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courage is contagious

Viewing cable 08BEIJING3877, SCENESETTER FOR THE VISIT OF SENATOR CHUCK HAGEL

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Reference ID Created Released Classification Origin
08BEIJING3877 2008-10-10 03:38 2011-08-23 00:00 UNCLASSIFIED Embassy Beijing
VZCZCXRO2802
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3877/01 2840338
ZNR UUUUU ZZH
O 100338Z OCT 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0377
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHUL/AMEMBASSY SEOUL 0972
RUEHKO/AMEMBASSY TOKYO 2274
UNCLAS SECTION 01 OF 06 BEIJING 003877 
 
SIPDIS 
 
DEPARTMENT FOR EAP/CM, H PLEASE PASS TO SENATOR HAGEL 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV CH
SUBJECT: SCENESETTER FOR THE VISIT OF SENATOR CHUCK HAGEL 
TO BEIJING 
 
SUMMARY 
------- 
 
1. (U) Senator Hagel, your visit comes at a momentous time in 
China's history and in our bilateral relationship.  January 
1, 2009, will mark the 30th anniversary of official United 
States-China relations.  During those thirty years, the U.S. 
Government presence in China has grown dramatically.  The 500 
Americans and 600 Chinese in the Embassy community welcome 
you to China and look forward to helping you to have a 
successful visit.  In terms of size and composition, the U.S. 
Embassy in Beijing is the third largest in the world.  This 
month, we will move into our new Embassy compound. 
 
2. (SBU) Your visit to Beijing will allow you to witness the 
transition underway as China assumes a leading role on the 
global stage.  Beijing's Olympic Games gave the world a clear 
look at the new buildings and infrastructure that typify 
China's cosmopolitan cities and which demonstrate that the 
transformation of urban China from grey Maoist orthodoxy to 
dynamic economic powerhouse is nearly complete.  However, the 
same confidence and ideological flexibility that allowed 
China to shake off its Marxist economic shackles is lacking 
in the political sphere.  The pace of political reform lags 
and the security organs move swiftly against any group deemed 
a threat to central authority, in the name of maintaining 
"stability."  This drives our ongoing friction with China in 
the human rights arena, where we vigorously demand that China 
respect the rights of its citizens as well as the will and 
conscience of the international community, which the Chinese 
Government just as vigorously protests as "unreasonable 
interference" in its internal affairs. 
 
3. (SBU) China's transformation is also evident in the 
international arena.  We see increasing evidence of China's 
growing confidence in world affairs, including its leadership 
role in the Six-Party Talks, and its assertive (and often 
frustrating to us) stance in the UN.  Leaders in Beijing are 
watching the global financial situation closely and recognize 
the need to consult regularly with other countries.  Your 
interlocutors will be keen to hear your views about how to 
resolve the present predicament.  End Summary. 
 
Economic Policies Foster Stability 
---------------------------------- 
 
4. (U) For China's top leadership, economic issues are 
important mainly as a tool for continued political stability 
and continuity, as well as for shoring up the Communist 
Party's legitimacy, which is predicated largely on its 
ability to deliver stunning economic growth over the past 
three decades.  In the first half of 2008, the leadership 
focused on double-digit inflation which threatened to erode 
the high-saving populace's nest eggs.  Beijing adopted credit 
and tax policies that slowly cooled economic growth from 11.9 
percent in 2007 to 10.4 percent in the first half of 2008. 
As fears of inflation abated, Beijing has now turned its 
attention to unstable international financial markets and 
prospects for lower industrial production growth, with its 
implications for slowing job creation and popular 
dissatisfaction. 
 
Financial Markets 
----------------- 
 
5. (SBU) Chinese commercial entities have limited direct 
exposure to global financial instability. The same cannot be 
said for the Chinese Government, which has about USD 1.2 
trillion in foreign exchange assets invested in the United 
States (including about USD 500 billion in GSE debt, USD 500 
billion in Treasury bonds, and another USD 200 billion in 
other dollar assets).  China has acted in a generally 
responsible way when addressing global economic concerns and 
the Chinese economy has proved to be quite resilient. 
Chinese Government interlocutors have been very interested in 
the role of Congress in stabilizing markets as well as how 
Congress and the Administration work together to resolve 
pressing economic issues.  The Chinese are also extremely 
interested in prospects for growth and import demand in the 
United States. 
 
