VZCZCXRO1410
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #5818/01 2480928
ZNY CCCCC ZZH
R 050928Z SEP 07 ZDK
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 1541
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 005818 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 08/28/2017 
TAGS: PREL PGOV ETRD SNAR KOLY MCAP PTER ECON CH
SUBJECT: NPC CHAIR WU BANGGUO DISCUSSES PRODUCT SAFETY, 
TRADE AND MILITARY POLICY WITH CODEL LARSEN-KIRK 
 
BEIJING 00005818  001.2 OF 003 
 
 
Classified By: Deputy Chief of Mission Dan Piccuta.  Reasons 1.4 (B) an 
d (D). 
 
Summary 
------- 
 
¶1. (C) Representatives Rick Larsen (D-WA) and Mark Kirk 
(R-IL), accompanied by the Ambassador, emphasized the 
importance of food and product safety issues to American 
consumers during a meeting with National People's Congress 
(NPC) Chairman Wu Bangguo on August 28.  Wu Bangguo said we 
need to settle safety problems case by case and not make 
sweeping generalizations about Chinese products, to which 
Rep. Kirk replied that what is needed is an explanation of 
changes and reforms that China will implement to address the 
problem.  Chairman Wu expressed concern about "protectionist" 
trade measures currently before Congress, arguing that there 
is no relationship between China's RMB exchange rate and the 
bilateral trade imbalance.  Wu acknowledged the importance of 
military-to-military exchanges.  Representative Kirk 
underscored the importance of security cooperation for the 
Beijing Olympics, with Wu replying that China has already put 
in place a security plan but will still require international 
support.  End Summary. 
 
FOOD, PRODUCT SAFETY 
-------------------- 
 
¶2. (C) Representatives Rick Larsen (D-WA) and Mark Kirk 
(R-IL), Co-Chairs of the U.S.-China Working Group, emphasized 
the importance of food and product safety issues to American 
consumers during a meeting with National People's Congress 
(NPC) Chairman Wu Bangguo on August 28.  Although the PRC 
position is that Chinese products are higher in quality than 
those of many other nations, Congressman Kirk stated that 
statistics are not the most important element in this debate, 
given that toys and pets are involved.  What is needed is not 
a recitation of figures or current practices but rather an 
explanation of changes and reforms that will be implemented 
to address the problem.  While the NPC may introduce 
food/product safety legislation by the end of year, 
Congressman Kirk said Congress will likely pass legislation 
on this subject by the end of next month. 
 
¶3. (C) We need to look at the facts of the product safety 
issue, keeping things in proper perspective and settling 
safety problems case by case, Wu Bangguo replied.  Most 
Chinese products are up to standard, having only a 
one-percent defect rate, lower than that for U.S. exports to 
China.  According to the Speaker of the Japanese Diet, 99.8 
percent of Chinese products entering Japan are up to 
standard, higher than the percentage for U.S. or European 
goods.  Just beause one company misbehaves, or one product 
i found to be defective, we should not make generlizations 
about China's system or determine that all Chinese products 
are bad.  ChairmanWu said he had spent a great deal of time 
working on product safety issues, having handled this 
portfolio while serving as Vice Premier for ight years.  He 
cited two main challene:  one, some Chinese products are 
defective, and when they are discovered, China needs to be 
responsible to its American and global customers by 
responding proactively.  Two, our two countries need to 
harmonize our different standards of testing.  Professor 
David M. Lampton suggested to Chairman Wu that to manage this 
issue publicly, rather than quoting statistics, it would be 
more effective to say that most products are safe, but that 
even a defect rate of one percent is unacceptable, so both 
sides are working hard to solve the problem. 
 
TRADE IMBALANCE, CURRENCY 
------------------------- 
 
¶4. (C) Chairman Wu expressed concern about "protectionist" 
measures currently before Congress.  He argued there is no 
relationship between the China's RMB exchange rate and the 
bilateral trade imbalance.  Nevertheless, since adopting 
currency reform, the RMB has appreciated nine percent.  A 
sudden change in China's exchange rate change would damage 
its economy, so Beijing is moving proactively but gradually. 
Any downturn in the Chinese economy would have global 
consequences given that China now ranks as the world's third 
largest trader and fourth largest economy.  Turning to the 
trade surplus, Wu said an important cause has been the 
decision by Japan, South Korea and Taiwan to shift assembly 
to the Chinese mainland.  Against this backdrop of 
globalization, one cannot look simply at the bilateral trade 
balance but also must examine the distribution of economic 
returns among enterprises and consumers.  Given our common 
economic interests, we should approach trade problems in a 
"fair and objective" manner. 
 
