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C O N F I D E N T I A L SECTION 01 OF 07 BEIJING 016162 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 08/07/2026 
TAGS: PREL PGOV XD XK CH
SUBJECT: CHINESE TELL BOUCHER STABILITY, SECURITY AND  GOOD 
NEIGHBORLINESS ARE TOP GOALS 
 
BEIJING 00016162  001.2 OF 007 
 
 
Classified By: Political Minister Counselor Daniel 
Shields.  Reasons 1.4 (b/d) 
 
Summary 
------- 
 
¶1.  (C) Ministry of Foreign Affairs officials, 
academics, and oil industry professionals told 
Assistant Secretary for South and Central Asian 
Affairs Richard A. Boucher during his July 30 ? August 
2 visit to China that stability and security are 
China's foreign policy goals in the Central and South 
Asia.  Boucher responded that the best way to achieve 
long-term stability is to build democratic 
institutions and political openness. Chinese officials 
and the Shanghai Cooperation Organization Secretary 
General welcomed U.S. efforts to help stabilize the 
region and stressed their desire for better 
coordination and cooperation with the United States. 
Assistant Foreign Minister Li Hui proposed 
establishing a United States-China-India trilateral 
mechanism to discuss issues of mutual concern. 
Boucher and ministry officials noted the usefulness of 
the consultations and agreed to convene again in the 
future. End Summary. 
 
South and Central Asia Subdialogue with Li Hui 
--------------------------------------------- - 
 
¶2.  (C) Assistant Secretary for South and Central 
Asian Affairs Richard A. Boucher and Assistant Foreign 
Minister Li Hui held U.S.-China South and Central Asia 
sub-dialogue consultations on July 31.  Li, focusing 
first on Central Asia issues, emphasized that the 
United States and China have a common interest in 
Central Asian stability and development, arguing that 
security is of paramount importance for the Central 
Asian nations.  The international community must 
support Central Asia in the fight against "the three 
evils" of extremism, separatism and terrorism with 
"strict preventative measures."  Li insisted that 
democracy is not the pressing issue right now and 
outsiders are not in a position to comment on Central 
Asian countries' decisions on how best to achieve 
stability.  Central Asian countries have unique 
histories and cultures and will realize the goal of 
democracy differently from Europe and the United 
States, Li said.  Boucher responded that the best way 
to achieve long-term stability is to build democratic 
institutions and political openness.  The U.S. goal is 
to ensure that Central Asian nations can act 
independently in the international arena rather than 
be dominated by the interests of one country or one 
set of economic interests.  This is why we are 
promoting links between Central Asia and South Asia, 
Boucher said. 
 
East Turkistan Liberation Organization 
-------------------------------------- 
 
¶3.  (C) Li spoke at length about the East Turkistan 
Liberation Organization, which he claimed has close 
relations with Al-Qaeda and poses a threat to Central 
Asia.  He stated that the group has carried out more 
than 300 attacks in Xinjiang and more than 100 attacks 
outside China, many directed at Chinese diplomats and 
private citizens.  The East Turkistan Liberation 
Organization recently announced its intention to 
"sabotage" the 2008 Olympics, according to Li, who 
stressed Beijing's disappointment at U.S. action to 
put a hold on designation of the group by the Security 
Council 1267 Committee.  He asked that the United 
States lift the hold in light of the "hard evidence" 
Beijing has provided.  Boucher replied that the United 
States has already listed an East Turkistan 
organization, the East Turkistan Independence 
Movement.  However, in the case of the East Turkistan 
 
BEIJING 00016162  002.2 OF 007 
 
 
Liberation Organization, China's evidence has yet to 
be independently confirmed.  The United States has 
worked with other countries to try to validate 
Beijing's evidence but these efforts have been 
unsuccessful.  The United States is spending 
considerable money investigating the organization. 
This is an important area that our security services 
should continue to discuss, Boucher stated. 
 
Russia's Role in Central Asia 
----------------------------- 
 
¶4.  (C) Li said the People's Republic of China does 
not seek to dominate Central Asia, believes the region 
should be "open and transparent" and opposes 
deliberate efforts to create regional division and 
confrontation.  Russia strongly influences Central 
Asia through trade, political, economic, military, 
cultural and historical ties, said Li, stressing that 
Central Asian nations need Russian political and 
security cooperation.  China believes Russia is an 
important force for stability and security and 
respects the significance of Russia's past role in the 
region, Li said. 
 