Exports 
------- 
 
6. (U) Currently, China's exports remain strong, growing at 
over 12 percent annually in RMB terms (over 20 percent in 
dollar terms).  With demand in China's big-three markets 
expected to contract, however, Chinese exporters face 
 
BEIJING 00003877  002 OF 006 
 
 
declining profits.  Beijing has apparently responded to their 
concerns in part by slowing dollar-RMB appreciation, although 
the RMB continues to appreciate overall against a basket of 
trade-weighted currencies. 
 
Messages for Economic Leaders 
----------------------------- 
 
7. (SBU) In our meetings with economic officials we express 
our appreciation for China's close coordination with the 
United States on financial and economic issues, noting the 
fundamental role of the Strategic Economic Dialogue (SED) in 
improving economic relations.  We encourage the general 
direction of China's economic policies, including RMB 
appreciation, improving market access and strengthening 
transparency and rule of law for investors, but note the need 
for China to do more.  Staying the course on economic reform 
during challenging economic times is crucial to China's long 
term economic health and to addressing global protectionist 
pressures.  We would welcome an active, constructive Chinese 
role in expanding global market access, such as working to 
bring the Doha Round of WTO negotiations to a successful 
conclusion. 
 
Energy Consumption 
------------------ 
 
8. (SBU) China imports nearly half of the 8 million barrels 
of oil it consumes per day.  Saudi Arabia, Angola, Iran and 
Russia are the largest suppliers, and with domestic oil 
production flat, China has sought deals in more remote and 
riskier locations such as Sudan and Iraq to cope with growing 
demand.  China accounted for 38 per cent of the rise in world 
oil demand in 2006, according to the International Energy 
Agency (IEA).  China remains heavily dependent on coal as a 
primary energy source (63 per cent).  Efforts are being made 
to diversify to cleaner carbon based fuels (natural gas) and 
other renewable sources (hydroelectric), but the IEA 
estimates coal will still dominate the energy profile in 2030 
(unchanged at 63 per cent). 
 
World's Largest Greenhouse Gas Emitter 
-------------------------------------- 
 
9. (SBU) China is the world's largest greenhouse gas emitter, 
and the continued reliance on coal will challenge attempts to 
improve the country's environment. Industrial policy has 
attempted to direct investment away from high energy 
consuming industries, hoping to cut energy consumption per 
unit of GDP by 20 per cent from 2006 to 2010.  China still 
consumes nearly four times as much energy per dollar of GDP 
than the U.S. 
 
Energy Subsidies 
---------------- 
 
10. (SBU) China has increasingly come under international 
criticism for domestic energy subsidies which keep prices 
below international norms.  In July 2008, China responded by 
raising petroleum based fuel prices by 15-25 per cent and 
electricity prices by 5 per cent.  Electricity prices may be 
raised again in November 2008.  The U.S. has engaged with 
China on a number of fronts related to energy, including the 
Strategic Economic Dialogue's (SED) Ten Year Framework on 
Energy and the Environment.  The Joint Working Group will 
identify several partnerships at the Dec. 2008 SED. 
Cooperation also is taking place in the civilian nuclear 
sector through the Department of Energy. 
 
Playing a Constructive Role Internationally 
------------------------------------------- 
 
11. (SBU) As China's economic influence has grown, so has its 
international political importance.  Although China no longer 
instinctively aligns itself with other developing countries, 
it maintains its long-standing close relationships with 
pariahs like North Korea, Burma and Iran.  Over the past few 
years, however, China has demonstrated a desire to become a 
more responsible member of the international community.  Our 
challenge is to motivate China to play a positive role in 
coping with thorny global issues like non-proliferation, UN 
reform and climate change with the same degree of seriousness 
it has demonstrated recently in supporting the Six-Party 
Talks for the denuclearization of the Korean Peninsula.  The 
Chinese dispute their label as a rising global political 
power and claim they do not threaten the international status 
quo.  Chinese leaders such as Premier Wen Jiabao emphasize 
China's inward focus, given the enormity of the country's 
 
BEIJING 00003877  003 OF 006 
 
 
domestic challenges, in particular the need to improve the 
lot of the 800-900 million rural Chinese who have yet to 
realize the benefits of "reform and opening" that have 
accrued to the increasingly prosperous members of China's 
urban middle class. 
 
