VZCZCXRO7281
PP RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVC
DE RUEHBJ #7581/01 3550300
ZNR UUUUU ZZH
P 210300Z DEC 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 4154
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 BEIJING 007581 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR OES, OES/EGC, OES/ENV, EAP/CM and EB 
STATE PASS CEQ FOR CONNAUGHTON/VAN DYKE 
STATE PASS USTR FOR STRATFORD/WINTERS/MAIN/CELICO 
STATE PASS EX-IM BANK FOR LAMBRIGHT/MYROW 
USDOC FOR MCQUEEN 
USDOE FOR FREDRIKSEN/MIZROCH/GEBERT 
EPA FOR INTERNATIONAL/DTHOMPSON 
NSC FOR HUNTER/SHRIER/TONG 
TREASURY FOR OASIA/ISA/DOHNER/HAARSAGER 
 
E.O. 12958: N/A 
TAGS: ECON ENRG ETRD SENV KGHG TBIO CH
SUBJECT: SED SESSION V: MERGING ECONOMIC GROWTH AND 
ENVIRONMENTAL SUSTAINABILITY, DECEMBER 13, 2007 
 
REF:  A. STATE 168294 
 ¶B. BEIJING 7557 
 ¶C. BEIJING 7579 
 
(U) THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE 
HANDLE ACCORDINGLY.  NOT FOR DISTRIBUTION OUTSIDE USG 
CHANNELS. 
 
Summary 
------- 
 
¶1. (SBU) Summary: Session V of the U.S.-China Strategic Economic 
Dialogue (SED) focused on the environmental protection 
achievements of both countries and sustainable development 
recommendations for the future.  Several successful 
collaborative efforts on environmental protection were 
highlighted during the session, and both sides made 
constructive suggestions for increasing future cooperation 
in these areas.  The discussions were positive and 
demonstrated that both sides have converging interests in 
the areas of environmental protection and sustainable 
development.  End Summary. 
 
China: Committed to Environmental Protection 
-------------------------------------------- 
 
¶2. (SBU) During a December 13 discussion on economic growth 
and environmental sustainability, Vice Premier Wu Yi 
emphasized China's commitment to environmental protection 
and building a conservation culture.  China's State 
Environmental Protection Administration (SEPA) Minister 
Zhou Shengxian echoed Wu's comments and noted China's 
progress in environmental protection since the last meeting 
of the SED in May 2007.  He said that environmental 
protection was highlighted at the 17th National Party 
Congress in October, where China agreed to determine the 
cost of economic growth on the environment, use 
environmental protection to achieve fast and sound economic 
growth, set environmental benchmarks, and make 
environmental protection a major part of China's foreign 
policy. 
 
¶3. (SBU) Zhou stated China has three "musts" and six 
"measures" for protecting the environment.  China must: 
improve policy and laws and use more legal means to protect 
the environment; grasp the main environmental problems; and 
earnestly implement its environmental protection plan.  The 
six "measures" include: getting rid of old facilities; 
establishing many pollution control projects; clean the 
rivers, lakes and seas; protect the environment in rural 
areas; promote the development of a "circular economy" 
focused on recycling, minimal waste and energy efficiency; 
and maintain good statistics.  Zhou said that China had 
seen a turning point this past year with reduction in both 
sulfur dioxide emissions (SO2) and water pollution or 
chemical oxygen demand (COD).  Zhou said that China is 
building more water treatment plants for cities with 60 
percent of urban sewage now treated. 
 
Fewer Coal-Fired Power Plants? 
------------------------------ 
 
¶4. (SBU) Zhou said that media reports that China is adding 
a coal-fired power plant every few days are inaccurate, 
because China is also closing down old, inefficient power 
plants at the same time.  He said China has already closed 
down 10 gigawatts of small, coal-fired power plants.  Zhou 
further highlighted Chinese policies to encourage 
environmental protection such as a lowering the VAT refund 
rate for high polluting industries in 2,800 product 
categories and charging more to power plants without FGD 
(flu gas desulfurization) pollution control equipment. 
Zhou said he looked forward to the Joint Committee on 
 
BEIJING 00007581  002 OF 004 
 
 
Environmental Cooperation (JCEC) meeting to be held 
December 14, which EPA and SEPA hold every two years.  He 
said the SED, JCEC and other fora are useful for 
strengthening environmental cooperation and to improve 
overall bilateral relations. 
 
China's Energy Goals 
-------------------- 
 
¶5. (SBU) National Development and Reform Commission (SDRC) 
Chairman Ma Kai said that China will speed up the 
restructuring of industry in order to achieve its 11th Five- 
Year Plan targets of 10 percent reduction in overall 
pollutants and 20 percent reduction in energy intensity. 
He said that China will develop the service sector and the 
high tech industry sector and reduce energy intensive 
industries in order to reduce energy intensity.  As an 
example, he said that 50 percent of all cement in China is 
now produced with new more efficient technology.  Ma said 
that China will improve policy mechanisms such as fees and 
pricing for resources which must reflect the demand on the 
resources and the environmental costs.  He said that a fund 
would be set up for environmental protection and that China 
would increase public awareness of energy conservation and 
accelerate cooperation under the September 2007 MOU signed 
by the U.S. Department of Energy and the NDRC on Industrial 
Energy Efficiency Cooperation. 
 
