VZCZCXRO9828
PP RUEHCN
DE RUEHBJ #5362/01 0822247
ZNY CCCCC ZZH
P 232247Z MAR 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 0933
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHMJ/AMEMBASSY MAJURO 0112
RUEHPY/AMEMBASSY PORT MORESBY 0103
RUEHSV/AMEMBASSY SUVA 0045
RUEHWL/AMEMBASSY WELLINGTON 0520
RHHMUNA/CDR USPACOM HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 005362 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPARTMENT FOR EAP/ANP, EAP/CM, EAP/RSP 
 
E.O. 12958: DECL: 03/23/2016 
TAGS: PREL EAID ETRD EFIS ECIN CH FJ PP TW
SUBJECT: PRC-PACIFIC ISLAND CONFERENCE: BUSINESS AND AID, 
WITH TAIWAN IN THE BACKGROUND 
 
REF: A. SUVA 00055 
 
     ¶B. PORT MORESBY 00073 
 
BEIJING 00005362  001.2 OF 003 
 
 
Classified By: Political External Unit Chief Edgard Kagan. Reasons 1.4 
(b) and (d). 
 
Summary 
------- 
 
¶1.  (C) PRC Premier Wen Jiabao will use the first visit by a 
PRC Premier to a Pacific Island nation to launch a China-Fiji 
co-hosted economic development and cooperation conference on 
April 5, according to a MOFCOM American and Oceanian Affairs 
Division Director.  MOFCOM Minister Bo Xilai will join 
regional ministers in signing a "Guiding Framework" on 
economic cooperation, while Pacific Island and PRC businesses 
will solidify business deals during the two-day event.  Fiji 
is the co-host after the Pacific Island Forum dropped its 
official participation due to pressure from its members who 
recognize Taiwan, although the MOFCOM official claimed some 
have now decided to attend the conference.  The Pacific 
Island nations are looking for more PRC assistance, while 
Beijing is pushing Chinese businesses to invest and secure 
access to the region's natural resources.  A New Zealand 
Embassy political officer said China's sporadic assistance 
focuses on "prestige" projects, while Taiwan is more 
effective in using its money to line politicians' pockets. 
Debate over playing the "recognition card" and the influx of 
money from the PRC and Taiwan often leads to instability. 
The New Zealand Embassy officer lamented that China's 
"extractive" approach to the region's resources is "less than 
responsible."  An Australian Embassy officer commented that 
Premier Wen will meet with all twelve heads of state or 
government who plan to attend the conference, noting that 
this alone will probably earn the gratitude of many Pacific 
Island leaders.  End summary. 
 
PRC: Yearlong Effort Pays Off 
----------------------------- 
 
¶2.  (C) On March 14 MOFCOM American and Oceanian Affairs 
Division Director Liu Yi briefed Emboffs on the 
"China-Pacific Island Countries Economic Development and 
Cooperation Forum Ministerial Conference 2006" co-sponsored 
by the PRC and Fiji that will be held in Nadi, Fiji on April 
5-6.  Liu said this event is the end-result of a yearlong 
effort by China after first broaching the idea with the 
Pacific island nations in February 2005.  Beijing has sent 
several advance teams to the area to help organize the event. 
 Overall, there has been a warm response from each of the 
island nations, according to Liu.  China expects to hold the 
conference every two or three years, with the location 
alternating between China and a Pacific Island nation. 
 
Wen Jiabao: First PRC Premier to Visit Region 
--------------------------------------------- 
 
¶3.  (C) Liu said the event will coincide with the first 
official visit by a PRC Premier to the Pacific Island region. 
 Premier Wen Jiabao will arrive in Fiji on April 4, the 
second leg of a trip that will start in Australia and include 
stops in New Zealand and Southeast Asia.  Liu reported that 
Premier Wen will hold bilateral meetings with Fiji leaders on 
April 4 and then join heads of state from most of the 
attending Pacific Island nations to open the conference on 
April 5 before departing for New Zealand. 
 
Ministerial and Business Meetings 
--------------------------------- 
 
¶4.  (C) Liu said the first day of the conference will also 
include a ministerial conference, in which Minister of 
Commerce Bo Xilai will participate.  There will be seminars 
on trade and investment, capacity building, tourism, 
transportation and agriculture, including fisheries and 
forestry.  On the second day, Pacific island businesses will 
meet with approximately 100 representatives from Chinese 
businesses that are already invested in the area or are 
interested in making Pacific island investments.  Liu is 
hopeful that these meetings will result in many new business 
deals. 
 
 
BEIJING 00005362  002.2 OF 003 
 
 
"Guiding Framework" Meets PRC Interests 
--------------------------------------- 
 
¶5.  (C) China expects to sign a ministerial-level "Guiding 
Framework" with all of the attending Pacific Island nations. 
Liu said all of the attending nations have already 
"initialed" the non-binding document, which covers general 
procedures to promote cooperation in trade and investment, 
capacity building, tourism, transportation and agriculture, 
including fisheries and forestry.  The island nations are 
interested in developing these areas and have requested PRC 
assistance, according to Liu.  China's interest is access to 
the regional fishery, forestry and other natural resources, 
Liu continued, while the Pacific island nations are most 
interested in promoting their tourism industries, increasing 
Chinese investment and securing more PRC assistance. 
 