North Korea and the Six-Party Talks 
----------------------------------- 
 
12. (SBU) For all of China's protestations that it is still a 
poor, developing country, its greater global footprint is 
undeniable.  China has at times frustrated us with its 
unwillingness to act, but in some cases, China has played a 
constructive role.  China's role in the Six-Party Talks is 
perhaps the most visible example of China's willingness to 
cooperate regionally.  China strengthened the multilateral 
denuclearization effort, serves as the Chair of the Six-Party 
Talks, and has exercised leadership in the effort to secure 
an effective mechanism to verify the North Korean nuclear 
declaration. 
 
Iran 
---- 
 
13. (SBU) Chinese leaders say they share our strategic goal 
of thwarting Iran's nuclear ambitions and have stated 
publicly that a nuclear armed Iran is not in China's 
interest.  China has worked with the United States in the "P5 
plus 1" process to reach consensus on four UN Security 
Council resolutions on Iran.  However, China regards energy 
cooperation with Iran as a "core interest" crucial to the 
development of its economy.  China therefore has resisted 
sanctions that might threaten Chinese involvement in Iran's 
energy sector.  American experts continue to emphasize that 
Iran's threat to peace and stability in the Middle East 
outweighs any short-term advantages China gains from 
maintaining good relations with Tehran. 
 
Pakistan 
-------- 
 
14.  (SBU) China and Pakistan have enjoyed decades of close 
relations.  China is concerned over instability in Pakistan 
and, specifically, how Pakistan's political morass affects 
Pakistani efforts against terrorism.  China believes that 
some of these separatist/terrorist elements in Pakistan have 
links to the very small armed separatist groups in China's 
Muslim West.  China welcomes dialogue with the United States 
on Pakistan and your visit offers an opportunity to reinforce 
the importance of cooperation to help Pakistan, including via 
the newly formed "Friends of Pakistan" group. 
 
Burma 
----- 
 
15. (SBU) Chinese leaders say that they convey to the Burmese 
regime the need for dialogue with the opposition and minority 
groups, democratization, and economic reform.  China has also 
been very helpful in urging Burma to work with UN Special 
Advisor Ibrahim Gambari.  As a practical matter, China's 
efforts have had little to no effect on the situation in 
Burma, possibly because China resolutely opposes sanctions 
and maintains growing commercial interests in Burma.  Chinese 
officials counsel patience and persistence and urge Western 
nations to have modest, "realistic" expectations for 
political change in Burma.  We regularly urge China to use 
its influence more aggressively in Burma. 
 
Sudan/Darfur 
------------ 
 
16. (SBU) The Chinese Government was instrumental in 
brokering the creation of the "hybrid" UN-African Union 
Peacekeeping force in Sudan.  China has also contributed a 
contingent of engineers to peacekeeping forces.  This, for 
China, represents significant action on an international 
problem.  As a result, China bristles fiercely at criticism 
that it somehow is not doing enough to end violence in 
Darfur.  Consistent with their position in other 
international crises, Chinese leaders resist robust sanctions 
against the Khartoum regime.  They also counsel patience and 
"realistic" expectations just as they do with Burma.  China 
has blamed Sudanese rebels for the lack of progress toward a 
political solution.  We express appreciation for China's 
contributions to a solution in Darfur but also urge China to 
employ its influence more aggressively to press the Sudanese 
Government. 
 
 
BEIJING 00003877  004 OF 006 
 
 
Military Relations 
------------------ 
 
17. (SBU) In recent years we have made some progress in 
building the U.S.-China military-to-military relationship. 
Exchanges in both directions, including by senior military 
leaders, have been an important step in beginning to break 
down the barriers of mistrust.  China justifies its continued 
double-digit increases in military spending as necessary 
after decades of flat or no growth.  However, many experts 
remain frustrated by China's lack of transparency about its 
military development.  The recent decision to sell defense 
articles to Taiwan has resulted in the postponement of a 
number of military to military and strategic engagements 
(more below). 
 