Shanghai Cooperation Organization 
--------------------------------- 
 
¶5.  (C) Li denied the Shanghai Cooperation 
Organization wants to become a "new NATO," arguing 
that it has never established any political or 
military structures.  He rejected reports that member 
states need permission to conduct exchanges with non- 
member states, arguing instead that the organization 
is open, all its members are equal and all have the 
full freedom to carry out activities without 
restriction.  Boucher replied that we welcome the 
organization's anti-terrorism efforts and stressed 
that U.S. military bases and security agreements in 
the region designed to fight terrorism are good for 
everyone, including Russia and China. Li said that 
China has noted the United States' military and 
security cooperation in the region and understands the 
need for temporary stationing of troops.  Our troop 
levels and basing, however, should be "rational and 
proportionate," and take into account the concerns of 
China and other neighbors. 
 
Kazakhstan, Kyrgyzstan and Tajikistan 
------------------------------------- 
 
¶6.  (C) Li emphasized that Kazakhstan, a key player in 
Central Asia with a high level of comprehensive 
national strength, is pursuing stable, reform-orieted 
policies.  Boucher highlighted positive tends in 
Kazakhstan to underscore the stabilizing effects and 
economic benefits of building democratic institutions. 
As for Kyrgyzstan, the nation is moving toward 
stability after th 2005 "Tulip Revolution," which Li 
termed the"March 24 Incident."  Facing increasing 
challenges from the three evils, Kyrgyzstan needs 
international assistance to deal with these issues, Li 
argued.  Tajikistan is stable and President Rahmonov 
has further consolidated his authority, enjoying broad 
support in advance of November elections.  Li noted 
that the United States has strengthened military and 
security cooperation with Tajikistan.  Boucher replied 
that we have been working closely with both Kyrgyzstan 
and Tajikistan on economic development and regional 
integration.  He added that the United States 
successfully concluded basing discussions with 
Kyrgyzstan and has worked to build Tajikistan's 
counter-narcotics and border patrol capacity. 
 
Turkmenistan and Uzbekistan 
--------------------------- 
 
 
BEIJING 00016162  003.2 OF 007 
 
 
¶7.  (C) Commenting that Turkmenistan has been 
generally stable since independence, Li said the 
Chinese government expects it will remain so despite 
concerns about President Niyazov's health and 
Turkmenistan's overdependence on oil and gas revenues. 
Boucher countered by highlighting the isolated and 
opaque nature of the Turkmenbashi's government, noting 
the impact of declining social services.  Turning to 
Uzbekistan, which China believes is "greatly 
important" to Central Asia, Li said President Karimov, 
a man of "strong character," enjoys "high authority" 
and is firmly in control, despite extremist activity 
in the Fergana Valley.  A series of incidents, 
including the "terrorist acts" that precipitated the 
2005 Andijan incident, are the work of extremists, Li 
asserted.  Boucher stressed that Uzbekistan's 
stability may be temporary because its isolation has 
harmed its people and allowed Russian security 
interests and Gazprom's economic demands to compromise 
its sovereignty.  The Andijan incident is much more 
complicated than a "terrorist" incident, Boucher 
pointed out, noting that the United States condemned 
the government's killing of hundreds of innocent 
demonstrators. 
 
South Asia: General Views 
------------------------- 
 
¶8.  (C) Li, noting the China's 4,700 km common border 
with South Asian states, stressed the importance of 
regional peace and stability to China's economic 
development and security.  Expanding economic ties 
would particularly help western China's development 
and provide an opportunity for Chinese companies to go 
global.  Beijing is promoting improved political ties 
through high-level visits and also hopes to strengthen 
multilateral cooperation, such as through the South 
Asian Association for Regional Cooperation.  While the 
region faces many problems, including the threat of 
terrorism, setbacks in the Sri Lankan peace process, 
territorial conflicts such as Kashmir and internal 
instability in Nepal, Li highlighted positive 
developments such as improving India-Pakistan 
relations and an increased emphasis on economic 
development.  Boucher emphasized U.S. success in 
improving our traditionally strong relations with 
Pakistan and India, highlighting the positive impact 
on India-Pakistan relations.  He described recent 
positive steps by India and Pakistan to address the 
Kashmir problem and noted U.S. interest South Asian 
regional free trade efforts.  Boucher emphasized U.S. 
interest in cooperating with China to address common 
challenges in South Asia. 
 
