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
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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
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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
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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

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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

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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