VZCZCXRO5740
OO RUEHCN
DE RUEHBJ #4560/01 0700356
ZNY CCCCC ZZH
O 110356Z MAR 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9982
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/CDR USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 004560 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/11/2026 
TAGS: PREL ENRG CH JA
SUBJECT: CHINESE LESS NEGATIVE THAN JAPANESE ON OUTCOME OF 
EAST CHINA SEA TALKS 
 
REF: TOKYO 1295 (NOTAL) 
 
Classified By: Political Minister Counselor Daniel Shields.  Reasons 1. 
4 (b) and (d). 
 
¶1.  (C) Summary: In contrast to the negative Japanese 
assessment of the March 6-7 Japan-China East China Sea 
Talk reported reftel, MFA Japan Division Deputy 
Director Xue Jian claimed some progress had been made. 
China and Japan reached consensus on the principle of 
joint development, although both sides recognize the 
difficulty of agreeing on a specific plan. 
Complaining about media reports on the lack of 
progress and about strongly negative public statements 
by senior officials from both sides, Xue said China 
wants the dispute to be resolved quickly.  If Japan is 
willing to share some of the costs incurred to date by 
China in developing the Chunxiao fields, there is room 
for further discussion.  Japanese Embassy Political 
Counselor Suzuki said the Japanese were furious 
because the PRC counterproposal for joint development 
did not cover the disputed gas and oil fields and 
because the proposed southern zone was entirely in 
waters surrounding the Senkaku/Diaoyu Islands.  He is 
intrigued, however, by the northern joint development 
zone proposed by Beijing, as a very small part may 
extend into the PRC side of the median-line claimed by 
Japan.  If Japanese experts confirm this is the case, 
it might represent an indication of PRC flexibility, 
Suzuki said.  End Summary. 
 
 
Fourth Round of Talks 
--------------------- 
 
¶2.  (C) On March 10 MFA Japan Division Deputy Director 
Xue Jian briefed poloff on the March 6-7 talks 
(reftel) on East China Sea issues between MFA Director 
General for Asian Affairs Hu Zhengyao and MOFA 
Director General for Asian and Oceanian Affairs 
Kenichiro Sasae.  Representatives from the PRC 
National Development and Reform Commission (NDRC) and 
Japan's Natural Resource and Energy Agency, as well as 
MFA and MOFA treaty and law officials, participated in 
this fourth round of talks.  The two sides agreed to 
meet again as soon as possible, with the exact date to 
be set through diplomatic channels.  Xue said the MFA 
is briefing the USG, and no other third country 
governments, on the talks because the PRC recognizes 
the keen U.S. interest in China-Japan relations. 
 
Some Progress Made 
------------------ 
 
¶3.  (C) In contrast to the negative Japanese 
assessment of the talks reported reftel, Xue claimed 
some progress had been made during the talks.  China 
and Japan had reached consensus on the principle of 
joint development, although both sides recognize the 
difficulty of agreeing on a specific plan.  It will 
take time to solve the dispute, made more complicated 
by disagreements over the Senkaku/Diaoyu Islands and 
the EEZ demarcation line.  Xue confirmed reports that 
China made a counterproposal to Japan's previous offer 
of jointly developing the gas fields largely on the 
PRC side of the Japan-proposed median line of the 
disputed exclusive economic zone (EEZ).  Instead, 
China offered to jointly develop fields around the 
disputed Senkaku/Diaoyu Islands and fields in the 
northern part of the East China Sea.  Xue said China 
would maintain its earnest and constructive attitude 
toward the talks. 
 
Negative Press, Comments by Senior Officials 
-------------------------------------------- 
 
¶4.  (C) Complaining about media reports on the lack of 
progress and about strongly negative public statements 
by senior officials from both sides, Xue said the 
progress was real and China wants the dispute to be 
resolved quickly.  According to Xue, both sides agreed 
at the end ofthe talks that it would be beneficial if 
information on the Chinese proposal stayed out of the 
press.  Blaming the Japanese side for leaks and 
pointing out that China had kept the details of the 
previously proposed Japanese plan out of the press, 
Xue said the media reports left both sides little 
choice but to take strong public stances and reject 
the other's proposal, thus making it appear that the 
had talks failed. 
 
BEIJING 00004560  002 OF 002 
 
 
 
Sharing Costs of Chunxiao Development? 
-------------------------------------- 
 
¶5.  (C) Responding to poloff's question about why 
China's offer did not cover the Chunxiao gas fields at 
the center of the dispute to date, Xue said China has 
been developing those fields for thirty years and it 
is impossible to give in to Japanese demands to halt 
operations.  Expressing annoyance at Japan's "sudden" 
complaints starting two years ago, Xue said China 
would incur significant costs to stop and then restart 
operations.  If Japan is willing to share some of the 
start-up, operational and development costs incurred 
to date, then there is room for further discussion. 
Reviewing Japan's request for subsoil data on the gas 
fields, Xue said the fields are four to five 
kilometers from the Japan-proposed demarcation line 
and that Chinese activities, which only cover a one- 
kilometer circle in the large fields, are not 
affecting undersea resources in the Japan-claimed 
area.  Xue claimed Japanese experts agreed with this 
assessment and noted that the Chinese side became 
angry during the talks when Japan continued to push 
for the data because "there might be an effect 100 
years from now." 
 
Demarcation Line a Complicating Factor 
-------------------------------------- 
 
¶6.  (C) Xue said China would never accept the median 
line established by Japan's domestic legislative body 
to demarcate the EEZ.  Japan complicates the talks on 
joint development by EEZ-related issues in their 
proposals.  Although treaty and law experts from both 
sides have joined the talks, Xue said neither side has 
raised the demarcation line as a specific issue during 
the talks. 
 
Japanese Embassy: "Tough" Talks, Possible Flexibility 
--------------------------------------------- -------- 
 
¶7.  (C) Japanese Embassy Political Counselor Kazuhiro 
Suzuki, echoing the comments of Japanese officials 
reported reftel, characterized the talks as "very 
tough," saying the Japanese had been disappointed by 
the PRC proposal.  During a March 9 discussion, he 
said that the METI participants were particularly 
upset because Trade Minister Nikai had left Beijing 
after his recent visit believing that the PRC had 
signaled a willingness to take a softer position on 
the East China Sea.  Suzuki noted that the MOFA 
participants were less surprised by the PRC position, 
a reversal from earlier talks where the METI 
representatives had far lower expectations than their 
MOFA colleagues.  The Japanese were furious because 
the PRC counterproposal for joint development did not 
cover the disputed gas and oil fields and because the 
proposed southern zone was entirely in waters 
surrounding the Senkaku/Diaoyu Islands.  The PRC is 
well aware that this is completely unacceptable to 
Japan, according to Suzuki. 
 
¶8.  (C) Suzuki commented that he is intrigued by the 
northern joint development zone proposed by Beijing, 
as a very small part may extend into the PRC side of 
the median-line claimed by Japan as the demarcation of 
the EEZ.  Noting that Japanese experts are analyzing 
the PRC proposal to determine the exact location of 
the northern zone with respect to the median line, 
Suzuki commented that, if true, this might represent 
an indication of PRC flexibility.  He added that the 
Japanese proposal was an opening bid that Tokyo 
recognizes is unacceptable to the PRC because it only 
covers four fields that China has already explored and 
taken steps to develop.  Unfortunately, the PRC 
"overreach" on the southern zone obscured the fact 
that Beijing has accepted the idea of joint 
development, according to Suzuki, who said that this 
may offer the opportunity for both sides to make 
compromise proposals in future discussions. 
RANDT