Identifier
Created
Classification
Origin
09BEIJING666
2009-03-13 18:14:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:  

PREMIER ADDRESSES FINANCIAL CRISIS, TIBET, TAIWAN,

Tags:  PGOV ECON PREL EFIN CH TW KN KS FR 
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OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0666/01 0721814
ZNR UUUUU ZZH
O 131814Z MAR 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2881
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC
UNCLAS SECTION 01 OF 05 BEIJING 000666 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON PREL EFIN CH TW KN KS FR
SUBJECT: PREMIER ADDRESSES FINANCIAL CRISIS, TIBET, TAIWAN,
DPRK IN NPC CLOSING PRESS CONFERENCE

REF: A. BEJING 664

B. BEJING 649

C. BEJING 633

D. BEJING 614

E. BEJING 607

F. BEJING 589

G. BEJING 580

H. BEJING 559

I. BEJING 531

SUMMARY
-------

UNCLAS SECTION 01 OF 05 BEIJING 000666

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON PREL EFIN CH TW KN KS FR
SUBJECT: PREMIER ADDRESSES FINANCIAL CRISIS, TIBET, TAIWAN,
DPRK IN NPC CLOSING PRESS CONFERENCE

REF: A. BEJING 664

B. BEJING 649

C. BEJING 633

D. BEJING 614

E. BEJING 607

F. BEJING 589

G. BEJING 580

H. BEJING 559

I. BEJING 531

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


1. (SBU) Premier Wen Jiabao set the tone for his annual press
conference at the conclusion of the National People's
Congress (NPC) by noting on March 13 that this year's NPC
session had been convened in the midst of the global
financial crisis and therefore had focused on China's
financial stimulus plan. "Confidence, not gold or money" was
the key to making China's stimulus plan a success, the
Premier said. China's plan for dealing with the economic
crisis would include large government investment in
infrastructure as well as the social safety net, industrial
restructuring, environmental protection and technology;
projects already included in the 11th Five-Year Plan such as
roads and railways; and new projects such as tax relief,
pension reform, employment training and rural health programs
that would be funded separately. China's foreign exchange
reserves and sound financial system would help it get through
the crisis; China would manage its forex reserves and RMB
value according to its own interest; the eight percent
economic growth rate target was "achievable"; and money would
be spent in a "transparent process subject to oversight."
Wen said he was "a little concerned" about the security of
China's assets in the United States because of China's large
holdings of U.S. debt and urged the United States to "honor
its credit, abide by its promises, and ensure the security of
China's assets." (NOTE: Xinhua news agency, in English,
carried the comments about the Premier's "worries" while at
the same time reporting that Wen expected U.S. measures would
"counter" the international financial crisis and that Chinese
reserves currently were "generally safe.")


2. (SBU) Summary Continued: Turning to Tibet, Wen reiterated
China's hard-line stance by lashing out at the Dalai Lama's

"lies" and asserting that the Dalai Lama was a political, not
religious, leader bent on Tibetan independence. China stands
ready to continue talks with the Dalai Lama, as long as he
abandons "separatism." On Taiwan, the Premier stressed the
need to "intensify" consultations on reaching an economic
agreement. Wen dodged a question on a possible North Korean
missile launch, stating instead that the main task was to
restart the Six-Party Process and avoid "contentious
actions." DPRK Premier Kim Yong-Il will visit China soon at
Wen's invitation, based on PRC-DPRK "traditional friendship."
Addressing the state of Sino-French relations, the Premier
said the onus was on Paris to repair the damage to the
relationship caused by French President Sarkozy's meeting
with the Dalai Lama. End Summary.

WEN FOCUSES ON ECONOMY, TIBET, TAIWAN, DPRK
--------------


3. (U) Premier Wen Jiabao's March 13 press conference again
served this year as the final event in China's annual
political spectacle, the "two meetings" (the National
People's Congress (NPC) and the Chinese People's Political
Consultative Conference (CPPCC)). Appearing at the press
conference immediately following the formal close of the NPC
earlier that morning (ref A),a confident and well-prepared
Premier Wen met with a large contingent of foreign and
domestic press for two and one-half hours, answering
questions on China's financial stimulus package, Tibet,
Taiwan, the DPRK and a range of other issues.