 
BEIJING 00005818  002.2 OF 003 
 
 
CHINA'S SECURITY POLICY 
----------------------- 
 
¶5. (C) Chairman Wu acknowledged the importance of bilateral 
military-to-military exchanges, noting that a delegation from 
the House Armed Services Committee is in Beijing and had just 
met with the Second Artillery and the president of China's 
National Defense University, having also visited a Chinese 
naval base at Qingdao.  Such dialogues enhance transparency, 
which increases mutual understanding and clarifies strategic 
intentions.  Referring to speculation in the U.S. media about 
Beijing's strategic intentions, Wu said that even though 
China has nuclear weapons, it was the first to declare a "no 
first use" policy.  As early as the 1970s, China vowed never 
to seek hegemony.  Were the PRC to try to do so, the whole 
world could unite to "bring down China," Wu said. 
 
¶6. (C) China follows a peaceful development path designed to 
raise the living standards of its people, which requires a 
stable and peaceful international environment, Wu said. 
China's development can only be a force for peace and 
stability.  The PRC long ago abandoned "international 
communism" as advocated by the former USSR and does not seek 
to impose its values or social systems on others.  China has 
no troops stationed overseas other than those serving under 
the UN flag.  Although it is true that China's defense 
capability has increased, China suffered a great deal of 
"bullying" in its modern history, which taught it that it 
must correct its own backwardness.  On Taiwan, China pursues 
a peaceful solution but believes that without military 
deterrence, a peaceful solution is not possible.  Wu, who 
said he was once in charge of China's military industrial 
sector, commented that the PRC has a long way to go to catch 
the United States.  Even if China has the technology, it 
cannot afford to provide its armed forces with high-tech 
equipment. 
 
OLYMPICS SECURITY 
----------------- 
 
¶7. (C) Representative Kirk underscored the importance of 
bilateral security cooperation for the 2008 Beijing Summer 
Olympics, where the U.S. team will be a potential terrorist 
target.  Chairman Wu said he was "optimistic" about security 
preparations for the Games, having just discussed 
preparations with International Olympic Commitee President 
Jacques Rogge earlier this month.  Beijing has already put in 
place a security plan but will require international support 
to absolute ensure the Games' security. 
 
COUNTERNARCOTICS, COUNTERTERRORISM COOPERATION 
--------------------------------------------- - 
 
¶8. (C) In advance of the CODEL traveling to Xinjiang to 
discuss counternarcotics and counterterrorism, 
Representatives Larsen and Kirk raised the need for increased 
cooperation on these subjects.  Chairman Wu said our 
interests on both issues are "convergent," and we already 
enjoy good cooperation.  China is also a "victim" of 
terrorism and narcotics trafficking, which can only be solved 
through international cooperation.  The United States has 
"rich experience" in the area of counternarcotics, so it is 
important for our two sides to cooperate.  Turning to 
counterterrorism, Chairman Wu said he was happy to hear the 
CODEL would travel to Xinjiang, where the terrorist 
organization ETLO/SHAT (East Turkestan Liberation 
Organization) is an important issue.  Our bilateral 
counterterrorism cooperation will continue.  Nevertheless, Wu 
said, China does not support "double standards" when it comes 
to terrorism.  (Note:  Wu was almost certainly referring to 
the U.S. refusal to recognize ETLO/SHAT as a terrorist 
organization.) 
 
WU BANGGUO'S WASHINGTON VISIT 
----------------------------- 
 
¶9. (C) Chairman Wu said he was looking forward to his visit 
to Washington at the end of October, underscoring that he 
will travel only to the United States on this trip, with his 
sole goal being to continue the positive momentum in 
U.S.-China relations.  Representatives Larsen and Kirk said 
they looked forward to seeing Chairman Wu, as does Speaker of 
theHouse Pelosi, who wishes to have a "Speaker-to-Speaker" 
dialogue in Washington. 
 
U.S.-CHINA WORKING GROUP'S ROLE, BILATERAL RELATIONS 
--------------------------------------------- ------ 
 
¶10. (C) Chairman Wu complimented Represenatives Larsen and 
Kirk on the important role played by the U.S.-China Working 
Group (USCWG).  Representative Larsen related how, when the 
 
BEIJING 00005818  003.2 OF 003 
 
 
USCWG was created two years ago, there were only 15 members. 
Today, there are more than 50, reflecting intense interest in 
China among Members of Congress.  Chairman Wu noted that this 
is the 35th anniversary of President Nixon's visit to China 
and the signing of the Shanghai Communique.  It would have 
been "unimaginable" 35 years ago that our bilateral 
relationship would develop to its current level.  Last year, 
bilateral trade between the United States and China was USD 
260 billion.  In contrast, China has had diplomatic relations 
for more than 80 years with Russia and the former Soviet 
Union, yet bilateral trade with Russia last year amounted to 
only USD 30 billion.  China knows that, as the United States 
enters its election year, China issues will be hotly debated. 
 Nevertheless, no matter which party captures the White 
House, China believes the new President will be committed to 
expanding U.S.-China relations, which are based on an 
ever-growing number of common interests.  The growth in our 
relationship reflects the will of our two peoples.  It is 
only natural that we have differences, but through 
consultation, we can work through those issues. 
 
¶11. (U) The delegation did not have an opportunity to clear 
this message. 
Randt