Nations That Recognize Taiwan to Attend? 
---------------------------------------- 
 
¶6.  (C) Liu said China chose Fiji as a co-host due to Fiji's 
central location among the Pacific island nations, relatively 
frequent flights and because it is the headquarters of the 
Pacific Island Forum (PIF) Secretariat.  When asked about 
PIF's involvement, Liu admitted that China had originally 
approached the PIF to co-host the event and the PIF 
Secretariat had sent out invitations to all of its members. 
 
SIPDIS 
The PIF then "quit," however, after "some PIF members" 
refused to attend, Liu said.   When pressed, Liu admitted 
that those PIF members were the ones that do not have 
diplomatic relations with Beijing, though she added that some 
of the nations that recognize Taiwan have now decided to 
attend the Conference nonetheless.  Liu said she had heard 
that Taiwan would be "doing something" in reaction to the 
conference but she refused to give any details. 
 
PRC Assistance Insufficient; Businesses Being Encouraged 
--------------------------------------------- ----------- 
 
¶7.  (C) Commenting on the level of assistance the PRC 
provides to the region, Liu said there is only so much 
Beijing can do with its limited resources, especially since 
other regions of the world, like Africa, Latin America and 
Southeast Asia are more important and have a greater need. 
Nonetheless, China feels it must try to meet the island 
nations' demands and is pressing Chinese companies to 
increase their investment in the island nations in order to 
make up for the shortfall.  Liu said that China, besides 
providing training and other capacity building programs, has 
built roads, hospitals, transportation systems and sports 
facilities and arenas.  Liu said China had recently responded 
to Samoa's need and built a new stadium specifically for the 
upcoming South Pacific Island Games in Samoa. 
 
The View from New Zealand 
------------------------- 
 
¶8.  (C/NF) During a separate meeting, New Zealand Embassy 
Political Officer Grahame Morton provided Poloff his 
perspectives on the conference and the PRC-Taiwan rivalry in 
the region.  Morton said the "Guiding Framework" for 
China-Pacific Island cooperation is very similar to the 
agreements China signed with Africa, the Caribbean and Latin 
America.   Morton expects Beijing to follow-up by using the 
document as a road map for PRC involvement in the region. 
China will foot the airfare and hotel bill for the island 
nations' conference participants, which is keeping with 
fairly standard practice for the region, according to Morton. 
 Besides saving the island nations money, this also provides 
cover for the bureaucrats and politicians from criticism of 
their frequent travel and use of government funds.  Australia 
and New Zealand will attend, after coordinating the level of 
participation with each other.  Neither expects to rock the 
boat, but rather will be interested in China's actions and 
tone during the event, according to Morton.  Details are 
still scant, Morton continued, but Taiwan is reportedly 
planning its own conference in July. 
 
¶9.  (C/NF) Morton said that Taiwan's efforts in the region 
have been comparatively more active and skillful, putting 
more money, by way of official assistance and private 
investment, into the island nations.  Taiwan is also more apt 
 
BEIJING 00005362  003.2 OF 003 
 
 
to engage in less scrupulous activities, continued Morton, 
including bribing politicians and government officials and 
directing assistance into projects they specify.  PRC 
assistance, lagging behind Taiwan's both in terms of volume 
and quality, largely focuses on high profile, prestige 
projects like sports stadiums, courthouses, government 
buildings and official residences.  Unlike Taipei or Tokyo's 
assistance programs, Beijing opts to bring in work crews from 
the Mainland, rather than hiring local workers, Morton 
observed. 
 
¶10.  (C/NF) Morton commented that Beijing's assistance and 
economic support directed at the Pacific nations is sporadic 
and inconsistent, with significant upward spikes if there is 
a switch of recognition, or even a rumor to that effect.  The 
island nations are not shy about playing this card, with area 
politicians regularly debating the timing and amount of the 
expected windfall.  Often this debate causes instability in 
the shaky island nations' governments, Morton lamented, as 
political factions stake out positions, bribes flow into 
pockets and scandals flourish as politicians see 
opportunities to drag opponents through the mud. 
 
¶11.  (C/NF) Morton said New Zealand's main regional interests 
are to promote stable governments, conserve the area's 
natural resources and encourage the economic development of 
its island neighbors.  Beijing views the area quite 
differently.  Competition with Taiwan for recognition is 
paramount.  Economically, China is largely extractive in its 
approach, despite lip service to "sustainable development." 
Morton said New Zealand finds China acting in less than a 
responsible fashion, as Beijing tends to extract rather than 
conserve resources, causes political instability by putting 
on the pressure over Taiwan and focuses overly on "prestige" 
projects as opposed to the real economic development needs of 
the area.  NZ recognizes that it does not have the power to 
keep China out of the region nor is it in a position to 
lecture China about being a "responsible stakeholder."  The 
best New Zealand can do is to engage in a dialogue with China 
and seek areas of cooperation, Morton concluded. 
 
Australian:  Wen Gives Face to Pacific Island Leaders 
--------------------------------------------- ---------- 
 
¶12. (C/NF) Australian Embassy Political Officer Scott Dewar 
told Poloff March 17 that Canberra appears to be keeping a 
watchful eye on Wen's trip, which will follow immediately his 
April 1-4 visit to Perth and Canberra.  Dewar said that Wen 
will meet with all twelve of the Pacific island heads of 
state or government who will participate in the conference, 
commenting that his willingness to meet these leaders should 
carry great weight with them.  Dewar commented that the PRC 
is well aware of the impact of giving good treatment to the 
leader of a small country. 
 
RANDT