Emissions Trading and China's Power Sector 
------------------------------------------ 
 
¶6. (SBU) U.S. Environmental Protection Agency (EPA) 
Administrator Stephen Johnson highlighted the completed 
U.S.-China Joint Economic Study (JES), which offers 
recommendations for energy savings and pollution abatement 
policies for the electric power sector in China, including 
emissions trading programs.  Johnson highlighted the 
success that the U.S. has had in using emissions trading 
programs to reduce pollution and outlined China's potential 
in this field.  In addition, the JES estimates that a 
national SO2 emissions trading system in China's power 
sector would reduce costs by more than 16 percent.  SEPA 
Minister Zhou praised the JES and the cost effectiveness of 
emissions trading programs. 
 
¶7. (SBU) Administrator Johnson attributed the success of 
the United States at protecting the environment to the 
following principles: 
 
- Strong, precise, and workable laws with clear and 
specific national standards and compliance 
requirements; 
 
- Comprehensive, accurate, and timely information 
about emissions; 
 
- Self-reporting of compliance information; 
 
- Strong enforcement with penalties higher than the 
money saved through non-compliance; 
 
- Strong national agency with appropriate legal 
authority and resources; 
 
- Public reporting of corporate environmental 
performance; and 
 
- National system for citizen reporting of non- 
compliance and initiation of legal actions. 
 
Joint Efforts on Global Climate Change 
-------------------------------------- 
 
 
BEIJING 00007581  003 OF 004 
 
 
¶8. (SBU) NDRC Chairman Ma praised the recent efforts of 
China and the United States to develop a joint statement on 
climate change and said it was a useful conversation to 
agree on the UNFCCC as the basis of these discussions. 
However, he criticized the U.S. for failing to reach 
agreement on the language China wanted in the joint 
statement including that the United States should take the 
lead on climate change based on historical responsibilities. 
He said China will make its own contributions to address 
global climate change. 
 
¶9. (SBU) Treasury Secretary Henry Paulson agreed with Ma 
that progress was made during discussions on the joint 
statement on climate change.  Paulson emphasized that the 
purpose of the joint statement was to highlight the ten- 
year plan on energy and environmental cooperation agreed to 
in the SED outcomes document. 
 
Reducing Tariffs on Environmental Goods and Services 
--------------------------------------------- ------- 
 
¶10. (SBU) U.S. Trade Representative Susan Schwab commented 
on the joint EU-US proposal on elimination of tariff and 
non-tariff barriers on environmental goods and services. 
She requested China engage on this issue at the next round 
of the SED scheduled for June in Washington.   Vice Premier 
Wu Yi said that the Chinese side could not discuss this 
issue at this time. 
 
Illegal Logging and Associated Trade 
------------------------------------ 
 
¶11. (SBU) State Department Under Secretary Reuben Jeffery 
announced the signing of the U.S.-China MOU on combating 
illegal logging and associated trade which would promote 
sustainable forest management.  Administrator Johnson said 
cooperation on combating illegal logging provides a useful 
example of how we can work together to promote economic 
growth and environmental sustainability. 
 
¶12. (SBU) China's State Forestry Administration Vice 
Minister Zhu Lieke said that forests are the main body for 
environmental protection and are major carbon sinks.  He 
said that China attaches great importance to the protection 
and development of forests.  China has made a major 
contribution to the world's forests because as the 
percentage of world forest cover has decreased, China's 
forest cover has increased.  Zhu said that majority of 
deforestation comes from turning forest into farmland and 
wildfires, not the timber trade.  He said that China 
opposes illegal logging and supports sustainable management 
of forests such as China's APEC proposal on sustainable 
forest management. 
 
China Seeks U.S. Help on Water and Occupational Health 
--------------------------------------------- --------- 
 
¶13. (SBU) Minister of Health Chen Zhu discussed the 
relationship between environment and health and said that 
disease is the result of interaction between human beings 
and the environment.  Chen said that the Ministry of Health 
was part of 18 departments that developed an action plan on 
the National Environment and Health.  He said that China 
wants to increase cooperation in two areas: sanitation of 
drinking water in rural areas and occupational health.  He 
said that the top priority for drinking water was to 
improve the standards on drinking water, establish a 
nationwide monitoring network, survey the quality of the 
water and improve the examination and supervision of 
drinkable water.  Regarding occupational health, Chen said 
that China has a large population and a large labor force 
which work long hours.  He said that the most frequent 
occupational diseases in China are lung-related diseases. 
 
BEIJING 00007581  004 OF 004 
 
 
Chen said that China wants to increase cooperation with the 
U.S. on improving occupational health laws and improving 
the competence of doctors and medical staff.  He also wants 
to increase joint research on environmentally related 
diseases. 
 
Randt