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UNCLAS SECTION 01 OF 03 BEIJING 009290 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PARM ECON CH IR KN JP
SUBJECT: MAY 16 MFA PRESS BRIEFING: IRAN, SCO, U.S.- CHINA 
MILITARY RELATIONS, U.S. PRC BANK SANCTIONS,  CHINA-JAPAN 
ECS CONSULTATIONS, ZHAO YAN, RMB,  SINGAPORE, MERKEL'S 
VISIT, CHINA-ARAB COOPERATION  FORUM 
 
 
Summary 
------- 
 
¶1.  Key points made at the May 16 MFA press briefing 
are as follows: 
 
- Beijing appreciates the positive efforts of the EU-3 
to resolve the Iran nuclear issue through dialogue. 
 
- The Shanghai Cooperation Organization (SCO) has 
invited leaders from all observer nations to attend 
the mid-June SCO Summit in Shanghai and China welcomes 
Iran's attendance. 
 
- China is positively considering Admiral Fallon's 
invitation to observe the U.S. military exercise in 
Guam. 
 
-  Asked about Washington's reported discussion of 
sanctions against some Chinese banks involved in 
illicit business activities with the DPRK, the MFA 
spokesperson expressed opposition to sanctions or the 
application of pressure in handling these issues. 
 
- The fifth round of China-Japan consultations on the 
East China Sea will be held May 18 in Tokyo and the 
decision whether to hold a foreign ministers' meeting 
in Qatar depends on consensus reached during bilateral 
discussions. 
 
- The MFA spokesperson had no specific information to 
offer on the case of detained NYT researcher Zhao Yan. 
 
- China is reforming its exchange rate regime in line 
with President Hu Jintao's statements during his April 
trip. 
 
- The spokesperson denied any link between Singaporean 
Minister Mentor Lee Kwan Yu's May 10-17 visit to China 
and KMT Chairman Ma Ying-jeou's recent trip to 
Singapore. 
 
- the first flight of the JF-17 "Xialong," a new 
light-weight fighter jet prototype reportedly 
developed jointly by China and Pakistan, took place on 
April 28 in Chengdu. 
 
- German Chancellor Angela Merkel will visit Beijing 
and Shanghai May 21-23. 
 
- Beijing will host the second China-Arab Cooperation 
Forum Ministerial Meeting May 31-June 1.  End Summary. 
 
Iran Nuclear Issue 
------------------ 
 
¶2.  Beijing has not yet received the official text of 
the EU-3 proposal but appreciates the positive efforts 
of the EU-3 to resolve the Iran nuclear issue through 
dialogue, Spokesperson Liu Jianchao stated during the 
regular May 16 MFA press briefing in response to the 
Kyodo correspondent's question on the EU plan.  China 
hopes the European countries will present a rational, 
comprehensive and balanced proposal that is conducive 
to the realization of nonproliferation objectives, 
considers Iran's concerns and helps talks resume 
promptly.  Asked to comment on the Iranian Foreign 
Minister's reported rejection of the EU-3 plan, Liu 
called on the relevant parties to make constructive 
efforts to launch a "new round of diplomacy" and 
positively respond to the proposal.  These actions 
will promote diplomatic efforts and create conditions 
for a dialogue between the EU-3 and Iran.  Beijing 
will send a representative to attend the upcoming P-5 
plus one meeting in London and China remains in close 
contact with Iran, Liu said. 
 
SCO Foreign Ministers Meeting, Iran Invited to Summit 
--------------------------------------------- -------- 
 
¶3.  Liu announced that the Shanghai Cooperation 
 
BEIJING 00009290  002 OF 003 
 
 
Organization (SCO) Summit will be held in Shanghai in 
mid-June.  The SCO has launched an official website, 
www.scosummit2006.org, to offer information in 
Chinese, English and Russian on the June Summit. 
Asked whether Iran will attend the SCO Summit, Liu 
stated that based on the consensus reached by SCO 
members, leaders from all observer nations will be 
invited.  China will respect these countries' 
decisions and welcomes Iran's attendance, Liu said, 
but would not confirm which countries have already 
accepted the invitation.  Liu reported that the May 15 
SCO Foreign Ministers' Meeting in Shanghai laid the 
foundation for the Summit and that the Foreign 
Ministers discussed security, humanitarian and other 
areas of cooperation.  They also reached a broad 
consensus on counterterrorism efforts. 
 
 
China Considering U.S. Invitation on Military Exercise 
--------------------------------------------- --------- 
 
¶4.  Asked for China's response to Admiral Fallon's 
invitation to the PLA to observe a U.S. military 
exercise in Guam, Liu commented hat China welcomes 
U.S. efforts to promote mutual understanding and 
relations between the two militaries.  China is 
positively considering the U.S. invitation, he said. 
 
