CHINA/EITI: CHINESE ACADEMIC STRESSES NEED TO BUILD

UNCLAS SECTION 01 OF 02 BEIJING 000903 STATE FOR OES, OES/EGC, OES/ENV, EAP/CM/HABJAN/FLATT, EEB/ESC/HENGEL, EEB/ESC/IEC/ENR/HENRY/KOPP/SECOR TREASURY FOR OASIA/ISA SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ENRG SENV EPET EMIN KCOR CH SUBJECT: CHINA/EITI: CHINESE ACADEMIC STRESSES NEED TO BUILD AWARENESS OF EITI REFTEL A: 08 BEIJING 4394 REFTEL B: 08 BEIJING 4602 Summary -------------- ¶1. (SBU) Summary. Chinese officials and academics lack a clear understanding of the Extractive Industries Transparency Initiative (EITI),according to Dr. He Wenping, of the Chinese Academy of Social Sciences (CASS). In He's view, Chinese officials will not support the EITI unless they can be convinced of its effectiveness in implementing countries where Chinese companies operate. He predicted that Chinese officials will wait for other developing countries to take the lead in becoming EITI supporting countries and noted that encouraging fiscal transparency abroad may be difficult for China, which faces its own challenges in this area. He suggested that the EITI Secretariat and EITI supporting countries coordinate with Chinese think tanks to create opportunities to inform policymakers and influential academics about the EITI. End Summary. Chinese officials need evidence of EITI's utility -------------- -------------- ¶2. (SBU) Dr. He Wenping, Director of the African Studies Section, Institute of West Asian and African Studies, Chinese Academy of Social Sciences (CASS),told Econoff that Chinese officials lack an understanding of the Extractive Industries Transparency Initiative (EITI) and will remain hesitant to support it without clear evidence of its effectiveness in EITI implementing countries where Chinese companies operate. In He's view, Chinese policymakers are focused on ensuring stable trade and investment environments for Chinese companies operating overseas. Chinese leaders would likely be more inclined to support the EITI if a clear connection could be drawn between stability in the implementing countries and EITI implementation. Few officials, academics familiar with EITI -------------- ¶3. (SBU) As a relatively new international organization, the EITI remains largely unfamiliar to Chinese officials and the academic community. Dr. He claimed she is one of a handful -- if not the only -- Chinese scholar familiar with the structure and purpose of the EITI. (Note: Dr. He learned about the EITI during an academic exchange program in Norway and was the only Chinese national in attendance at the EITI's annual conference in Doha in mid-February.) She pointed out that not a single academic paper has been written in China on the EITI and concluded that "if Chinese academics are uninformed about the EITI, Chinese leaders are also uninformed," as think tanks play an important role in advising policymakers. China will wait to follow other developing countries -------------- -------------- ¶4. (SBU) Dr. He argued that China considers itself a developing country and that Chinese leaders could be uncomfortable with economic distinctions between "supporting" and "implementing" countries. Most EITI supporting countries belong to the OECD, while most implementing countries are part of the developing world, she noted. China could be misperceived if it were to join developed countries by becoming an EITI supporting country and it would not want to take the lead in becoming the first developing country to do so. He noted that China would likely wait for countries like India, Brazil, and Mexico to make the first move in this regard. She also pointed out that many developed countries have yet to support the EITI, noting that Japan only recently announced its intentions to become a supporting country. China has its own fiscal transparency problems -------------- - ¶5. (SBU) Dr. He noted that although the central government has placed a greater emphasis on fiscal transparency in recent years, implementation of measures aimed at enhancing fiscal transparency and accountability among state-owned enterprises (SOEs),including in the domestic extractive industries, continues to be a challenge. Given China's challenges in achieving fiscal transparency at home, China would not be well-positioned to promote such requirements abroad through the EITI, He asserted. Next steps: Raise awareness of EITI in China BEIJING 00000903 002 OF 002 -------------- ¶6. (SBU) Dr. He suggested that the EITI Secretariat and EITI supporting countries coordinate with Chinese think tanks to create opportunities to inform policymakers and influential academics about the EITI, including through conferences, travel by think tank officials to implementing countries, and by providing funding to conduct assessments on the impact of the EITI in implementing countries. Inviting officials from implementing countries to China to discuss the EITI's impact on economic and political stability would be particularly useful, He noted. He reported that her institute is currently working with the United Kingdom's Department for International Development (DFID) to organize a conference that would include discussions on the EITI, tentatively scheduled for late September, 2009. Emboffs will follow up with DFID's Beijing office to seek more detailed information about these plans. Comment -------------- ¶7. (SBU) China has not designated a specific ministry to handle EITI issues. Officials from agencies that could have a stake in EITI matters, including the Ministry of Foreign Affairs (MFA),the National Energy Administration (NEA),and the Ministry of Land and Resources (MOLAR),have been reluctant to discuss the EITI with Emboffs (reftel A, B). China's MFA and NEA decided not to send observers to the EITI's annual conference in Doha in February this year and in December 2008, China declined to include language in the Strategic Economic Dialogue (SED) outcomes document that would have linked bilateral energy cooperation to language welcoming efforts by EITI implementing countries to strengthen transparency and accountability in the extractive sector. As future discussions with Chinese officials on the EITI are likely to move ahead at a slow pace, engaging Chinese think tanks -- which play an important policy advisory role -- may be the most effective means of raising the EITI's profile in China in the near-term. PICCUTA