CHINESE DCM ON BOSWORTH VISIT, DPRK CURRENCY CHAOS

C O N F I D E N T I A L SEOUL 001932 SIPDIS E.O. 12958: DECL: 12/09/2029 TAGS: PREL PGOV PINR PHUM MNUC SOCI ECON KN KS CH SUBJECT: CHINESE DCM ON BOSWORTH VISIT, DPRK CURRENCY CHAOS REF: A. SEOUL 1921 ¶B. SEOUL 1896 Classified By: POL M/C James L. Wayman. Reasons 1.4 (b/d). Summary -------------- ¶1. (C) Chinese Embassy DCM Xing Haiming predicted on December 8 that Ambassador Bosworth would be successful in persuading the DPRK to return to the Six-Party Talks (6PT),though the North Koreans would likely demand at least one more bilateral meeting with the United States ahead of a possible plenary session. A series of high-ranking PRC official visitors to Pyongyang had reinforced with their interlocutors the need for the DPRK to return to the 6PT. Xing asserted that the DPRK had planned to replace its currency last year; the move was allegedly postponed because of Kim Jong-il's stroke. Xing acknowledged that the currency fiasco had triggered some protests but characterized the unrest as small-scale and disorganized. North Korea has asked the PRC to keep its Korean War 60th anniversary commemorations low-key, as DPRK official history doesn't acknowledge the role of the Chinese People's Volunteers Army. End summary. Veteran Chinese North Korea-Watcher on Bosworth Visit... -------------- -------------- ¶2. (C) During a December 8 holiday party hosted by the DCM, Chinese Embassy DCM Xing Haiming, one of the PRC Foreign Ministry's most experienced North Korea-watchers, told us he believed Ambassador Bosworth would be successful in persuading the DPRK to return to the Six-Party Talks (6PT) and re-committing to the principles of the September 2005 Joint Statement. The North Koreans would likely demand at least one more bilateral meeting with the United States prior to returning to the talks; Xing said such a meeting could, for example, occur in Beijing or Pyongyang "a day or two" before China convened a plenary session. ¶3. (C) Xing explained he was optimistic about a DPRK return to the 6PT because China had done the spadework necessary for success. He claimed that a series of senior PRC official visitors to the DPRK, most recently National People's Congress Standing Committee Vice-Chairwoman Chen Zhili, had emphasized to senior North Korean officials that China "sincerely hoped" Pyongyang would return "soon" to the 6PT. China had "said all it could say"; Ambassador Bosworth's visit, Xing argued, would give the North Koreans the "last little shove" they needed to get back to the talks. Asked whether PRC Defense Minister Liang Guanglie had pressed DPRK leader Kim Jong-il (KJI) about returning to the 6PT, Xing claimed he didn't know. ...Currency Chaos... -------------- ¶4. (C) Xing asserted that the North's decision to replace its currency (reftels) was not made suddenly. According to the PRC Embassy in Pyongyang, the DPRK printed the new bank notes last year and had been planning to implement the currency changeover when KJI was incapacitated by a stroke. The North's "collective leadership," knowing that the move would be controversial, allegedly postponed the replacement until KJI had recovered and felt confident enough to proceed. The target of the currency change was an emerging middle class of traders who had profited in the DPRK's ubiquitous unofficial markets. These wealthy traders were fueling corruption and undermining the Party's authority, particularly in rural areas, Xing said. ¶5. (C) Again citing the PRC Embassy in Pyongyang, Xing acknowledged that the currency replacement scheme had triggered some protests. He characterized the unrest as small-scale and disorganized; Xing noted that wealthy traders were "not stupid," and understood clearly that organized resistance to the regime would be "suicidal." Xing predicted that "until things settled down" there would likely be additional small-scale anti-regime incidents, like people painting anti-KJI slogans on walls and traders refusing to re-open markets. There would, however, not be any major upheaval, he claimed. ...and Korean War 60th Anniversary "Problems" -------------- ¶6. (C) At the same holiday event, Chinese Embassy Political Counselor Chen Hai told us privately that the PRC was having "serious problems" with the DPRK over Chinese plans to commemorate the 60th anniversary of the start of the Korean War. Chen said that "large numbers" of PRC veterans, knowing that this would likely be the last major anniversary they would live to see, were expressing interest in returning to their old battlefields and in organizing high-profile ceremonies to celebrate Sino-North Korean friendship and success in "stopping American imperialist aggression." ¶7. (C) The problem, Chen explained, was that official North Korean history doesn't acknowledge the role of the Chinese People's Volunteers Army (CPVA). North Korean museums only make cursory mention of the CPVA, Chen said, adding that the major CPVA "heroes" cemetery -- where Mao Zedong's son is buried -- is "150 kilometers from Pyongyang, out in the middle of nowhere." The DPRK government, he complained, was urging Beijing to tone down any official commemorations of the CPVA's role in the war, a position that had allegedly "irritated" several prominent PRC Korean War veterans. STEPHENS