COMMERCE SECRETARY LOCKE TO MIIT MINISTER LI

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 002127 SIPDIS COMMERCE FOR KASOFF AND MELCHER E.O. 12958: DECL: 07/22/2019 TAGS: ENRG KGHG ECON SENV PGOV CH SUBJECT: COMMERCE SECRETARY LOCKE TO MIIT MINISTER LI YIZHONG: THE FUTURE LIES IN CLEAN ENERGY, TECHNOLOGY Classified By: Acting Economic Counselor Robert W. Forden, for reasons 1.4 b, d. ¶1. (C) Summary. In a July 15 discussion with Minister of Industry and Information Technology (MIIT) Li Yizhong on the challenges posed by the global financial crisis (GFC), Secretary of Commerce Locke emphasized the importance of investing in clean energy and technology. Secretary Locke noted that recovery in the United States will be slow and take a considerable amount of time. Li, in turn, warned against putting too much hope in China to save the world economy, adding that "only until the United States and Western Europe recover, can we have hope of a global economic recovery." Secretary Locke raised U.S. concerns over China,s proposed measures mandating that computers sold in China include Green Dam filtering software and recent actions taken against Google in China. Minister Li defended the Green Dam software measure as a means to protect minors from pornography and decried the politicization of the issue. He thanked Secretary Locke for a letter he had written on the issue, emphasizing that China would study the issues the U.S. had raised. Li did not respond directly on Google, but said some of the issues related to Google were moving toward resolution. End Summary. WE CAN'T DELAY TAKING THE NECESSARY STEPS TO FIGHT GLOBAL WARMING -------------- -------------- ¶2. (U) In the July 15 meeting with MIIT Minister Li in Beijing, Secretary Locke told Li that the U.S. stimulus package includes long-term investments and is based on a future which relies on investment in technology, R&D of alternative energy, and energy efficiency, "because it is our belief that focusing on clean energy and environmental protection will actually create new jobs in the 21st century." ¶3. (U) Secretary Locke pointed out that tough economic times are an ideal time to restructure industry, so when the economy improves industry will be in a better position. He remarked that "even despite economic turmoil, we can,t delay taking the necessary steps to fight global warming," and expressed hope that as China focuses on its economy, it will not delay its efforts to solve its energy problems. Locke called on China to continue to push for the Euro 4 standards it adopted on diesel engines, observing that a focus on higher efficiency standards will incentivize companies to comply and create new technology. Locke reminded Li that the "United States is very open to Chinese investment in the United States, and very much looks forward to products made in China to help solve our goals and objectives in energy efficiency and clean energy." CHINA'S STIMULUS PACKAGE: ENCOURAGING DOMESTIC CONSUMPTION -------------- -------------- ¶4. (U) Minister Li described China's stimulus package as a series of measures for particular programs enacted by the Chinese government in the past year. The programs include: (1) 1.3 trillion RMB to increase investment, mostlyon infrastructure; (2) rate adjustment for 10 key industries: steel and iron, nonferrous metal, aircraft, ship, auto, light, textile, electronics. (Li mentioned this has had no impact on the financial sector, but has had a real impact on the real economy); (3) 20 billion RMB to accelerate technology upgrades of businesses;(4) Improve social security system: pension funds, migrant cases, employment. ¶5. (U) Li told Locke that after one year, these efforts have begun to pay off. However, China still faces a severe situation: the decline of both imports and exports. Exports are down by 20 percent for the whole year, and the domestic market alone cannot offset a decline in exports. ¶6. (U) Secretary Locke told Minister Li that "China has done well with its stimulus" by encouraging domestic consumption and by stimulating industries. Li agreed that "at the end of the day, economic recovery will rely on consumption and spending." He hoped that the Chinese, who have a tendency to save, could learn something from Americans, who tend to consume on loans and credit. INCREASING ECONOMIC TIES BETWEEN THE US AND CHINA -------------- - ¶7. (U) Secretary Locke told Li that he looked forward to the upcoming JCCT in October, and wished to concentrate on enhancing mutually-beneficial U.S.