VZCZCXRO2653
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #5652/01 2410232
ZNY CCCCC ZZH
O 290232Z AUG 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1309
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 1825

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 005652 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 08/27/2032 
TAGS: PREL ETRD PGOV PMUC PTER IR SU KN CH
SUBJECT: CODEL SKELTON-FORBES MEETING WITH VFM ZHANG YESUI 
ON IRAN, PRODUCT SAFETY, TRADE, IPR, SECURITY COOPERATION 
 
Classified By: Political Minister Counselor Aubrey Carlson.  Reasons 1. 
4 (b/d). 
 
Summary 
------- 
 
¶1. (C) CODEL Skelton cited strong constituent concern in 
urging Vice Foreign Minister Zhang Yesui on August 27 to 
cooperate with efforts to solve the Iran nuclear issue, take 
steps to alleviate the American public's worries over the 
safety of Chinese exports and the U.S.-China trade deficit 
and do more to combat Chinese violations of intellectual 
property rights (IPR).  VFM Zhang advised giving more time 
for negotiations between the Iran and the International 
Atomic Energy Agency (IAEA), adding that the United States 
and China have no "strategic differences" on the Iran nuclear 
issue, but support "different approaches to the same goal." 
Zhang emphasized the need for "joint efforts" on issues of 
product safety, trade and IPR, suggesting that China is not 
solely responsible for problems in these areas.  The two 
sides also discussed mutual security concerns and shared 
interest in collaborating on such issues as Iran, North 
Korea, Sudan and the Middle East.  End Summary. 
 
¶2. (U) A delegation led by House Armed Services Committee 
Chairman Ike Skelton (D-MO) and including Representatives 
Randy Forbes (R-VA), John Spratt (R-SC), Robin Hayes (R-NC), 
Jeff Flake (R-AZ), Carol Shea-Porter (D-NH), Delegate 
Madeleine Bordallo (D-GU) and Rear Admiral Mark Ferguson met 
with Vice Foreign Minister Zhang Yesui at the Foreign 
Ministry August 27. 
 
"No Strategic Differences" On Iran, Says Zhang 
--------------------------------------------- - 
 
¶3. (C) VFM Zhang told the HASC delegation on August 27 that 
the United States and China have no "strategic differences" 
on the Iran nuclear issue, but rather support "different 
approaches to the same goal."  He emphasized Iran's right to 
peaceful use of nuclear energy, but acknowledged Iran's loss 
of the international community's trust.  On the topic of UN 
sanctions, Zhang said "timing is very important" and Iran 
should be allowed time to complete negotiations with the IAEA. 
 
¶4. (C) VFM Zhang reiterated China's stance on weapons sales 
to Iran, maintaining that such trade is "in accordance with 
UN Security Council resolutions" and "limited."  Chinese law 
stipulates that China only sells arms to foreign governments 
and forbids buyers from re-selling to third parties, Zhang 
added.  Asked by Representative Flake (R-AZ) for China's 
opinion on potential U.S. sanctions on Iran, VFM Zhang noted 
Iran's current cooperation with the IAEA and remarked that 
sanctions now would "not be conducive" to resolving the 
problem.  A new resolution should not affect China's economic 
and trade interests vis-a-vis Iran, Zhang added.  Zhang noted 
that China will send a delegation to the next meeting of 
P5-plus-1 talks in Washington. 
 
Product Safety Concerns 
----------------------- 
 
¶5. (SBU) Representative Forbes (R-VA) pressed VFM Zhang on 
what steps China could take to alleviate the American 
public's concerns over the safety of Chinese exports.  VFM 
Zhang replied that the Chinese Government pays close 
attention to the issue.  For example, he said, Vice-Premier 
Wu Yi is heading a Central Government leading group, which 
will conduct a nationwide campaign focused on production 
procedures, licensing and testing of food and manufactured 
products through the rest of the year.  This is only a "first 
step," he said. 
 
¶6. (SBU) VFM Zhang claimed that 99 percent of Chinese exports 
are safe, a rate better than that of the United States.  He 
added that even one percent of products being "unsafe" is 
unacceptable, and China will continue efforts to improve in 
this area.  VFM Zhang said producers and importers share 
responsibility for product safety, and China and the United 
States must work together in this respect.  He complained 
that the U.S. media sensationalized and politicized the 
issue.  Representative Forbes called for U.S. companies to be 
able to conduct safety inspections "further up the 
(production) chain." 
 
Trade Issues: Imbalance, Market Access 
-------------------------------------- 
 
¶7. (SBU) Representatives Forbes (R-VA), Bordallo (D-GU) and 
Spratt (D-SC) challenged China's earnestness in addressing 
the U.S. trade deficit with China and in expanding access to 
the Chinese market for American companies.  Representative 
 
BEIJING 00005652  002 OF 002 
 
 
Forbes pointed out that only twenty American motion pictures 
are allowed to be shown in China each year.  VFM Zhang stated 
that the trade deficit is the result of the present "economic 
structure," not China's exchange rate.  Zhang noted that the 
RMB has appreciated nearly 10 percent against the dollar 
since July 2005, but has "not significantly changed" the two 
countries' trade imbalance.  Zhang also called attention to 
United States' hindrance of Chinese investment in the U.S. 
economy "for political or security reasons" to highlight the 
need for "joint efforts" in addressing the problem.  After 
Zhang cited China's CNOOC oil company's failed bid in 2005 to 
buy Unocal as an example, Representative Hayes responded that 
such deals are only a "small component" of greater potential 
for Chinese business expansion in the United States.  Zhang 
also pointed to U.S. export controls as a contributing factor 
to the trade deficit. 
 
¶8. (SBU) Chairman Skelton and Representative Hayes (R-NC) 
pressed VFM Zhang on the issue of Chinese restrictions on 
imports of U.S. beef.  Zhang referred to President Bush's 
mention of the issue to Vice Premier Wu Yi in May 2007 and 
suggested mad-cow disease concerns as one reason for such 
restrictions.  China's partial lifting of a ban on American 
beef is evidence of China's intentions to build trust, stated 
Zhang.  Representative Shea-Porter (D-NH) raised the issue of 
China's exporting steel at unfairly low prices, a concern VFM 
Zhang said he would pass along to the Ministry of Commerce. 
 
Do More to Fight IPR Violations 
------------------------------- 
 
¶9. (SBU) VFM Zhang stressed that the United States and China 
must work together to combat intellectual property rights 
(IPR) violations, noting that some orders for counterfeit 
products come from the United States.  Movies that end up 
being counterfeited also somehow illegally make their way out 
of the United States.  Zhang held that the Chinese Government 
is resolutely against IPR violations and has made "remarkable 
progress," but acknowledged that problems remain. 
Representative Forbes noted China's efforts, but reminded VFM 
Zhang that "floors" of counterfeit products could be found 
"just a short drive away."  Representative Flake raised his 
concern over case being litigated in China involving a 
constituent.  Zhang assured Representative Flake that the 
case would be handled in accordance with the law. 
 
Security Cooperation 
--------------------- 
 
¶10. (SBU) Representative Spratt expressed hope that the 
United States and China could strengthen cooperation 
regarding "common security concerns" and proposed using 
security for the 2008 Olympics as a basis for further 
collaboration.  VFM Zhang "fully agreed" that China and the 
United States have "increasingly shared interests," giving 
Iran, North Korea, Sudan and the Middle East as examples. 
 
¶11. (U) The delegation cleared this cable. 
Randt