CHINA-ROK RELATIONS: MINOR TENSIONS, POSITIVE

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 000382

SIPDIS

E.O. 12958: DECL: 02/12/2035
TAGS: PREL PGOV PINR PARM ECON KN KS CH
SUBJECT: CHINA-ROK RELATIONS: MINOR TENSIONS, POSITIVE
OVERALL

Classified By: Deputy Political Section Chief Ben Moeling. Reasons 1.4
(b/d).


1. (C) Summary: In a round of recent meetings on the state
of Sino-ROK relations, Chinese and ROK officials agree that
the overall trend of the bilateral relationship is positive.
Chinese leaders are quite pleased at the appointment of Yu
Woo-ik, the former Chief of Staff to ROK President Lee
Myung-bak, as the new ROK Ambassador to Beijing. Chinese
officials point to the unprecedented frequency of high-level
exchanges as a sign of the growing importance of Sino-ROK
ties and note that President Lee has tentatively agreed to
attend the opening ceremony of the Shanghai World Expo.
Total bilateral trade slowed in 2009, but China still hopes
to conclude a bilateral FTA with Seoul soon.
One ROK Embassy contact said that even though many South
Koreans believe China has strategic political motives for
pursuing a bilateral FTA with the ROK, China's enthusiasm for
the FTA contrasted with the U.S. delay in ratifying KORUS
(South Korea-U.S. FTA). On mil-mil ties, China's priority
remains reminding the ROK to avoid taking any actions that
might affect the Taiwan issue. Chinese and ROK officials
both maintain that the handling of DPRK defectors residing in
ROK diplomatic missions remains an area of contention between
the two countries. End Summary.

PRC-ROK Ties
--------------


2. (C) In a round of recent meetings on the state of Sino-ROK
relations, Chinese and ROK officials agreed that the overall
trend of the bilateral relationship was positive. Despite
some initial concerns that ROK President Lee Myung-bak's
campaign promise to emphasize the U.S.-ROK alliance might
come at the expense of its ties with China, ROK Embassy
contacts told us that Beijing had been pleasantly surprised
that it had been able to continue developing a strategic
relationship with Seoul. MFA Asia Department DPRK, ROK and
Mongolia Division Deputy Director Bao Xuhui described
Sino-ROK ties as friendly and smooth during a January 25
meeting. He noted that Seoul had sent Yu Woo-ik, President
Lee's former Chief of Staff, as South Korean Ambassador to
Beijing in December in a clear sign of the importance of the
relationship to Seoul. PRC MFA officials were quite pleased
at the appointment of Yu and suggested it had been well
received by senior Politburo officials, said ROK Embassy
Counselor Lee Heon during a January 19 discussion. Chinese
scholars and MFA officials had frequently reminded Seoul that
the ROK Ambassador to Washington was a former Prime Minister
and had hinted that Seoul should send a similar political
heavyweight to Beijing, maintained Lee. It would be
interesting to see if the next Chinese Ambassador to Seoul --
rumored to be announced after Lunar New Year -- would be
similarly well received in Seoul, said Lee.


3. (C) Bao highlighted the fact that Sino-ROK ties had
undergone tremendous development since the establishment of
diplomatic relations in 1992 and had been "upgraded" roughly
every five years. The bilateral relationship was upgraded to
"cooperative partnership" in 1998, to "comprehensive
cooperative partnership" in 2002, and most recently to
"strategic cooperative partnership" in 2008. Bao told PolOff
that Beijing and Seoul closely cooperated on a variety of
global issues such as UN reform, climate change, the global
financial crisis and, of course, North Korea.

High-Level Exchanges
--------------


4. (C) The frequency of high-level exchanges and meetings
between China and the ROK was unprecedented, claimed Bao.
PRC Premier Wen Jiabao was scheduled to visit the ROK in May
to participate in the China-Japan-ROK Trilateral Summit and
President Hu was expected to meet with President Lee at the
G-20 Summit in November. In 2009, recounted Bao, Politburo
Standing Committee member Li Changchun and Vice President Xi
Jinping paid separate visits to South Korea. And in 2008,
President Lee met with President Hu a record three times
(President Lee visited Beijing for an official visit in May
and again in August for the Olympics, and President Hu paid
an official to Seoul in August).


