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PP RUEHCN RUEHDBU RUEHGH
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ZNR UUUUU ZZH
P 080928Z SEP 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 6450
INFO RUCPDOC/USDOC WASHDC
RUEHCN/AMCONSUL CHENGDU 7098
RUEHGZ/AMCONSUL GUANGZHOU 1420
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RUEHSH/AMCONSUL SHENYANG 6833
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RUEHDBU/AMEMBASSY DUSHANBE
RUEHEK/AMEMBASSY BISHKEK 1264
RUEHTA/AMEMBASSY ALMATY 1850
RUEHNT/AMEMBASSY TASHKENT 1091
RUEHNE/AMEMBASSY NEW DELHI 4171
RUEHUM/AMEMBASSY ULAANBAATAR 3456
RUEHIL/AMEMBASSY ISLAMABAD 6446

UNCLAS SECTION 01 OF 02 BEIJING 019030 
 
SIPDIS 
 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR ITA/MAC/AP/MCQUEEN 
STATE PASS USTR STRATFORD, WINTER, ALTBACH 
GENEVA PASS USTR 
 
E.O. 12958: N/A 
TAGS: ECON ECIN ETRD PREL PTER CH ZK
SUBJECT: China Pushes SCO Economic Agenda at Western China 
Trade and Economic onference 
 
REFS:  A) SHANGHAI 03842; B) BEIJIG 16162; (C) 05 BEIJING 
15345 
 
¶1. (SBU)  Sumary:  Zhang Deguang, Secretary General of the 
Shanghai Cooperation Organization (SCO), exhorted his 
central Asian counterparts at a September 2 event in Urumqi 
to quickly conclude three key economic agreements on 
customs, transportation and protection of foreign 
investment.  These are key to broader economic integration 
between China and Central Asia, he stated.  Zhang added 
that once these agreements were signed by the SCO members 
they could be expanded to include observer countries. 
Zhang also emphasized that economic cooperation is 
important for the SCO, not just politics, security and 
fighting terrorism.  Several other speakers also 
highlighted the importance of the SCO to regional economic 
cooperation.  End Summary. 
 
--------------------------------------------- ------ 
The SCO - Key to Central Asian Economic Cooperation 
--------------------------------------------- ------ 
 
¶2. (SBU)  Speaking at the High-level Forum on Regional 
Economic Cooperation between China and Central-West-South 
Asia of the annual Urumqi Fair on September 2, 2006, SCO 
Secretary General Zhang Deguang repeatedly emphasized the 
 
SIPDIS 
importance of the SCO to regional economic integration. 
Suddenly switching to Russian, Zhang exhorted visiting 
delegations from SCO member countries to sign three 
proposed agreements on customs, transportation (highway 
cooperation, cargo, vehicles, general procedures, and 
quarantine conditions) and protection of foreign 
investment, respectively. 
 
¶3. (SBU)  Noting that there are differences of opinion 
amongst SCO member countries regarding these topics, Zhang 
stressed that agreement is needed soon.  In further 
expanding the range of SCO activities beyond the political 
arena, Zhang added that business leaders and academics 
should increase their participation in the organization and 
greater cooperation between politics and business is 
needed.  He emphasized that regional economic cooperation 
is an important goal and work topic for the SCO, not just 
politics, security and fighting terrorism. 
 
¶4. (SBU)  Former Vice Minister of China's Ministry of 
Commerce, Liu Shanzai, echoed Zhang's emphasis on the SCO's 
central role as a platform for enhancing regional economic 
cooperation.  Liu recalled that as early as 2001, when the 
SCO was formed, mechanisms were set up to establish 
meetings between economic and trade ministers of SCO member 
states.  At that time negotiations for facilitation of 
trade and development were also launched.  Liu went on to 
say that at the fifth anniversary celebration of the SCO's 
founding held in Shanghai in June, 2006 (see Reftel A), all 
parties agreed to give priority to cooperation in energy, 
information technology and transportation as well as to 
actively promote facilitation of trade and investment, 
gradually realizing the free flow of goods, capital, 
services, and technology. 
 
¶5. (SBU)  Huang Fanzhang, a Deputy Director of the China 
Reform Forum, also noted in his Urumqi speech that the SCO 
planned to establish a common market around 2020.  He went 
on to say that at the Shanghai Summit in June, 2006, China 
promised to provide USD 900 million in loans to increase 
cooperation among member countries in energy, IT, transport 
and other sectors. 
 
¶6. (SBU)  Yue Sondong, Deputy Director General of the State 
 
BEIJING 00019030  002 OF 002 
 
 
Council's Development and Research Center, continued to 
echo this theme of the SCO's central role in promoting 
regional economic cooperation.  Yue outlined a series of 
practical cooperation projects stemming in part from a 
series of June Summit agreements including the "Memo on 
Developing Regional Economic Cooperation and Facilitating 
Trade Investment" and the "Outline on Multilateral Trade 
Cooperation."  These include the China-Kazakhstan oil 
pipeline that has begun operating, the gas pipeline that is 
under construction, and the initiation of the China- 
Kazakhstan Huoergousi Border Cooperation Center that has 
been initiated.  He noted that the member countries of the 
SCO are working on the subdivision and promotion of 127 
projects listed in the plans of the SCO which involve 11 
industries, including transportation, energy, communication 
and agriculture. 
 
--------------------------------------------- ------- 
Extending Economic Agreements to West and South Asia 
--------------------------------------------- ------- 
 
¶7. (SBU)  In his prepared comments SCO Secretary General 
Zhang stated that the SCO stands ready to intensify 
exchanges with countries all over the world, especially 
Central, West and South Asian states.  In his exhortation 
to the delegates in Russian, he also suggested that these 
agreements, once signed, would be expanded to include 
observer countries.  (Note: The observer countries include 
Iran, Mongolia, India, and Pakistan.  Observer status was 
granted to these countries in 2004 and 2005.  End Note.) 
 
------- 
Comment 
------- 
 
¶8. (SBU)  China's campaign for the Shanghai Cooperation 
Organization's greater role in Central Asian economic 
cooperation was in full swing at the Urumqi Conference. 
Many speakers stressed the SCO's economic importance in 
almost identical terms.  The presentations in Urumqi did 
not make explicit the "differences of opinion" Secretary 
General Zhang alluded to in his exhortation nor whether 
they would be resolved by the Dushanbe conference starting 
in mid-September.  This appears to be the first time the 
SCO has been a main feature of the high-level Urumqi forum. 
End comment. 
 
 
Randt