O 161432Z NOV 06
FM AMEMBASSY BEIJING
TO SECSTATE WASHDC IMMEDIATE 2152
INFO CHINA POSTS COLLECTIVE

S E C R E T BEIJING 023817 
 
SIPDIS 
 
 
NOFORN 
 
DEPT FOR T, P, ISN, EAP AND EAP/CM 
 
E.O. 12958: DECL: 11/16/2031 
TAGS: PREL PARM ETTC CH NK
 
SUBJECT: PRC RELUCTANT TO ACCEPT KOMID DEMARCHE BECAUSE OF 
LINK TO E.O. 13382 
 
REF: A. STATE 182889 
     ¶B. STATE 180512 
 
Classified By: Deputy Chief of Mission David S. Sedney.  Reasons 1.4 (b 
/d). 
 
Summary 
------- 
 
¶1. (S/NF) We delivered ref A demarche with considerable 
difficulty after our regular contacts at the People's Bank of 
China (PBOC) and the MFA Arms Control and Disarmament 
Department refused to meet with us.  We received no direct 
response when we finally managed to discuss KOMID with the IO 
Department UN Affairs Division Director, after having passed 
a nonpaper on the margins of another meeting.  Our IO contact 
said that reluctance to meet to discuss the matter was 
because of the reference to Executive Order 13382 in an 
earlier demarche on KOMID (ref b).  Our contact said that 
strong Chinese dissatisfaction with the U.S. designation of 
PRC firms under E.O. 13382 makes it difficult for MFA 
officials to accept demarches that appear to link UNSC action 
on North Korea to any reference to the Executive Order.  Our 
contact, speaking personally, offered that any future 
requests related to UNSC 1718 not make reference to E.O. 
13382, claiming this would complicate China's response. 
Poloff stiffly rejected linkage between PRC unhappiness over 
the Executive Order and 1718 implementation, stressed that 
the problem is serial proliferation by PRC firms and urged 
full Chinese cooperation with the United States on previous 
proliferation cases.  Poloff told the contact that the 
claimed linkage was contrary to China's oft-expressed 
commitment to prevent proliferation.  End Summary. 
 
¶2. (S/NF) After considerable difficulty securing meetings, we 
delivered ref A demarche.  Our regular MFA and People's Bank 
of China (PBOC) interlocutors refused to meet with us.  After 
a number of conversations with MFA Arms Control and 
Disarmament Department Missiles Division Director Ma Shengkun 
to discuss the general subject matter and stress the urgency 
of the message, Ma refused to take further calls.  Poloff 
delivered the demarche to MFA Arms Control and Disarmament 
Department Missiles Division Deputy Director Wang Daxue (Ma's 
Deputy) on the margins of another meeting.  Once he realized 
the issue, a visibly angry Wang first refused to listen or 
accept a copy of the points, relenting only after stressing 
that he was not authorized to accept the demarche on behalf 
of the PRC but "might" pass it to the appropriate person. 
 
¶3. (C) Cao Li, Director, International Division of the 
People,s Bank of China (PBOC), told econoff in November 7 
telcon that PBOC would not receive delivery of ref A demarche 
because &the PBOC currently has nobody appropriate available 
to receive the demarche.8  Li added that if this issue is 
urgent, the embassy should raise it with the MFA directly. 
Jin Qi, the PBOC,s International Division Director General, 
also told Finatt in a follow-up November 7 telcon in a 
similar fashion that PBOC would not accept delivery of reftel 
demarche. 
 
¶4. (S/NF) Poloff subsequently spoke with MFA IO Department UN 
Affairs Division Director Yang Tao (strictly protect), whose 
office has been charged with issues related to UNSCR 1718. 
While discussing another issue, Yang mentioned that reftel 
demarche points were sitting on his desk.  He said the PRC 
would look into the matter.  Asked why there had been such 
reluctance on the part of other PRC officials to receive the 
demarche, Yang said that KOMID is a sensitive issue because 
of an earlier demarche (ref B) that mentioned U.S. EO 13382 
sanctions against KOMID as grounds for China to take similar 
actions.  Reviewing very strong PRC objections to the 
sanctioning of Chinese companies under EO 13382, Yang said 
that Arms Control and Disarmament Department officials reject 
any implication that recent UNSC resolutions on North Korea 
support the legitimacy of the United States' Executive Order 
¶13382.  In that regard, Yang suggested his personal view that 
any approaches to the PRC regarding UNSCR 1718 not make 
reference to EO 13382, as such a connection will complicate a 
fast response. 
 
¶5. (S/NF) More generally, Yang (again strictly protect) said 
that the anger over the Executive Order sanctions on China 
within the MFA Arms Control and Disarmament Department, 
particularly at the perception that the United States has 
ignored PRC views and dismissed Beijing's efforts, makes 
cooperation with the United States very difficult.  Yang said 
that the PRC-United States meetings on the Executive Order in 
December 2005 and June 2006 were very upsetting, with the 
Chinese feeling they the United States had no intention to 
listen to the PRC views and that nothing China might do could 
 
 
influence a pre-determined United States process.  Yang, 
echoing comments we have heard from others in his Department, 
said the Chinese delegation lost face in the Foreign Ministry 
and in the wider Chinese inter-agency environment because of 
the "disrespectful" way the Chinese team was treated.  He 
said that the Executive Order "is one factor" that led the 
Ministry to "adjust the allocation of work," noting that the 
MFA leadership has now put the IO Department in charge of 
1718 implementation as well as the Iran nuclear issue. 
 
¶6. (S/NF) Poloff rejected any linkage between PRC unhappiness 
over E.O. 13382 and full implementation of China's obligation 
to enforce UNSCR 1718.  Stressing our view that China bears 
full responsibility for the heart of the problem, which is 
the continuing proliferation by the companies sanctioned 
under E.O. 13382, Poloff emphasized our efforts to work with 
China in December 2005 and June 2006 to resolve the questions 
surrounding the proliferation by these companies.  Rejecting 
Yang's characterization of the meetings, Poloff pointed to 
clear U.S. efforts to work with China to resolve the 
nonproliferation cases of firms that have repeatedly violated 
U.S. as well as PRC law.  The lack of progress stemmed from 
China refusing to take the opportunity to engage seriously 
with the United States, Poloff said.  Poloff noted that part 
of the continuing problem is China's unwillingness to share 
the detailed results of its investigations into proliferation 
as well as the refusal to publicly punish companies that 
conduct such activities.  Stressing that making any such 
linkage between E.O. 13382 and PRC cooperation with the 
United States to combat proliferation is completely 
counterproductive, Poloff pointed out that it also calls into 
question China's adherence to its own commitments and legal 
obligations. 
Randt 
 
 
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