VZCZCXRO7835
RR RUEHCN RUEHGH
DE RUEHGH #6494/01 2860124
ZNY CCCCC ZZH
R 130124Z OCT 06
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 4690
INFO RUEHBJ/AMEMBASSY BEIJING 0543
RUEHSH/AMCONSUL SHENYANG 0263
RUEHCN/AMCONSUL CHENGDU 0258
RUEHGZ/AMCONSUL GUANGZHOU 0240
RUEHIN/AIT TAIPEI 0256
RUEHHK/AMCONSUL HONG KONG 0340
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 4976

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 006494 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM 
NSC FOR WILDER 
 
E.O. 12958: DECL:  10/13/2016 
TAGS: PREL PGOV PHUM CH ECON EFIN
SUBJECT: DAS CHRISTENSEN'S SHANGHAI VISIT 
 
REF: SHANGHAI 6493 
 
CLASSIFIED BY: Simon Schuchat, Deputy Principle Officer,  , US 
Consulate Shanghai. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C)  Summary.  During DAS Christensen's September 12-14 visit 
to Shanghai, he participated in a Fudan University roundtable, 
and met with Shanghai foreign policy academics, influential 
Shanghainese, and representatives of AmCham Shanghai.  His lunch 
with academics was reported in reftel A.  During the Fudan 
roundtable, students and faculty discussed Taiwan, North Korea, 
and democracy, and urged the USG to be more proactive in 
reaching out to the Chinese people.  Local Shanghainese 
discussed gay rights, rising economic nationalism in China and 
the Sino-Japan relationship.  AmCham members discussed changing 
trends in Shanghai's business climate and also expressed 
concerns about growing economic nationalism.  End Summary. 
 
---------------- 
Fudan Roundtable 
---------------- 
 
¶2.  (SBU)  During a lively roundtable with Fudan University's 
Center for American Studies (CAS) students and faculty, DAS 
Christensen engaged participants on a wide range of issues 
including Taiwan, Japan, North Korea, democracy, and U.S. public 
diplomacy efforts.  In response to a question about former 
Deputy Secretary Zoellick's "responsible stakeholder" concept, 
DAS Christensen said the USG was using the concept to encourage 
China to take a more active role in international institutions. 
He added that the United States did not fear China's growing 
influence  but wanted China to use its power constructively to 
help solve global issues. 
 
 
¶3.  (SBU)  Students and scholars were interested in the U.S. 
reaction to recent protests in Taiwan that called for President 
Chen Shui-bian to step down.  DAS Christensen said the USG did 
not have a position on Taiwan succession and said our main 
concern was that the political process was non-violent and in 
accordance with the Taiwan Constitution.  He added that the 
United States supports Taiwan's Democracy and that the "one 
China policy" requires that the two sides of the Taiwan Strait 
must find peaceful means to resolve cross-strait issues.  On 
Japan, DAS Christensen noted that focusing too much on emotional 
historical issues had negatively impacted the Sino-Japanese 
relationship.  Both countries needed to find a way to improve 
their relationship. 
 
 
¶4.  (C)  DAS Christensen said that North Korea had essentially 
backed-out of the agreement reached during the last round of the 
Six-Party talks and was using the sanctions issue as an excuse. 
The United States was willing to help North Korea to implement 
economic reforms but it must first give up its nuclear weapons 
program.  China should play a leading role in pushing North 
Korea on this issue.  CAS Director Shen Dingli (protect) 
countered that the United States was not giving North Korea an 
opportunity to join the talks and warned that North Korea would 
be more dangerous if it decided against participating in the 
Six-Party process. 
 
 
¶5.  (C)  CAS Deputy Director Sun Zhe (protect) said some Chinese 
believed USG efforts to promote democracy were an attempt to 
weaken the country.  He claimed China had not rejected democracy 
but rather had a different understanding of how to implement it, 
and then suggested that the USG provide China a "to-do" list of 
steps to take.  DAS Christensen said such a list would be too 
complex, and stressed that the United States promoted democracy 
because it led to stability.  Also, people on the mainland 
should not be too harsh in criticizing Taiwan's democracy. 
While Taiwan's young democracy had many problems, it was still 
basically healthy and provided an example for the mainland of 
how a democracy can emerge from a one-Party State within a 
Chinese cultural context. 
 
