O 141004Z MAR 06
FM AMEMBASSY BEIJING
TO SECSTATE WASHDC IMMEDIATE 0216
INFO CHINA POSTS COLLECTIVE

C O N F I D E N T I A L  BEIJING 004758 
 
 
E.O. 12958: DECL: 03/10/2016 
TAGS: PGOV PHUM ECON SOCI CH
SUBJECT: AMBASSADOR RAISES HUMAN RIGHTS, STABILITY WITH 
LIAONING PARTY SECRETARY LI KEQIANG 
 
Classified By: Ambassador Clark T. Randt, Jr.  Reasons 
1.4 (b/d). 
 
Summary 
------- 
 
¶1.  (C)  During a March 9 dinner hosted by the 
Ambassador, Liaoning Party Secretary and potential 
"Fifth Generation" leader Li Keqiang candidly 
discussed the economic development and stability 
challenges he faces.  Liaoning has the largest number 
of urban poor in China, a substantial number of rural 
poor and more than its share of unrest and protest 
incidents.  Revitalization of Liaoning's industrial 
base continues to be Li's top priority with state- 
owned enterprise reform the most important task. 
Liaoning hopes to land a major investment by Intel 
aimed at China's domestic market and to further 
develop its neglected coastal areas.  Li expressed 
optimism about U.S.-China relations but said that 
Taiwan remains the biggest obstacle and warned that 
Chen Shui-bian is pushing Taiwan toward independence. 
In response to the Ambassador's query, Li acknowledged 
that the Chinese legal system lacks transparency but 
maintained that the Party does not formally approve or 
review court decisions.  Li did not directly address 
the Ambassador's question about labor activists Xiao 
Yunliang and Yao Fuxin but agreed to allow Consulate 
personnel to observe some court proceedings in 
Liaoning.  In response to the Ambassador's question 
about Li's January meeting with DPRK leader Kim Jong- 
Il at the border, Li said the encounter was brief and 
formal.  End Summary. 
 
Liaoning's Development Challenges 
--------------------------------- 
 
¶2.  (C)  Liaoning Party Secretary and potential "Fifth 
Generation" leader Li Keqiang candidly discussed the 
development and stability challenges he faces with the 
Ambassador on March 10.  Li was in Beijing to attend 
China's annual National People's Congress (NPC) 
session and said that Liaoning's priority at the 
session continues to be the revitalization of 
Liaoning's industrial base.  The 11th Five Year Plan 
being discussed at the NPC includes several major 
projects for Liaoning, including petrochemical, steel 
and nuclear power plants.  The most important issue is 
continued state-owned enterprise (SOE) reform, Li 
stated.  Sixty percent of Liaoning's SOEs have already 
gone through the reform process and last year Liaoning 
eliminated foreign ownership ceilings in order to spur 
foreign investment. 
 
¶3.  (C) Foreign direct investment in Liaoning 
increased 172 percent in 2005, but this figureis 
calculate from a very low base, Li noted. Li said 
U.S. investment in Liaoning is signiicant and noted 
that Intel is considering building a wholly-owned chip 
plant in Dalian city for production aimed at the 
Chinese domestic market.  If that deal is concluded 
successfully, the United States will lead foreign 
investment in Liaoning.  In response to Li's concerns 
about potential restrictions on high-tech exports from 
the United States, the Ambassador noted that export 
license requests for China that are denied in terms of 
value equal less than one percent of our bilateral 
deficit. 
 
¶4.  (C) Li described plans to develop Liaoning's 2,200 
kilometer long coastline, asserting that no other 
Chinese province can boast of comparable development 
potential for coastal areas.  In tandem with the 
reform of SOEs, attracting new ventures to the coastal 
development zone will be a major task for the future. 
In response to the Ambassador's question about the 
importance of the leadership's New Socialist 
Countryside initiative, Li was fairly dismissive. 
Liaoning has China's highest number of urban poor with 
a 56 percent urbanization rate and has a significant 
number of rural poor.  Building the New Socialist 
Countryside is a long-term task that goes along with 
the process of China's modernization.  This will take 
50 years, Li said, noting that China's preoccupation 
with its own development means that China will not 
pose a threat to other countries. 
 
U.S.-China Relations Solid, But Taiwan 
-------------------------------------- 
 
¶5. (C) Li expressed optimism about U.S.-China 
relations, noting that areas of common interest far 
outweigh differences.  The Ambassador noted that 
President Bush agrees with Li's statement and is 
pursuing constructive bilateral ties. 
 
