, although no "formal" arrangements had
emerged. Zhu Feng noted that the Japanese were very nervous about
the G-2 concept, and the U.S. and China should continue to distance
themselves from the formulation.

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18. (U) The delegation has cleared this cable.