U.S. Sanctions on PRC Banks Involved with the DPRK 
--------------------------------------------- ----- 
 
¶5.  Questioned by the AP correspondent about 
Washington's reported discussion of sanctions against 
Chinese banks linked to DPRK proliferation and other 
illicit activities, Liu asserted that the Chinese 
Government has taken a "clear and resolute" position 
on nonproliferation.  Beijing opposes the 
proliferation of weapons of mass destruction in any 
form and stands against any entity that conducts such 
activities.  However, China consistently opposes using 
sanctions or types of pressure to handle these issues. 
 
China-Japan East China Sea Consultations 
---------------------------------------- 
 
¶6.  Liu announced that the fifth round of China-Japan 
consultations on the East China Sea will be held May 
18 in Tokyo and attended by MFA Asian Affairs 
Department DG Hu Zhengyue and his Japanese 
counterpart, Kenichiro Sasae.  The consultations will 
help expand consensus and narrow bilateral 
differences, but there is still a major gap between 
the two countries' positions.  Remarking that this is 
a complicated issue, Liu said there is no expectation 
of a breakthrough during the upcoming round of talks. 
China, nonetheless, will maintain a positive attitude 
in order to reduce differences.  Queried about the 
possibility of the Chinese and Japanese Foreign 
Ministers' meeting on the sidelines of the Asia 
Cooperation Dialogue (ACD) in Qatar, Liu remarked that 
the officials should "not meet for the sake of 
meeting."  China hopes that bilateral consultations 
will lead to a consensus on this issue, he said, 
stressing that the decision whether to conduct the 
meeting depends on the results of consultations. 
Beijing and Tokyo maintain unimpeded channels of 
communication and will remain in contact on the issue. 
 
Detained NYT Researcher Zhao Yan 
-------------------------------- 
 
¶7.  Asked about reported new charges brought against 
detained New York Times researcher Zhao Yan, Liu said 
that in the past he inquired into the case but 
currently has no specific information to offer, adding 
that the question should be referred to the relevant 
authorities. 
 
Exchange Rate Reform 
-------------------- 
 
 
BEIJING 00009290  003 OF 003 
 
 
¶8.  Asked about the recent appreciation of the RMB, 
Liu stated that the currency exchange rate has 
appreciated by 3.4 percent against the USD since last 
year.  The value of the RMB versus the USD has both 
risen and decreased, reflecting both changes in the 
major global currencies and the RMB's resilience. 
China is reforming its exchange rate regime in line 
with President Hu Jintao's statements during his April 
trip, according to Liu. 
 
Lee Kwan Yu's Visit 
------------------- 
 
¶9.  Asked about the link between Singaporean Minister 
Mentor Lee Kwan Yu's visit to China and KMT Chairman 
Ma Ying-jeou's recent trip to Singapore, Liu denied 
any connection between the two events, noting that MM 
Lee's May 10-17 trip was planned far in advance.  Lee 
met with Premier Wen Jiabao and Vice President Zeng 
Qinghong.  Liu said Lee assessed positively the state 
of China-Singapore relations as well as China's 
economic and social achievements, reiterating 
Singapore's commitment to its one-China policy. 
 
China and Pakistan Launch New Fighter Jet Prototype 
--------------------------------------------- ------ 
 
¶10.  Asked about the recent flight of an aircraft 
reportedly developed jointly by China and Pakistan, 
Liu confirmed that the first flight of the JF-17 
"Xialong," a new light-weight fighter jet prototype, 
took place April 28 in Chengdu.  China and Pakistan 
maintain longstanding aviation cooperation and will 
remain in contact on further joint projects in this 
field, he stated. 
 
Chancellor Merkel to Visit 
-------------------------- 
 
¶11.  Liu reported that German Chancellor Angela Merkel 
will visit Beijing and Shanghai May 21-23.  She will 
meet President Hu and Premier Wen and hold a joint 
press conference.  Asked what types of economic deals 
are planned and whether Merkel will discuss the high- 
speed Maglev rail project, Liu noted that Chancellor 
Merkel will attend a high-tech cooperation forum and 
sign a series of agreements and contracts.  In 2005 
Germany-China trade reached 63.2 billion USD, 
comprising one third of total China-EU trade.  China 
has achieved breakthroughs in the development of the 
Maglev, in which China is prepared to cooperate with 
Germany. 
 
China-Arab Cooperation Forum 
--------------------------- 
 
¶12.  Beijing will host the second China-Arab 
Cooperation Forum Ministerial Meeting May 31-June 1, 
Liu noted.  Chinese and Arab foreign ministers and the 
Arab League Secretary General will attend the meeting, 
which will discuss the "new China-Arab partnership." 
MFA West Asia and North African Affairs Department DG 
Zhai Jun will preview the forum to the press on May 
¶17. 
RANDT