¶9.  (C) Agreeing on the need to improve cooperation on 
South Asia, Li proposed establishing a United States- 
China-India trilateral mechanism to discuss issues of 
concern, as well as "dialogue mechanism" for the 
United States and China to exchange views on an ad hoc 
basis.  He urged strengthening U.S.-China policy 
coordination, jointly fighting terrorists, separatists 
and religious extremists in the region and using the 
South Asian Association for Regional Cooperation as a 
platform to coordinate U.S.-China cooperation in South 
Asia.  Boucher, welcoming efforts to improve bilateral 
cooperation, said the United States would consider 
Beijing's proposals. 
 
India 
----- 
 
¶10.  (C) China welcomes the warming of relations 
between the United States and India, believing that 
good U.S.-India relations will contribute to regional 
peace and stability, Li said.  Beijing welcomes 
India's adjustment of its strategic thinking, with New 
Delhi now emphasizing economic development as much as 
 
BEIJING 00016162  004.2 OF 007 
 
 
security.  Li stated that China-India ties are 
improving and bilateral trade will exceed USD 20 
billion this year.  He stressed that China and India 
are partners, not competitors, dismissing the "theory" 
of China-India competition.  Li added that improving 
China-India strategic ties are not targeted at any 
country. 
 
¶11.  (C) Boucher replied that India is both an 
important partner for the United States and an anchor 
of stability for the region.  India is also an 
enormous economic force and an important technological 
partner.  U.S.-India cooperation is growing quickly, 
he explained, noting the recent example of our 
agreement on civil nuclear cooperation.  Boucher said 
the agreement is a realistic means of obtaining 
India's cooperation in international non-proliferation 
efforts.  The agreement is good for non-proliferation, 
will help India's strategic position and relationships 
with other countries, will provide clean energy for 
India's development and will lessen India's impact on 
international oil and gas markets.  Li responded that 
Beijing believes all countries can cooperate on the 
peaceful use of nuclear energy but hopes this 
cooperation will strengthen the global non- 
proliferation regime. 
 
Nepal 
----- 
 
¶12.  (C) China believes the situation in Nepal is 
developing quickly.  The seven-party alliance and 
"anti-government forces" have reached consensus on 
major issues and are making arrangements for an 
interim government, Li said, although differences 
remain over the management of troops and weapons as 
well as whether Nepal should adopt a constitution or a 
republican form of government.  China attaches great 
importance to Nepal's stability, but maintains a 
policy of non-interference and has no ties with the 
Maoists.  Boucher said the United States is pushing 
for the restoration of the political process, but is 
concerned about Maoist intentions.  The Maoists claim 
they wish to join the political process, but continue 
to behave violently.  Stressing the importance of 
international support to the new government, Boucher 
stated that we have 40 million dollars available to 
assist Nepal. 
 
¶13.  (C) In a separate meeting, Ministry of Foreign 
Affairs Asia Department Director General Hu Zhengyue 
stated that the monarchy (though not the King) still 
appeals to many Nepalis, who must decide for 
themselves whether to retain it in some form.  Hu said 
China has not resumed military assistance to Nepal and 
noted that economic assistance focuses on 
infrastructure and may include a hydroelectric dam 
project. 
 
Pakistan-Afghanistan Relations 
------------------------------ 
 
¶14.  (C) Boucher said Pakistan and Afghanistan are 
confronting common challenges, pointing out that Al 
Qaeda and Taliban terrorists, drug dealers and tribal 
elements are fiercely resisting the Afghan government 
as it expands its authority beyond Kabul.  Pakistan 
faces similar challenges, particularly in its border 
regions.  Pakistan and Afghanistan are close U.S. 
partners in the war on terror and we encourage both 
countries to cooperate with each other, as Secretary 
Rice stressed during her July visits to Kabul and 
Islamabad.  Boucher welcomed Chinese assistance to 
Afghanistan, noting China's recent pledge to provide 
Afghan police training and equipment.  He asked if the 
Chinese government could provide more for the Afghan 
army and police and the Chinese responded that they 
 
BEIJING 00016162  005.2 OF 007 
 
 
had not been asked by the Afghan government to do so. 
 
