SCENESETTER FOR THE DEPUTY SECRETARY'S VISIT TO

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 002693

SIPDIS

DEPARTMENT FOR D, EAP, EAP/CM

E.O. 12958: DECL: 09/15/2029
TAGS: PREL PGOV ECON PARM MARR CH KN AF PK TW
SUBJECT: SCENESETTER FOR THE DEPUTY SECRETARY'S VISIT TO
CHINA, SEPTEMBER 28-29

Classified By: Ambassador Jon M. Huntsman, Jr.
Reasons 1.4 (b/d).


1. (C) Mister Deputy Secretary, your trip to Beijing comes as
a simultaneously prosperous and stable yet anxious and
brittle China prepares for its 60th birthday October 1.
Thirty years of double-digit economic growth have brought a
measure of stability and prosperity to many, yet numerous
political, economic and social woes challenge a system of
governance lacking the dynamic stability enjoyed by mature
democracies and rife with systemic corruption. Although the
September 15-18 CCP Plenum was purportedly to address
political reform and corruption, observers predict no
significant outcomes in either area.

U.S.-China Relations
--------------


2. (C) Externally, the Chinese leadership is sharply focused
on U.S.-China relations. The Chinese recognize our growing
interdependence (though they prefer to refer to "common
interests") and have demonstrated a desire to use the
President's November visit to, in the words of Foreign
Minister Yang Jiechi, "demonstrate shared views on common
interests and develop "positive policy guidelines" on how to
improve strategic mutual trust and cooperation on key
issues." China's collective leadership remains convinced
that a strong relationship with the United States is a
prerequisite for China's continued economic development. Our
bilateral differences remain significant, but the Chinese see
the benefit of resolving, or at least managing, our
disagreements quietly and not letting them hijack the overall
relationship. Recent developments such as the U.S.
delegation meeting with the Dalai Lama in Dharamsala and the
Section 421 tire remedies decision would, in the past, have
been sufficient provocation for the Chinese to chill
relations. The restrained response from Beijing is clear
evidence that they are committed to keeping relations on an
even keel.


3. (C) Since your June 5 visit to Beijing, we have worked to
implement the President's vision of creating a positive,
cooperative and comprehensive relationship with China. The
July 27-28 Strategic and Economic Dialogue (S&ED)
kick-started a mechanism to oversee bilateral relations and
permitted the Secretary to reinforce the continued benefit to
China of U.S. global leadership. She reassured the Chinese
that the United States welcomed China's rise within the
international system, while at the same time stressing that
China must shoulder global responsibilities commensurate with
its growing political and economic clout. Presidents Hu and
Obama will sit next to each other at the Pittsburgh Summit,
which will be another opportunity for the United States and
China to pursue global, strategic economic objectives
together. Your counterparts will be eager to hear your views
on the major substantive themes and content of President
Obama's visit.


4. (C) Successful visits by Special Envoy Stern, Energy
Secretary Chu and Commerce Secretary Locke have kept us
focused on climate change and the importance of demonstrating
forward progress at Copenhagen. Special Envoys Holbrooke and
Bosworth have engaged their counterparts to discuss solutions
to problems in Afghanistan, Pakistan and the DPRK, and are
working to identify ways to move our common interests
forward. Chinese cooperation with us on Af/Pak remains
restrained by persistent PRC suspicions regarding U.S. aims
in the region. Our cooperation on Iran leaves much to be
desired, but will be crucial in coming months, which suggests
that an early visit by Special Envoy Dennis Ross would be
useful and important. The Chinese have said they would
welcome such a visit. Our cooperation on Burma has been
minimal (though not without its positive moments),but recent
refugee flows into China illustrate our long-argued point
that the Burmese regime, no matter how obstinate, is a cause
of instability in the region.


5. (C) Defense Consultative Talks led by USD/P Flournoy and
the Military Maritime Consultative Talks have helped us to
communicate to the PLA that we want improved military
relations. The Chinese seem willing to address our
disagreements in this field, including over our military
surveys in China's EEZ, behind closed doors, which is a major
improvement since the March 8 confrontation at sea involving

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the USNS Impeccable. The Chinese would welcome hearing your
ideas on how to improve our military-to-military relationship.


6. (C) By your arrival, the Chinese will likely have shown at
the Pittsburgh Summit their desire to play a cautious but
increasingly confident international economic role
commensurate with their growing economic stature. Also by
that time, Premier Wen will reportedly be only a week away
from traveling to Pyongyang, mostly to mark 60 years of
PRC-DPRK ties, but also to prod the North Koreans to return
to the Six-Party Talks and to the goal of Korean Peninsula
denuclearization.

Cross-Strait Relations
--------------


7. (C) Since the May 2008 inauguration of a Taiwan leadership
interested in improving relations with the PRC, the
cross-Strait situation has transformed into a relatively
stable relationship focused on achieving concrete, mostly
economic, agreements. Once fraught with tension -- and with
potentially very serious repercussions for the United States
-- eased cross-Strait ties have allowed us to step back from
a day-to-day focus on the situation (while we at the same
time remain prepared for contingencies). Beijing's limited
reaction to the Dalai Lama's recent visit to southern Taiwan
showed an understanding of the Taiwan politics involved and a
desire to avoid jettisoning the positive track of
cross-Strait relations. The Chinese, as always, are watching
carefully for signs of new U.S. arms sales to the island.

Inside the PRC
--------------


8. (C) You will notice in Beijing an enhanced security
presence to ensure a trouble-free celebration of the 60th
anniversary of the founding of the PRC, to include a massive
military parade showing off China's most modern weapons. The
heightened security stance reflects the unease of a
leadership beset with internal, mostly localized, challenges
-- not external threats -- to the ruling authorities. Recent
unrest and continuing tensions in Xinjiang, in both Han and
Uighur communities, challenge the Party's ability to maintain
stability in that far-western province and have provoked rare
popular calls for the regional Party Secretary (and CCP
Politburo member) to step down. Tibet remains tense 18
months after deadly riots, which partly explains the Chinese
pique over any foreign leaders' interaction with the Dalai
Lama. In the intensified security environment of the lead-up
to the October 1 anniversary, rights lawyers, activists,
dissidents and others who challenge the government and Party
have suffered. Just to remind that the challenges to
governance come in many forms, you may see thermal scanners
at your hotel as the Chinese remain on high alert for an H1N1
flu pandemic. In face of these and other perceived
challenges, the leadership works hard to maintain top-level
consensus and is searching for ways to address increasing
public demands for good governance. Still, Tibet, Xinjiang
and Beijing's harsh treatment of peaceful dissenters are
reminders that, six decades into CCP rule, the PRC leadership
has to continue to seek a way forward that will avoid the
fate of the Soviet Union.


9. (U) Mr. Deputy Secretary, all of us at Embassy Beijing
look forward to your arrival and to contributing to the
success of your visit to China.
HUNTSMAN