¶6.  (C) Li noted that Taiwan remains the biggest 
obstacle to improved relations.  The United States has 
reiterated its one-China policy, Li noted and said 
that the United States and China have common interests 
in preserving stability in the Taiwan Strait.  Li 
warned that Chen Shui-bian is taking a dangerous path, 
wants to change the status quo and is pushing Taiwan 
toward independence.  Li asserted that Chen has 
incorrectly assessed the current situation.  With 
regard to Chen's recent decision to cease functions of 
the National Unification Council, Li asserted that the 
last "no" is now gone.  Li maintained that China is 
prepared to discuss anything with Taiwan, provided the 
context is under the One-China Principle.  Li said 
China has been sincere in its quest to maintain peace 
in the Strait, asserting that any non-peaceful 
approach would only be targeted at Taiwan's 
secessionist forces. 
 
WWII, History and Japan 
----------------------- 
 
¶7.  (C) The Ambassador stated that evidence from KGB 
archives has emerged proving that allegations of U.S. 
use of chemical weapons during the Korean War were 
products of a Soviet disinformation campaign.  He 
asked Li when the Korean War history museum in Dandong 
would remove the display making this false allegation. 
Li said he was aware of the Ambassador's concerns but 
believes this issue should be left to historians and 
that bilateral relations should look forward. 
 
¶8.  (C) The Ambassador noted that this was not China's 
position with respect to Japan.  In response, Li 
reviewed the Japanese record of atrocities in China 
over the past 100 years, noting that the cruelty of 
the Japanese record is very difficult for Chinese 
people to accept.  This makes the situation with Japan 
unique, Li argued.  In contrast, Li said, the Chinese 
people will never forget the assistance rendered by 
the United States during World War II.  Without the 
U.S.-supported supply lines, China's rear defenses 
would have collapsed. 
 
Stability 
--------- 
 
¶9.  (C) Citing the increasing number of protest 
incidents in China, the Ambassador asked about 
stability in Liaoning.  Liaoning has more protest 
incidents than other provinces, Li replied, the vast 
majority of which involve money.  People protest for 
heating subsidies, increased retirement benefits and 
other compensation issues.  A small percentage of 
incidents are linked to problems with the justice 
system, Li acknowledged, but officials as well as 
common people have many complaints about the courts. 
Every year the approval votes at the NPC for the 
Supreme People's Court and Supreme People's 
Procuratorate are the lowest, Li remarked. 
 
Transparency Lacking in Justice System 
-------------------------------------- 
 
¶10.  (C) In response to the Ambassador's comment about 
the lack of judicial independence in China's legal 
system, Li acknowledged that this is a problem.  He 
maintained, however, that the Party does not formally 
approve or review court decisions and said that, if 
officials are found to have interfered in court 
decisions, they will be sanctioned.  Ten years ago 
court decisions would have been openly discussed in 
Party meetings, Li stated, but now this is not the 
case.  Trial committees at the provincial level have 
10-20 judges, who must sign their names to decision 
votes.  These decisions may not be altered.  Li said 
he couldn't rule out that judges might be approached 
informally before the decision, but this is not 
permitted and can lead to reprimand or worse for the 
judge if discovered. 
 
¶11.  (C) Li said that outsiders had paid relatively 
little attention to the sweeping powers of judges in 
China to render verdicts and hand down sentences. 
Judges' powers are vast and must be effectively 
supervised, Li said.  Any power without supervision 
gives rise to corruption, he observed. 
 
Human Rights Cases 
------------------ 
 
¶12.  (C) The Ambassador noted that Article 306 of the 
criminal code, which makes defense lawyers vulnerable 
to prosecution for misleading the court, has a 
chilling effect on the work of defense attorneys.  Li 
claimed to be unfamiliar with the article, but said he 
had heard of cases in which lawyers who committed or 
assisted in perjury were prosecuted.  Li did not 
directly address the Ambassador's question about labor 
activists Xiao Yunliang and Yao Fuxin but agreed that 
judicial transparency is a problem.  In response to CG 
Kornbluth's request, Li said he would permit Consulate 
personnel to observe some court proceedings in 
Liaoning. 
 
Encounter with Kim Jong-Il 
-------------------------- 
 
¶13. (C) Asked by the Ambassador about Li's January 
meeting with Kim Jong-il at the DPRK border, Li 
responded that he had only met Kim briefly at the 
railroad station in Dandong.  Li said he only shook 
hands and exchanged ceremonial greetings with Kim for 
a few minutes before Kim's train moved on. 
 
 
RANDT