-China economic ties. He told Minister Li that American companies can offer technological expertise to help China meet its objectives while creating millions of jobs for Chinese people. Locke BEIJING 00002127 002 OF 003 expressed hope that American companies will be eligible to participate in China,s stimulus programs and compete equally against Chinese companies. ¶8. (U) Li told Locke that China will welcome investments by American businesses and future cooperation, as such investments will help consumption and spending. GREEN DAM -------------- ¶9. (U) Minister Li thanked Secretary Locke for a letter Locke had sent to him regarding the Green Dam software measure, welcoming understanding and support of the Chinese government,s initiative to protect Chinese minors on the internet. Li told Locke that he believed the letter was written in good will and that China would consider the points raised in it. Li said that he fully agreed that economic recovery will depend on science and technology and that the internet plays an increasing role on society, the economy, and the improvement of life. ¶10. (U) Minister Li explained that the Green Dam measures were a response to a call from parents and teachers to protect children from the large amount of "unhealthy information on the internet, like pornography." Last April, the government installed some programs in schools and cybercafs and received a positive public response, Li said. As a result, MIIT announced that it would require all computers (both foreign and domestic) to pre-install the software. ¶11. (U) Li defended the software as "designed to filter unhealthy online information. It asserted that it had no other purpose and that it was not true that China sought to control or violate privacy. He acknowledged that some factors had not been considered in rolling out the measure, which led to some misunderstandings. So China had decided to postpone implementation so it would have time to solicit more opinions and further improve the software. Li stressed that the software is not mandatory for users and is free -- people can download it online. ¶12. (U) Li complained that "a few businesses" were politicizing the issue and that China was very dissatisfied with these businesses. Li said he had heard that one congressman in the US had even proposed a resolution on the issue. Li saw this as "unfriendly" and expressed hope that through Secretary Locke, a better resolution of the issue could be reached. ¶13. (U) Secretary Locke thanked Li for delaying implementation of the order for mandatory installation of Green Dam software. He agreed that the internet will play a powerful role in society in the future but that at the same time, emphasized that issues of cyber security were of utmost importance to governments around the world. He noted that many in the U.S. also have young children and are concerned as parents that our children not be exposed to inappropriate content. The U.S. hoped to work together to address the legitimate concerns of the Chinese government to protect children and acknowledged the sovereign right of each nation to protect its citizens. However, he cautioned Li that "the internet is so pervasive and tied worldwide that countries need to be careful in the demands they make to individual providers. It is unworkable to expect individual internet companies to respond to different requirements all over the world." U.S. CONCERNS OVER CHINESE POLICIES REGARDING GOOGLE -------------- -------------- ¶14. (C) Reiterating that the U.S. understood the need to protect children from pornography, Secretary Locke noted that the U.S. was also very concerned about recent measures China had taken against Google. The value of Google,s search engine was its ability to provide a comprehensive search of all available information. Over 95 percent of Chinese Google users are referred to Chinese websites. Less than 5 percent of people in China use google.com; most are expats, businesses, or scientists who go on the World Wide Web. This gives them access to materials they need for research, and other business. Locke emphasized that restricting this small amount of people from accessing the information they need for legitimate purposes was bad for China,s development, sent a bad signal to the international community and could negatively impact US-China relations just as we moved forward to hold the first Strategic and Economic Dialogue. He reiterated that the U.s. respected the sovereign right of China to protect its citizens, but that we hoped China could work with the relevant parties to address its concerns. ¶15. (C) Noting that the scheduled end time for the meeting BEIJING 00002127 003 OF 003 had passed, Li declined to reply specifically to the Google issues. However, he noted that some of Google,s concerns were "undergoing resolution." Li said China recognized that the internet is an "irreversible trend. " However, there were differences among different countries. He said that China takes note of the U.S. government,s views. He concluded by stating that China appreciated the approach President Obama had taken toward China since he had become President. GOLDBERG