Counter-terrorism 
----------------- 
 
18. (SBU) We worked closely with the Chinese in the lead-up 
to the Olympics to share best practices in ways to combat 
terrorism.  Given their own concerns about Islamic 
separatists in the western parts of the country, Chinese 
officials acknowledge our shared need to stop terrorism. 
While we support Chinese efforts to address domestic security 
concerns and the violence in China's Muslim west, we also 
caution China on the need to avoid infringing on the 
religious freedoms of Chinese Muslims under the guise of 
fighting terrorism.  International human rights groups have 
stated that China's efforts to fight what it calls separatism 
and terrorism in the west have at times crossed the line into 
oppression of the Uighur people. 
 
Non-proliferation 
----------------- 
 
19. (SBU) We routinely share information with Chinese 
authorities about suspected violations of proliferation 
regimes and have had some success in preventing shipments or 
shutting down suspect operations.  On the positive side, 
China adopted several laws in recent years aimed at curbing 
proliferation activities by Chinese companies.  There is 
still a long way to go, and visiting U.S. experts continue to 
underscore the need for tougher safeguards and more 
transparency in China's own proliferation efforts to track 
suspect shipments and to curb proliferation. 
 
Taiwan:  Improved Cross-Strait Ties, Arms Sale Tension 
--------------------------------------------- --------- 
 
20. (SBU) Taiwan remains the most nettlesome issue in 
U.S.-China relations.  Cross-Strait relations have 
nonetheless witnessed significant improvement since March 
2008, following the election of Taiwan President Ma 
Ying-jeou, who has publicly pledged not to seek Taiwan 
independence.  The goodwill Ma has generated resulted in 
positive steps such as the re-establishment of the 
cross-Strait dialogue mechanism, commencement of weekend 
charter flights and Mainland tourist groups traveling to 
Taiwan.  Many difficult political issues remain, including 
the long-term nature of cross-Strait relations, Taiwan's 
participation in international organizations and U.S. arms 
sales to Taiwan. 
 
21. (SBU) Following the October 3, 2008 notification to 
Congress of the U.S. Government's decision to sell defense 
articles to Taiwan, the Chinese Government reacted sharply, 
issuing a "strong protest" and warning that it will respond 
with "corresponding measures."  The PRC subsequently 
announced it was canceling or suspending a number of 
military-to-military contact events in 2008, as well as 
suspending cooperation on four bilateral arms control and 
nonproliferation matters. 
 
22. (SBU) Our message to China on the arms sales has been to 
affirm the U.S. commitment to our one China policy based on 
the three Joint Communiques and the Taiwan Relations Act 
(TRA); express our conviction that U.S. arms sales to Taiwan 
contribute to stability in cross-Strait relations; state that 
the United States welcomes recent improvements in 
cross-Strait relations and supports the peaceful resolution 
of differences between the two sides; encourage China to 
pursue constructive cross-Strait dialogue to reduce tensions 
further; and urge reductions in China's military build-up 
across from Taiwan. 
 
Human Rights 
------------ 
 
BEIJING 00003877  005 OF 006 
 
 
 
23. (SBU) The Chinese like to define human rights broadly to 
include factors affecting economic and social well-being, 
pointing out that China's "reform and opening" policies of 
the last 30 years have coincided with gradual improvements in 
the quality of life enjoyed by hundreds of millions of 
Chinese.  They further argue that our focus on individual 
rights and liberties reflects "Western values."  We respond 
to this self-serving argument by noting that these are 
universal values, as the Chinese themselves acknowledged when 
they signed the Universal Declaration of Human Rights. 
Although freedoms for Chinese citizens have expanded over the 
past 30 years, the overall human rights situation in China 
remains poor in many respects.  We continue to emphasize that 
the expansion of individual freedoms, respect for the rule of 
law and the establishment of a truly free and independent 
judiciary and press are in China's own interests, and would 
enable the PRC to deal with social tensions and achieve its 
goal of building a "harmonious society." 
 