¶15.  (C) Li said he believes Afghanistan's rebuilding 
efforts are advancing and the overall situation is 
improving, although the country faces many obstacles 
and China is increasingly affected by Afghan narcotics 
production and trade.  During President Karzai's 2004 
inauguration, Li observed Afghan warlords and 
government officials exchanging "big hugs." He 
wondered whether the warlords are faithfully 
implementing government policies and reconstruction 
programs.  China has friendly relations with 
Afghanistan and Pakistan and has signed Treaties of 
Good Neighborliness and Friendly Cooperation with 
both.  Sino-Pakistani relations are particularly 
important, Li explained, because Pakistan borders 
China's Xinjiang Uighur Autonomous Region and thus 
directly affects domestic stability and security. 
 
Sri Lanka 
--------- 
 
¶16.  (C) Boucher said the United States is working 
with Norway and the co-Chairs to support the peace 
process and is urging the Sri Lankan government to 
initiate peace proposals and reach out to its Tamil 
population.  The United States is urging countries 
with large Tamil populations to disrupt the flow of 
finances and weapons to the Tamil Tigers, who have yet 
to commit themselves to the peace process.  Li agreed 
that national reconciliation is the only way forward 
and hopes the international community will urge both 
sides to return to negotiations. 
 
Discussion with Chinese Scholars 
-------------------------------- 
 
¶17.  (C) Chinese scholars at a roundtable discussion 
hosted by the Ministry of State Security-affiliated 
China Institutes of Contemporary International 
Relations arued that the U.S. policy of linking South 
andCentral Asian issues is not likely to succeed 
because of great differences between, and within, the 
two regions.  The scholars stated that the United 
States and China should work together to help India 
and Pakistan improve relations because instability in 
India-Pakistan relations has the potential to spill 
over into less stable countries in the region, such as 
Afghanistan.  In response to a question about China's 
position on a rising India, one scholar responded that 
China welcomes India's rise in general, recognizing 
that it will have a significant impact on regional and 
global stability.  He acknowledged traditional strains 
on the China-India relationship such as unresolved 
border disputes and India's mistrust of China's 
strategic intentions, but stated that China is 
concentrating on the positive aspects of the 
relationship. 
 
Shanghai Cooperation Organization Perspective 
--------------------------------------------- 
 
¶18. (C) Shanghai Cooperation Organization Secretary 
General Zhang Deguang told Assistant Secretary Boucher 
August 1 that the organization has moved beyond 
initial goals of promoting confidence building, 
withdrawing military forces and resolving border 
disputes affecting the former Soviet Central Asian 
countries to become a multifaceted international 
organization.  Now and in the future, it will address 
a broad range of political and economic issues, 
including trade and investment, energy, education, 
environmental protection, combating the spread of 
contagious disease, infrastructure building and 
information security.  The organization is not so 
ambitious as to aim for a free trade zone, but is 
consulting with experts on the prospect of 
 
BEIJING 00016162  006.2 OF 007 
 
 
establishing limited customs-free zones in border 
towns to facilitate cross-border trade.  It has held 
expert discussions on eliminating subsidies, 
facilitating cross-border container traffic and 
establishing a business council and a joint banking 
pool, while engaging in specific projects such as 
support for construction of roads and power plants. 
 
¶19. (C) Concerns that the Shanghai Cooperation 
Organization could become a military alliance that 
excludes the United States are exaggerated, Zhang 
said, adding that he favors expanded consultation with 
the United States to avoid such misunderstandings. 
The organization will not follow the NATO model.  Its 
security goal is simply to attack terrorism and 
extremism.  The organization has no requirement that 
would prevent members from undertaking security 
cooperation activities with the United States, he 
said, although the spirit of the organization is that 
no member should act in a way that would damage other 
members' security interests.  In fact, the 
organization's efforts to fight terrorism, drug 
trafficking and the spread of illegal weapons are 
points in common with the United States.  Assistant 
Secretary Boucher agreed that China and the United 
 
SIPDIS 
States share many goals in the region.  Both should 
support the independence of Central Asian nations and 
encourage their economic development, he said. 
 
