CHINA-JAPAN DISPUTE OVER EAST CHINA SEA UPDATE

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000097

SIPDIS

E.O. 12958: DECL: 01/12/2033
TAGS: PREL PGOV EPET ECON CH KN KS JA
SUBJECT: CHINA-JAPAN DISPUTE OVER EAST CHINA SEA UPDATE

Classified By: Classified by Deputy Political Minister Counselor Ben Mo
eling. Reasons 1.4 (b/d).


1. (C) Summary: Although Japan disputes China's assertion of
its right to develop the Tianwaitian gas field in the East
China Sea and has raised concerns at the highest level, the
dispute is unlikely to derail Sino-Japanese relations,
according to a Japanese Embassy contact in Beijing. Our
source said that Japanese observation aircraft are monitoring
the disputed field but emphasized that the Chinese military
has not responded provocatively. Japan continues to hope the
disagreement can be resolved by using a median line
demarcation between China and Japan. End Summary.

China Publicly Announces Right to Develop Gas Field
-------------- --------------


2. (U) In response to Japanese media reports of Chinese
development of the Tianwaitian (Japanese: Kashi) gas field,
PRC Foreign Ministry spokesman Qin Gang said January 4 the
field "was under the administration of China's undisputed
territorial water" and that "there is no basis for raising
the issue of joint development in such areas." See
http:news.xinhhuanet.com for more on China's public stance.

Japanese Disagree
--------------


3. (C) Japanese Embassy First Secretary Akira Yokochi told
EmbOffs on January 9 that the MFA knows its "undisputed"
assertion is incorrect. Yokochi acknowledged that the
Tianwaitian field lies on the Chinese side of the median line
that Japan has long proposed as the maritime border between
the countries. He argued that the field is within the area
where the Chinese and Japanese exclusive economic zones
(EEZs) overlap and that until that dispute is resolved Japan
does not cede its rights within the confines of its EEZ and
China has no right to develop the field. (NOTE: China
rejects the median line and claims a much broader swath of
the East China Sea based on its continental shelf, vice
median line, argument.)

Details of the Sino-Japanese Agreement
--------------


4. (C) There are several possible gas fields in the disputed
region. Yokochi said the agreement reached between China and
Japan on the East China Sea in June 2008 included consensus
to develop the northernmost disputed field jointly. On "the
others," he said the two sides would continue to consult,
which Japan understood to mean no development. He indicated
that the Chinese took advantage of the fact that the "other"
fields were not clearly enumerated in order to develop of the
Tianwaitian field. Yokochi surmised that China might already
be at the production stage, though would likely be
disappointed with the amount of gas and oil it would be able
to extract. He added that Japanese requests for geophysical
data to ensure that China would not be sucking hydrocarbon
reserves from the Japanese side of the median line have gone
unanswered.

Raised at High Levels
--------------


5. (C) Yokochi said Japan had raised this issue with the
Chinese multiple times since June, including during a
bilateral meeting between Prime Minister Aso and Premier Wen
on the margins of the China-Japan-South Korea summit meeting
in Fukuoka on December 13. According to Yokochi, Wen said
the issue should be handled at the working level, but to
date, despite repeated Japanese attempts, there has been no
engagement from their Chinese counterparts. Yokochi said
this issue had more to do with national pride than with the
small amounts of oil and gas at stake. Japanese analysts
conclude that the Chinese leadership is wary of taking a more
accommodating public line for fear of provoking an
anti-Japanese backlash.


6. (C) So far China's Tianwaitian drilling has not caused
an uproar in Japan, though Yokochi said it was possible that
the reconnaissance photos that revealed Chinese activity
there had been leaked to the conservative Sankei newspaper
for political effect. Yokochi emphasized that the drilling
has not had a negative affect on the larger bilateral
relationship, noting that it has not caused any meetings to
be canceled or postponed.

Concern About Accidents
--------------

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7. (C) Yokochi confirmed that Japanese Maritime Self
Defense Force aircraft regularly monitor the area. He was
aware of the 2001 EP-3 incident in which a PLA Air Force
fighter rammed a U.S. reconnaissance plane and said he was
unaware of any provocative moves made by Chinese aircraft in
reaction to the Japanese overflights. He stressed the need
to resolve the territorial dispute to avoid any incidents.


8. (C) Yokochi said that the Japan desk at the MFA was
generally good to work with but seemed to not be fully aware
of Chinese activities in the disputed area. Yokochi said the
most worrying aspect of this issue was that the MFA
frequently seems to be out of the loop when the Chinese
military engages in provocative behavior. Yokochi said that
Japan remains worried that, without oversight from Chinese
diplomats, a dangerous incident like the one that resulted
from the November 2004 incursion by a Chinese nuclear
submarine into Japanese territorial waters might occur.
Randt