SERBIA AND CHINA FIND ECONOMIC AND POLITICAL

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 002536

SIPDIS

E.O. 12958: DECL: 09/03/2029
TAGS: PREL PGOV EAID EINV ICG YI KV CH
SUBJECT: SERBIA AND CHINA FIND ECONOMIC AND POLITICAL
OPPORTUNITIES DURING PRESIDENTIAL VISIT

Classified By: Political Minister Counselor Aubrey Carlson for reasons
1.4 (B/D)



1. (C) Summary: Affirmation of mutual support on respective
Serbian and PRC sovereignty issues highlighted the political
agenda of Serbian President Boris Tadic's August 19-25 visit
to China, according to Serbian diplomats and Chinese
government and academic contacts. Despite MFA insistence
that its April 2009 submission to the ICJ did not explicitly
support either Serbia or Kosovo over the question of Kosovo's
independence, a Serbian diplomat reported that China had
voiced support for Serbia's views on Kosovo during the visit.
An MFA official confirmed that the visit had included broad
economic agreements, particularly in areas of investment,
trade, infrastructure and tourism, but said that the PRC had
offered no promises of funding. End Summary.

Formalizing an "Already Strong" Relationship
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2. (C) Serbian Embassy Political Counselor Alexander Jankovic
on August 28 provided PolOff details of the first high-level
visit to China by a Serbian president since Serbia was
established as an independent state in 2006. President
Tadic, accompanied by Minister of Economy and Regional
Development Dinkic and Foreign Minister Jerimic, met with PRC
President Hu Jintao, Premier Wen Jiabao, and National
People's Congress Standing Committee Chairman Wu Bangguo. In
addition to Beijing, the delegation visited Shanghai and Xian
and participated in investment and trade fora in Beijing and
Shanghai. The end result was the signing of a "Joint
Statement on Establishing a Strategic Partnership," as well
as three economic documents.


3. (C) Jankovic highlighted several key areas in the
Serbia-PRC Joint Statement, including a formal reiteration of
each nation's position regarding important political issues
and an agreement to strengthen dialogue at all levels through
increased exchanges and cooperation. The two sides agreed to
greater economic investment and trade and expanding
cooperation in culture, education, sports, science and
technology, and military and police fields. In addition, the
Joint Statement expressed commitment to live and work within
the framework of the United Nations, respect for the UN's
role and principles, and the need to address the global
financial crisis through international coordination. China
also affirmed its support for Serbia's efforts to integrate
into the European Union. Tadic invited Hu to a cultural
event in Belgrade in 2010 to celebrate China and Serbia's
55th anniversary of the establishment of diplomatic relations.

Mutual Support on Sovereignty Issues
--------------


4. (C) MFA-affiliated China Institute of International
Studies (CIIS) Department of European Union Studies Deputy
Director Li Weiwei on August 31 told PolOff that common
positions on political issues such as sovereignty concerns
made each country attractive to the other in pursuing its
political objectives. President Tadic repeatedly mentioned
Serbia's respect for China's sovereignty, including strong
opposition to "Taiwan independence," by throughout the trip.
Though Xinjiang was not mentioned in the Joint Statement,
President Tadic made a point to affirm Serbia's support for
China's action in suppressing the early July unrest in
Xinjiang, a different position than that taken by the EU,
which had called for a peaceful resolution while stressing
the need for freedom of expression and the right to peaceful
assembly.


5. (C) On the issue of Kosovo's independence, China
reaffirmed its respect for Serbia's sovereignty and
territorial integrity, according to Serbian Political
Counselor Jankovic. China expressed hope for a diplomatic
resolution between Kosovo and Serbia in accordance with the
principles of the United Nations and international law.
Jankovic noted that China had in April submitted an advisory
opinion to the International Court of Justice in The Hague on
the legality of Kosovo's declaration of independence and said
that PRC officials reiterated their support for Serbia's
position during the visit. However, MFA Treaty and Law
Department Public and International Law Division Deputy
Director Hu Bin told PolOff September 2 that the PRC brief
itself did not support either Serbia or Kosovo. (Note: A

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review of China's April 2009 ICJ submission provided by the
MFA reveals that while the submission does not specifically
mention either Serbia or Kosovo, it supports territorial
sovereignty and notes that secession from a sovereign state
is not recognized by international law unless under colonial
domination or foreign occupation.)

Three Economic Documents Signed
--------------


6. (C) Serbian diplomat Jankovic noted that three economic
agreements had been signed during the visit. The first was
an Agreement on Economic and Technical Cooperation that
encouraged Chinese participation in building and financing a
bridge over the Danube, a port on the Danube (which would
will allow for more direct imports from China, as presently
over half of the imports from China to Serbia are routed
through third countries),and a free economic zone for
Chinese companies. Tadic invited Chinese companies to invest
in Serbia, emphasizing the benefits as compared to the EU in
such areas as tax allowances, low-cost and available labor,
and other incentives. The two sides also initiated
agreements to facilitate Chinese tour visits to Serbia and
promising Chinese financial assistance to Serbia in the
amount of 10M RMB ($1.5M) for an as-yet undetermined purpose.

Economic Projects Mooted with No Funding
--------------


7. (C) In a meeting August 31 with PolOff, MFA European
Affairs Department Deputy Division Chief Tian Yishu
highlighted PRC and Serbian intentions to expand bilateral
trade, investment, infrastructure and high-priority
enterprises in such fields as communication, petrochemical
industry, energy, high and new technology, industrial
production, and food processing. Though he also noted
projects mentioned in the Joint Statement, such as bridge
construction and tourism initiatives to increase Chinese
tourist flow to Serbia, Tian insisted that no specific plans
were yet in place, nor had China provided funding to Serbia
for any specific projects.

China Extends Its Reach into Europe through Serbia
-------------- --------------


8. (C) CIIS scholar Li Weiwei suggested that in economic
terms, Serbia found in China an excellent partner for
pursuing economic growth initiatives in infrastructure,
tourism and trade. Conversely, China saw opportunity in
Serbia. Not only did it see Serbia as outspoken in its
political support for China on controversial issues within
the European Union, but by continuing to extend its reach
into Europe through Serbia, China's economic and political
influence would be strengthened, Li asserted.
HUNTSMAN