¶20. (C) Addressing Assistant Secretary Boucher's 
questions about the organization's relationship with 
non-members, Zhang said the group is considering 
establishing a new status of "dialogue partner" in 
addition to the current observer members and the 
Afghanistan Contact Group.  During the Organization's 
June Summit, Afghanistan informally asked about 
becoming a full member, Zhang said.  Observers cannot 
raise resolutions or participate formally in the 
discussion, but are expected to send representatives 
to meetings at the same rank as other member 
countries.  The organization discusses third countries 
only as part of its evaluation of the overall security 
situation, consistent with its goal of maintaining 
peace and stability in the region, Zhang said. 
 
Chinese Energy Firm's Views 
--------------------------- 
 
¶21. (SBU) Assistant Secretary Boucher discussed 
Central Asian energy issues with Wang Dongjin, 
Assistant to the President of China National Petroleum 
Corporation International, Ltd.  Wang said the company 
is doing business in 24 countries worldwide, with 
projects in countries including Azerbaijan, 
Kazakhstan, Turkmenistan, and Uzbekistan.  The 
company's technological resources are one of the its 
strengths when doing business abroad, according to 
Wang, who highlighted the business's use of 
proprietary Enhanced Oil Recovery technology in 
Kazakhstan to boost an oilfield's output from a forty 
year average of 2.3 million metric tons per year to 
some 6 million metric tons of production in 2005. 
This increased yield is part of the 400,000 barrels 
per day of crude oil that the company currently 
produces from its operation in Kazakhstan. 
 
¶22. (SBU) Wang told Boucher that the company plans to 
further increase its business in Kazakhstan to help 
feed China's growing oil and natural gas needs. 
Kazakh oil fields currently send 200,00 barrels of 
crude oil per day to an oil refinery in western China 
through a recently opened pipeline built and operated 
by the business.  The company expects that total to 
climb to 400,000 barrels per day in the future.  As a 
part of the effort to increase the volume of imports 
from Kazakhstan, the company recently proposed the 
construction of an additional 1,300 kilometer of 
 
BEIJING 00016162  007.2 OF 007 
 
 
pipeline.  The pipeline would connect oil fields in 
east Kazakhstan to the newly operational Sino-Kazakh 
pipeline that draws on production from the western 
part of the country.  The company estimates that its 
pipeline construction subsidiary, using a combination 
of Chinese, Kazakh and Russian workers, could build 
the pipeline in one year.  Wang also noted that the 
company is pursuing an opportunity to share in oil and 
natural gas production from ChevronTexaco projects in 
Kazakhstan. 
 
¶23. (SBU) Wang hopes that the company's possible joint 
venture with ChevronTexaco along with other natural 
gas projects elsewhere in Central Asia can serve as a 
hedge against the apparent plan of Russian energy 
company Gazprom to control the Central Asian natural 
gas market.  He noted that Gazprom's current Central 
Asian natural gas production is shipped to Russia as a 
cheap substitute for domestic natural gas production 
exported to Europe at premium prices.  If Gazprom 
gains control of Central Asia's natural gas 
production, China would probably be forced to pay the 
same price as European customers for Gazprom's natural 
gas, regardless of whether it is produced in Russia or 
Central Asia.   To avoid this situation, the company 
is prepared to connect its natural gas pipeline 
running from western China to Shanghai to natural gas 
production in Central Asia.  The company also is 
prepared to build a second pipeline that could move 
Central Asian natural gas to customers in southwestern 
China.  Wang said that the company recognizes that 
there are inherent risks in pursuing energy projects 
in Central Asia.  For example, if the company wins 
production rights to natural gas fields in 
Turkmenistan, to get the gas to China they would 
probably be forced to build a pipeline through 
Kazakhstan rather than along a much shorter route 
through Uzbekistan because of Uzbek-Kazakh political 
tensions.  Wang said the company conducts frequent and 
extensive risk assessments to ensure that they 
recognize and address such situations when pursuing 
business in Central Asia or elsewhere in the world. 
 
¶24. (U) Assistant Secretary Boucher cleared this 
cable. 
 
 
RANDT