4. (U) Wen set the tone for the event by first noting that
this year's NPC had been convened in the midst of a global
financial crisis and that the NPC Government Work Report had
spilt considerable ink on China's financial stimulus plan.
Reiterating his "confidence" mantra, Wen recalled that in
September of last year when the true dimensions of the
economic crisis were not yet clear, he had said that
"confidence, not gold or money" would be required to tackle
the problem. Now, half a year later, confidence is the key
to making China's stimulus plan a success. All journalists,
he declared, have a "responsibility" to spread this message
of confidence.

STIMULUS PACKAGE: DISPELLING RUMORS
--------------

BEIJING 00000666 002 OF 005




5. (U) Wen reviewed China's approach to the global financial
crisis, particularly its financial stimulus package and
expectations of a new stimulus plan, in response to several
questions. Wen lamented the many "rumors" which had led to
"misunderstandings" of China's package, clarifying that the
central government will only invest 1.18 trillion RMB out of
the two-year four trillion RMB stimulus package. The central
government's investment mainly would go to projects
addressing the people's well-being, projects concerning
technological transformation, environmental protection and
infrastructure investment.


6. (U) The 1.18 trillion RMB did not include many other
projects, such as tax relief, worker training, pension
reform, increasing rural incomes, rural medical and health
programs, Wen explained. Wen also explained that some of the
investment projects under the overall four trillion RMB
package were already included in the 11th Five-Year Plan,
such as public roads and railroads, projects that had already
been evaluated and preparations made, so they would be
accelerated under the stimulus package. He emphasized that
massive government investment in infrastructure and other
projects would yield the "most direct, efficient, and strong"
impetus to growth. The 1.18 trillion RMB is all for "new
investment," Wen said.


7. (U) Turning to other economic issues, Wen provided
statistics to argue that PRC debt had declined over the past
five years and revenues had increased, which he claimed
allowed the Government to feel confident about this year's
deficit spending policy. On increasing employment
opportunities, Wen said the stimulus package will help small
and medium enterprises (SMEs),which are the key to the
employment problem, accounting for 90 percent of jobs in
China. There are specific policies to help migrant workers
and students, Wen stated, claiming that "in general," the
employment situation is "stable."


8. (U) China was looking ahead to even tougher times and was
prepared for whatever may come, Wen concluded. Reiterating a
strong theme in the NPC Government Work Report, he said "the
entire process will be transparent and subject to oversight."
Wen sought to dispel "doubts" that the Government can
achieve the eight percent growth rate it has set as this
year's goal, in response to a Renmin Ribao reporter's
question. "It will not be easy," Wen said, acknowledging
that "goals cannot determine everything," but this goal would
be "possible" through hard work and a sense of necessity.
The Government has "promised" to deliver and had a
"responsibility" to do so. Ongoing marketization,
urbanization, industrial restructuring, expanding domestic
consumption, investment in rural areas, China's competitive
edge in labor and a healthy financial system were all factors
that will contribute to continued economic development, Wen
said..

TIBET: CONTINUED HARSH LINE
--------------


9. (SBU) Wen maintained China's hard-line stance on Tibet by
declaring that Tibet is an inalienable part of China's
territory and that Tibet issues are purely China's internal
affair. The "door remains open" to discussions with the
Dalai Lama's representatives "as long as he stops his
separatist activities." The Dalai Lama is a "political
exile," not simply a religious figure," who is the leader of
an "illegal, theocractic" government-in-exile. Noting that
the Dalai Lama "travels around the world meeting with
government leaders," Wen urged the international community to
"watch what the Dalai Lama does, not simply listen to what he
says."


10. (SBU) Wen lashed out at the Dalai Lama's response to
Foreign Minister Yang Jiechi's March 7 press conference, in
which when the Tibetan leader denied Yang's allegation that
he had asked for the removal of Chinese military forces from
Tibet and the expulsion of all Han Chinese. Calling these
comments "lies," Wen cited statements allegedly made by the
Dalai Lama in a "five-point proposal" in 1987 and a
seven-point proposal in 1988 in which the Dalai Lama
supposedly called for these steps to be taken. "The Dalai
Lama can switch positions," Wen declared, but he "cannot deny
what he has said in the past."