 
¶6.  (SBU)  The CAS students stressed the need for more efforts 
to improve the U.S. image in China.  According to one student, 
people living in poorer areas of China had a more negative 
impression of the United States then those in urban areas.  DAS 
 
SHANGHAI 00006494  002 OF 003 
 
 
Christensen said that the USG, through its transformational 
diplomacy initiative, would become more proactive in reaching 
out to Chinese people.  Another student urged more 
people-to-people programs, noting that she had just returned 
from trip to the United States in which she learned more about 
the country than in all of her coursework.  DAS Christensen 
encouraged the students to be proactive in correcting 
misunderstandings about the United States and urged them to 
consider government service.  He said it was important for 
people to engage with their government and find ways to shape 
policies. 
 
 
--------------------------------------------- ------------ 
Gay Rights, Economic-Nationalism and Sino-Japan Relations 
--------------------------------------------- ------------ 
 
¶7.  (C)  At a dinner with a small group of Shanghai "movers and 
shakers," DAS Christensen engaged on a wide range of current 
topics.  Gay rights lawyer and activist Zhou Dan (protect) noted 
China's recently enacted legislation improved protection of 
rights of people with HIV/AIDS in China.  Zhou said there was 
still no legislation protecting gay rights, but acknowledged a 
general positive trend in China since 2001 when homosexuality 
was classified as a psychological disorder.  Many of his clients 
were couples wanting to divorce because one partner was gay. 
 
 
¶8.  (C)  The Carlyle Group Chief Representative Luo Yi (protect) 
saw both nationalism and protectionism as the motivating factors 
underlying the new M&A rules.  Both he and Eric Li (protect), 
the Manager of Chengwei LLC Ventures, a small private equity 
firm which handled China investments for several U.S. colleges, 
viewed the rules as political posturing leading up to the next 
Party Congress and didn't expect any significant change until 
after November 2007.  Meanwhile, Carlyle would need to 
restructure some of its deals to work around the regulations. 
Luo said the flare-up over Carlyle's efforts to acquire a 
controlling stake in Xugong Manufacturing Group (Ref B) was 
unfortunately the most publicized example of this wave of 
economic nationalism, and that "he could write a fascinating 
book" discussing its travails.  Luo opined that the USG bore 
some of the blame for the new economic nationalism because of 
the failed CNOOC bid.  Acknowledging that the deal was not 
blocked by the Administration, he said that the common Chinese 
person did not differentiate between Congress and the rest of 
the U.S. Government.  He quipped that China unfortunately had 
"learned" from the United States to use "national security" as a 
rationale to protect domestic business. 
 
 
¶9.  (C)  Turning to international issues, the group discussed 
anti-Japanese sentiments among Chinese.  Chief Editor of China 
Daily's East China edition Chen Weihua (protect) noted with 
bemusement that it was not his parents, who directly experienced 
the war with Japan, but his daughter who held the strongest 
anti-Japanese attitudes and who had participated in 
anti-Japanese protests.  Li thought it was clever of China to 
take the moral high ground with Japan.  Japan would isolate 
itself in Asia if it did not face up to its history, but that 
was not necessarily bad for China. 
 
 
---------------- 
AmCham Breakfast 
---------------- 
 
¶10.  (SBU)  During a breakfast meeting hosted by AmCham 
Shanghai, DAS Christensen discussed bilateral relations and 
queried AmCham members on the local business environment. 
AmCham Chairman Jeff Bernstein first briefed the DAS on three 
main trends in Shanghai's business environment:  Shanghai's 
development into a service economy, the emergence of an R&D 
sector in Shanghai (with its accompanying technology transfer 
and IPR issues), and the movement of manufacturing away from 
Shanghai.  Overall, AmCham members rated Shanghai as one of the 
best places to do business in China, but acknowledged there were 
still transparency issues that made doing business 
unpredictable.  The group raised the issue of China's 
"push-back" on FDI, reflected in China's new M&A regulations. 
They discussed the failed CNOOC bid as well as proposed U.S. 
rules on export controls as factors fueling China's growing 
protectionism. 
 
 
SHANGHAI 00006494  003 OF 003 
 
 
 
 
¶11.  (U)  DAS Christensen has cleared this cable. 
JARRETT