5. (C) According to Bao, ROK President Lee had agreed "in
principle" to attend the opening ceremony of the Shanghai
World Expo in April. He noted that 2010 had been designated
the "Visit China" year in South Korea. Bao added that China

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had tentatively agreed to reciprocate by sending a senior
Chinese leader to attend the opening ceremony of the Yeosu
World Expo in 2012 and would designate 2012 the "Visit South
Korea" year. ROK Deputy Chief of Mission Lim Sungnam
confidentially confirmed to PolOffs on February 10 that ROK
President Lee had agreed to visit Shanghai in April but said
that there had been no quid pro quo agreement with China to
guarantee a Chinese leader's participation at the Yeosu World
Expo in 2012. Lim complained that the Chinese often seemed
to link unrelated items in an effort to force their preferred
outcomes (e.g. you visit my expo and I'll visit your expo).


6. (C) High-level exchanges with the Chinese were not without
risks to the host country, said ROK First Secretary Jin Nam
on January 28. Nam told us that Vice President Xi's visit to
Seoul in December had gone well. Fortunately, said Nam, the
ROK had decided to provide Xi with a level of security
protection normally reserved for heads of state. Japan,
however, had declined to upgrade Xi's security, and was later
embarrassed when a loose coalition of anti-China protestors
shouted slogans such as "go home" and "go to hell" during his
visit to Japan. While Xi remained calm throughout this
incident, MFA Vice Foreign Minister Wu Dawei and the PRC
security detail became extremely agitated and flustered. Nam
said that former PRC Ambassador to Tokyo and newly appointed
VFM Cui Tiankai reportedly was sent back to Beijing for a
scolding after Xi's visit.


7. (C) In addition to the numerous high-level exchanges
between China and the ROK, Bao noted that there had been an
explosion in people-to-people contact in recent years. China
was the ROK's most popular tourist destination, with over
5.53 million South Koreans visiting China in 2008. There
were more than 330 flights per week between the two countries
and 110 Chinese cities had sister-city agreements with ROK
cities. There were also more than 60,000 Chinese students in
the ROK and 65,000 ROK students in China; both groups were
the largest foreign student populations in the two countries.
All of these official and unofficial exchanges helped the
two countries better understand each other, asserted Bao.

Economic Agreements Lead to Enhanced Political Ties
-------------- --------------


8. (C) While the political relationship between Beijing and
Seoul was important, said Bao, the foundation of the
bilateral relationship was economic cooperation. According
to Bao, there was "consensus" in Beijing and Seoul that South
Korea's economic growth was now tied to China's economy and
would develop and benefit along with China's growth. Bao
confirmed that there had been some tension in the Sino-ROK
commercial relationship last year when Chinese workers
complained about unpaid wages after numerous ROK factory
owners abruptly shut down operations in order to avoid
complying with new labor regulations. The two governments
have since dealt with this issue and continue to educate ROK
investors about China's new labor regulations, said Bao.
Currently, Beijing was focused on improving the quality of
ROK investments in China and hoped to attract more high-tech
investments in the environment and communication sectors.
Due to the global financial crisis, total bilateral trade
between China and South Korea had slowed in 2009, but China
still hoped that bilateral FTA talks would move into the
negotiation phase soon, said Bao.