11. (SBU) Tibet was "peaceful and stable overall," in line
with the wishes of the "Tibetan people," Wen claimed. The
Chinese constitution and Law on Ethnic Autonomy stipulates
freedoms, especially freedom of religious belief, and in
recent years the Government has made a great effort to bring

BEIJING 00000666 003 OF 005


economic development to Tibet and improve the livelihood of
Tibetan farmers and people. This opening up policy would
continue, Wen declared, asserting that Tibet's "stability and
security" were ample evidence that China's policies there had
been "correct."

TAIWAN: FOCUS ON THE ECONOMY
--------------


12. (U) Wen praised the great progress made in cross-Strait
economic integration, stating that the economies of the
Mainland and Taiwan are "indivisible." He called for an
"intensification" of consultations to reach an economic
agreement and develop a cooperation mechanism. Economic
progress must be "aligned with" a continued improvement in
cross-Strait relations, the realities of trade and the
special features of cross-Strait economic relations and trade
in order to produce a "win-win" solution.

TAIWAN AND THE WHA?
--------------


13. (U) Responding to a question on Taiwan's possible
participation in the World Health Assembly (WHA) this year,
Wen referred to the Government Work Report in which he had
reiterated China's position that it would make "fair and
reasonable arrangements" for Taiwan regarding some
international bodies, "such as the WHA," involving the
interests of "Taiwan compatriots." When asked if he would
like to visit Taiwan, the Premier said Taiwan was a "treasure
island of the motherland" and a place he had always wanted to
go. Though now 67 years old, Wen said he would be willing to
"crawl" to Taiwan if he could no longer walk.

DPRK: RESTART SIX-PARTY TALKS
--------------


14. (U) Wen sidestepped a question about North Korea's
possible missile launch, replying instead that the most
important task was to restart the Six-Party Talks. China was
committed to the denuclearization of the Korean peninsula,
which would contribute to the security not only of Korea but
all of Northeast Asia. All parties to the Talks should "keep
the big picture in mind, handle well differences and not take
any contentious action." China would continue to "strengthen
consultations" with the other five parties and keep the talks
process "moving on a sound track." In answer to a question
about the upcoming visit to China by DPRK Premier Kim
Yong-il, Wen emphasized the "traditional friendship" between
the two countries and said the discussion would include the
"full range" of bilateral, regional and international issues,
while also noting that Kim would be traveling in response to
Wen's invitation.

CONCERN OVER CHINA'S HOLDING OF U.S. DEBT
--------------


15. (SBU) Premier Wen was asked how he would evaluate U.S.
measures to counteract the global financial crisis in light
of China's large holdings of U.S. debt and what China's
strategy was for spreading its investment risks if the U.S.
dollar depreciated. Wen responded that China was "paying
close attention" to the U.S. economic situation and "looks
forward to the results" of measures taken by the new Obama
administration. However, Wen said, "after lending an
enormous sum" to the United States, "we are certainly
concerned about the security of our assets." "Frankly
speaking," he said, "I am a little concerned." Wen urged
the United States to "honor its credit, abide by its promises
and ensure the security of China's assets." (NOTE: After
the press conference, China's Xinhua news agency's
English-language coverage carried Wen's comments by
acknowledging the Premier's "worries" while at the same time
reporting that Wen expected U.S. measures would "counter" the
international financial crisis, and that Chinese reserves
currently were "generally safe.") China's "huge foreign
exchange reserves" demonstrated the strength of its economy,
Wen said, asserting that China's first principle in managing
this reserve was to "guard against risk" through maintaining
the "security, liquidity and good value" of forex to pursue a
"diversification strategy." China's top priority was to
protect its own national interests, but it needed to also
consider the interrelated issue of the stability of the
international finance system.

CHINA'S CURENCY
--------------


16. (U) Wen also addressed a reporter's question as to
whether China could guarantee that it would assist

BEIJING 00000666 004 OF 005


international economic interests by not devaluing the RMB.
Wen rejected the reporter's suggestion that the value of the
RMB was depreciating, noting that it had appreciated against
the U.S. dollar by 21 percent since July of 2005, and that
the falling Euro and Asian currencies meant the RMB was
appreciating and that this was putting great pressure on
China's export sector. China's goal was to maintain a
"basically stable value of the RMB." "We ourselves will make
the decision," he declared, stating that "no country can
pressure China to appreciate or depreciate" its currency.