24. (SBU) May 2008 marked the resumption of our formal Human 
Rights Dialogue (HRD) with China, reopening a high-level 
channel for raising human rights concerns after a five-year 
hiatus.  The session, which took place before the Olympic 
Games, allowed for a frank exchange of views.  Apart from 
urging fundamental, institutional reform, we also raised 
individual cases to highlight our human rights concerns and 
bring hope to activists.  Key cases, which we welcome you to 
raise if you have the opportunity, include the cases of blind 
legal activist Chen Guangcheng, who was imprisoned after 
Western media publicized his allegations of widespread family 
planning abuse in Shandong Province; rights activist Hu Jia, 
who was imprisoned after strenuous advocacy on behalf of 
others detained or imprisoned in high-profile human rights 
cases; and Gao Zhisheng, whose whereabouts are unknown 
following his advocacy for activists and groups claiming 
rights abuses by Chinese authorities. 
 
25. (SBU) Many had hoped that the scrutiny brought by the 
August 2008 Beijing Olympics would lead to improvements in 
China's human rights record, but Chinese leaders made clear 
that security and an "incident-free" Olympics, not the 
expansion of individual freedoms, were their highest 
priorities.  They tightened controls over the media, 
religion, NGOs and other activists.  Foreign media criticized 
China for breaking promises it made when it bid to host the 
Games.  Instead of granting wide media freedom, China closed 
off nearly a third of the country to reporters "for security 
purposes" after the Tibet unrest in March.  Some reporters 
were harassed or prevented from conducting interviews during 
the Olympics and promises of unlimited Internet access went 
unfulfilled.  Beijing claimed it set up "protest zones" to 
accommodate legal demonstrations during the Olympics, 
although not a single protest was allowed to take place, 
despite 77 applications having been submitted.  Some would-be 
protesters reportedly were detained, forcibly returned to 
their homes far from Beijing or otherwise harassed.  Many 
dissidents were separately detained during the Olympics and 
Paralympics period, and were released only after the games 
concluded. 
 
Religious Freedom 
----------------- 
 
26. (SBU) China has made some limited progress on religious 
freedom in recent years, as Chinese citizens have gradually 
enjoyed more space in which to practice their religious 
beliefs.  Chinese authorities have recently stressed the 
positive role of religion in building a "harmonious society." 
 Many Christian groups no longer operate in strict secrecy. 
Recent U.S. visitors to China have noted these developments 
in their meetings with Chinese officials and have underscored 
Americans' belief that religious adherents make good citizens. 
 
27. (SBU) Despite these gradual positive steps, problems 
clearly remain.  House churches, for example, are almost 
universally prevented from registering as legal entities, and 
therefore do not enjoy legal protections.  There have been 
multiple reports of the harassment and detention of house 
church Christians and the closure of house churches.  For 
instance, authorities detained prominent house church pastor 
Zhang Mingxuan following his unauthorized meeting with 
Congressmen Frank Wolf and Chris Smith in late June.  The 
overall situation is much worse in Xinjiang for Muslims and 
in Tibet for Buddhists. 
 
Tibet/Dalai Lama 
---------------- 
 
BEIJING 00003877  006 OF 006 
 
 
 
28. (SBU) Tibet remains a raw, emotional issue here for 
Tibetans and Han Chinese alike.  In March 2008, major 
violence and unrest struck Tibetan areas of China, and 
Tibetans and international observers accused China of 
brutality in the measures it took (and continues to take) to 
pacify the region.  In July, China held another round of 
talks with representatives of the Dalai Lama, but there was 
no progress.  Another round of dialogue was reportedly 
scheduled for this month, but in recent meetings, PRC 
officials have only said that they are committed to another 
round of talks "this year" -- provided the Dalai Lama ceases 
his "splittist" behavior.  Recent U.S. visitors have pressed 
the Chinese to engage in serious, results-oriented dialogue, 
and stop vilifying the Dalai Lama.  This step, accompanied by 
actions open Tibet to international journalists and 
diplomats, can Beijing lend credibility to Tibetan leaders 
who favor dialogue and negotiation over violence and unrest. 
We have also urged China to demonstrate 
greater respect for peaceful Tibetan Buddhist religious 
practices, a step which would contribute to long-term 
stability in Tibetan regions. 
PICCUTA