9. (C) ROK DCM Lim confirmed that China was enthusiastic
about concluding a bilateral FTA with South Korea. China's
efforts to sign a bilateral FTA with the ROK and a trilateral
FTA with the ROK and Japan might be part of China's strategic
efforts to improve ties with its neighbors, said Lim.
Unfortunately, these Chinese efforts might come at the
expense of U.S. standing in the region, warned Lim. China's
pro-active efforts to pass an FTA with the ROK contrasted
poorly with the U.S. delay in ratification of KORUS,
commented Lim. (In a follow-on point, Lim urged increased
U.S. engagement in the Asia-Pacific region. He praised the
Secretary's January 12 speech in Honolulu, but added that it
was now up to Washington to fulfill the vision that the
Secretary outlined. Lim suggested that the USG needed to
think long-term and creatively. For instance, in order to
increase American awareness of the Asia Pacific region, Lim
suggested organizing a regular youth exchange comprised of
students from the U.S., China, Japan and the ROK that would
tour the region together and might include stops in Honolulu,
Tianjin, Yokohama, and Incheon.)


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10. (C) Separately, ROK Embassy First Secretary Jin Nam said
on January 28 that, as the host of the China-Japan-ROK
Trilateral Summit in May, the ROK was focused on moving
forward on conducting feasibility studies for a trilateral
FTA. The ROK also had proposed and received positive
feedback from Beijing and Tokyo on establishing a permanent
trilateral secretariat in Seoul, according to Jin.

Military Ties
--------------


11. (C) China and the ROK were slowly developing a mil-to-mil
relationship, said Bao. Thus far, the two militaries had
established a hotline in 2008, had conducted joint naval
search and rescue operations, and exchanged high-level
military visits. Seoul and Beijing had not yet conducted any
joint military exercises. Bao told PolOff that China's main
concern on military issues was to remind the ROK to avoid
taking any actions that might affect the Taiwan issue.

DPRK
--------------


12. (C) How to handle DPRK citizens residing in ROK
diplomatic missions remained an area of contention in the
bilateral relationship, Bao acknowledged. Several years ago,
noted Bao, ROK officials angered their Chinese counterparts
when they provided assistance to DPRK refugees trying to
enter ROK diplomatic buildings. The ROK's actions were
viewed by the Chinese government as an abuse of their
diplomatic status and a violation of Chinese law. Beijing
understood ROK concerns about getting exit permission for
these individuals, but China viewed these individuals as
illegal economic migrants -- not refugees -- and preferred to
handle them according to domestic immigration law.


13. (C) ROK Counselor Lee Heon said that while overall
Sino-ROK relations had improved over the course of 2009, the
Ministry of Public Security (MPS) had increasingly become
inflexible and "arrogant" on granting exit permissions to
DPRK defectors located in ROK diplomatic buildings. Lee
attributed the change in MPS attitude to the controversy
surrounding General Secretary of the World Uighur Congress
Kolkun Isa's attempt to enter South Korea in September 2009
on a flight from Germany. Once Beijing learned of Isa's
attempt to enter South Korea, it dispatched a team of five
MPS officials to the international airport in Seoul to demand
the repatriation of Isa to China where he would have faced
criminal charges for running a "terrorist organization."
Although Blue House officials refused Isa entry into the ROK,
they also refused to turn Isa over to Chinese officials,
opting instead to send him back on a flight to Germany.
Since that time, Lee maintained, MPS had become stricter and
slower to make decisions when dealing with DPRK refugees at
the ROK Embassy.


14. (C) Separately, Bao, who is an alumnus of Kim Il Sung
University, said that he believed that North Korea had the
following motivations in mind for revaluing its currency: 1)
strengthening its planned economy; 2) strengthening social
control over the North Korean people; and 3) reorganizing and
simplifying control of its currency. It was clear, however,
that North Korean leaders had not fully considered the
consequences of the currency revaluation. North Korea had
not yet set the foreign currency exchange rates and this had
affected PRC Embassy operations in Pyongyang. Bao noted that
the PRC Embassy in Pyongyang, which had previously accepted
payment for visa applications in euros and dollars, had
temporarily suspended visa processing. The Chinese and North
Koreans were in discussions to find a resolution to this
problem, Bao reported.
HUNTSMAN