MEDIA REACTION; G20, MILITARY POWER REPORT

UNCLAS SECTION 01 OF 02 BEIJING 000843

SIPDIS

DEPARTMENT FOR INR/R/MR, EAP/CM, EAP/PA, EAP/PD, C
HQ PACOM FOR PUBLIC DIPLOMACY ADVISOR (J007)

E.O. 12958: N/A
TAGS: OPRC KMDR CH
SUBJECT: MEDIA REACTION; G20, MILITARY POWER REPORT

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Editorial Quotes
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1. G20
a. "China shouldn't sing too loudly at the G20"
The official Xinhua News Agency international news publication
International Herald Leader (Guoji Xianqu Daobao)(03/30): "China
should become the strength supporting the reform and reconstruction
of the international financial system. But this can only happen if
China has handled its own domestic issues well.
It is too idealistic to think about replacing the U.S. dollar. This
suggestion ignores the political powers behind the international
financial system. Even if China successfully climbed to the top and
claimed leadership, China still wouldn't change the limitations of
the current system and won't perform better than the U.S.
Additionally, there is too much effort and too little gain when one
is the leader. As one of the most powerful emerging economic
entities, it seems only China has the capacity to save the global
economy. But at this early phase, China won't benefit from being
the leader. The reason why China wasn't seriously affected by the
global crisis is that China's financial system hasn't completely
opened, not because China's financial system is perfect. The
developments in China's social and political systems are still
insufficient for a world leader.
Therefore, China shouldn't sing too loudly at the Summit as China is
in a precarious situation. China should play an active role in
supporting the reform and reconstruction of the international
financial system. But it needs to first handle its own business.
China will be capable of playing the lead after it has successfully
reformed its social and political systems. China is in an awkward
position now. On the one hand, China buys USD in order to help
maintain the U.S. hegemony. However on the other hand China has
suggested replacing the USD. This shows that China is not happy with
the current system, but at this time, cannot do anything to change
it. One realistic option for China is to reduce its international
responsibilities in IMF and spread its powers to other regional
financial and economic organizations."
b. "China claims that it is the "right of the world" to hear
everyone's voice"
The Beijing based News Agency economic news publication Economic
Observer (Jingji Guancha)(03/30): "Certain high-level Chinese
financial official's voices, a warm-up for the G20, have aroused the
attention and responses of the leaders of the G20 countries. For
the first time, China doesn't want to be just a listener. China is
willing to take action on its responsibilities. However,
responsibilities and the right to relevant discourse are equal.
This is what China wants to tell the world at the G20.
China has done a lot and will do more. China needs to combine both
its long-term objective and short term interests in order to push
the establishment of a new, more impartial, international financial
order. Of course, Zhou Xiaochuan, the leader of People's Bank of
China, understands that his suggestion of a "super-sovereign reserve
currency" won't produce results within a short time. But his call
clearly reflects that China can't bear any unilateral obligations
without first being guaranteed its benefits.
We estimate that China's concerns will be put forward formally at
the meeting between China and the U.S. Many observers believe that
the possible results of the G20 meetings will depend on the
dialogues between China and the U.S. The rebalance of the global
economy needs both the U.S. and China to make some adjustments. The
U.S. won't gain full understanding +or support if it ignores its
stake holder's interests and is always in a position to criticize.
This won't contribute to the macro-political cooperation among the
major economic entities.
For their attempts in the fields of currency and financial
regulation, the international society should give more respect to
Asian economies, the world's emerging economies, including China.
The Submit itself is a process of listening, which serves as the
basis to put aside disagreements and seek resolutions."
c. "Chinese people shouldn't indulge themselves in the illusion of
saving the world"
The official Xinhua News Agency news publication Beijing Youth
Daily(Beijing Qingnianbao) (03/30): "Since the credits crisis became
a global financial crisis, the U.S. and major western countries have
constantly sent signals to China, and other new emerging economic
entities, calling for help. President Obama quickly responded to
Premier Wen's worry about China's holding a huge amount of U.S.
assets. This shows that China's U.S. assets have already been
counted into America's stimulus package budget. any action by China
concerning its U.S. debts may impact the USD's status and Obama's
stimulus package.
Chinese media have celebrated China's becoming the "only highlight"
in the crisis. It is true that, during this financial crisis, China
has not been through and fatal up and downturns and that China might
play an important role in the global economy recovery process.
However, China's internal social and economic problems, such as the
drop exports, the bankruptcy of its small and medium enterprises,
educational issues, etc, won't disappear because of the worsening
external crisis. Instead, these problems may become more serious.

BEIJING 00000843 002 OF 002


In this situation, as Premier Wen said, China's handling of its own
domestic issues is the biggest contribution to the world. China
should be warned about Japan's experiences during the 1980s when
Japan tried to "buy America" by purchasing American debts. Even with
great expectations and encouragements, China shouldn't fall into the
illusion that it can save the world."

2. Military power report
a. "What is behind the U.S. military report?"
The official Xinhua News Agency international news publication
International Herald Leader (Guoji Xianqu Daobao)(03/30): "This
report is the voice of the Pentagon and the Congress to Obama: Don't
get too close to Beijing. Professor Meng Xiang, from National
Defense University, tells the International Herald Leader that
publishing the military report in the current situation is
inappropriate and inconsistent with the declaration and tendency of
the Obama administration. He also points out that the purpose of
this report is to put pressure on the new government, asking for
more military budget moneys.
Yuan Peng, from China Institute of Contemporary International
Relations, says that the U.S. Defense Department is trying to
influence Obama's China strategy. Professor Meng says that the U.S.
won't change its defensive mentality towards China. America's China
strategy will remain both restrained and cooperative.
China's military is also keeping a sober awareness of this. Qian
Lihua, director of the Ministry's Foreign Affairs Office, has
already expressed that Sino-U.S. military relations are having a
difficult time and that the obstacles to developing the military
relationship have not been eliminated. Experts also believe that
military relations between China and the U.S. failed to fully
recover from the former administration's military communications.
"(Therefore) America's publishing of the military report at such a
sensitive and important period creates more difficulties for the
U.S.-China military relationship" says Professor Meng.
PICCUTA