17. (U) In answer to a question on whether China would
contribute more to the IMF, Wen said the IMF issue was
"complex" and that China was "paying close attention" to it.
China's approach was based on several principles: structural
reform of the IMF (including guarding against investment
risks, balancing rights and obligations and considering the
interests of developing countries),member states'
responsibilities in accord with their quotas, expanding the
variety of financing offered by international financial
institutions and ensuring that countries increased their
funding "on a voluntary basis and in line with national
conditions."

REFORM WILL CONTINUE, INCLUDING POLITICAL REFORM
-------------- ---


18. (U) China intended to "accelerate reform," which, Wen
said, "was the only way to remove institutional barriers" and
"implement the stimulus package," in response to a CCTV
reporter's question on the impact of the financial crisis on
reform. Wen called for reliance on the "market" to allocate
resources and for non-governmental and private organizations
to invest and contribute to the success of the stimulus plan.
More "political structural reform" was also an essential
part of the economic policy, Wen said, including boosting
"socialist democracy, freedom and rights," further judicial
reform to foster "social equity and justice" and "oversight
by various social sectors" to ensure that government
administration "acts according to law."

CHINA-HONG KONG-MACAO
--------------


19. (U) The impact of the financial crisis was becoming "more
acute" in Hong Kong and Macao, Wen said, asserting that China
was nevertheless confident Hong Kong would maintain its
status as a "global finance center." The Mainland would
strengthen Hong Kong's financial situation and China-Hong
Kong financial interactions, as well as boost Hong Kong
access to China's markets. The Government Work Report had
said China would accelerate infrastructure projects linking
Hong Kong, Macao and the Mainland and that Beijing was
solidly behind the Pearl River Delta development plan, which
allowed the three areas to draw on each others' strengths.
Wen concluded with a vote of confidence in the leadership of
Hong Kong and Macao, saying they had proved their mettle in
dealing with the Asian Financial Crisis and that China was
confident they would also weather this storm.

SCO COPES WITH DOWNTURN
--------------


20. (U) In response to a Russian journalist's question on how
Shanghai Cooperation Organization (SCO) countries would
respond to the economic crisis at their next meeting, which
China will host this year, Wen said they would tackle the
crisis by "strengthening cooperation." The impact on member
states varied, but there would be "no problem tiding over
difficulties through cooperation." Wen cited oil and
financing agreements with Russia, and financial, energy and
resources cooperation with Kazakhstan as examples. Wen
predicted SCO cooperation on infrastructure projects in
energy, resoruces, transportation, agriculture and high-tech
fields.

FINANCIAL CRISIS AND DEVELOPING COUNTRIES
--------------


21. (U) Developing countries were suffering the most from the
global economic downturn, Wen said, stating that as the
world's "largest developing country," China supported giving
developing countries a bigger role in solving the financial
crisis. The upcoming G-20 summit in London should make this
a "major" item on the agenda. China believed there should be
no change in the Millennium Development Goals. Developed
countries should give more weight to supporting developing
countries, Wen said, and China will keep the commitments it
made at the G-20 in Washington by continuing to forgive
developing countries' debt and cutting tariffs on the goods

BEIJING 00000666 005 OF 005


they export to China. He also stressed China's ongoing aid
to Africa.

SINO-FRENCH RELATIONS: ONUS ON PARIS
--------------


22. (U) Wen said China-French relations had experienced
"twists and turns" since the two countries established ties
45 years ago and that the two should move forward. The issue
of French President Sarkozy's meeting the Dalai Lama,
however, had hit at the core of China's interests. Thus, the
onus was on France to repair the damage so that relations
could be quickly restored, Wen said.

BIO NOTE: WEN'S COMMON TOUCH
--------------


23. (SBU) Demonstrating his popular touch, at the conclusion
of the press conference, Premier Wen stepped off the rostrum
and spent several minutes mixing with the assembled press
corps, shaking hands, chatting and waving as he made his way
to the exit.
WEINSTEIN