VZCZCXRO3737
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHRL #1511/01 3101355
ZNR UUUUU ZZH
P 051355Z NOV 08
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 2576
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0980
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 0472
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0555
RUEHKO/AMEMBASSY TOKYO PRIORITY 1593
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 BERLIN 001511 
 
SENSITIVE 
 
DEPARTMENT FOR EEB (NELSON), EEB/OMA (SAKAUE, WHITTINGTON), 
DRL/ILCSR AND EUR/CE; LABOR FOR ILAB (BRUMFIELD); TREASURY 
FOR ICN (KOHLER), IMB (MURDEN, MONROE, CARNES) 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM EFIN ECON CH GM IN PK
SUBJECT: MERKEL IN CHINA SEEKS RESOLVE IN HANDING FINANCIAL 
CRISIS 
 
¶1.  (SBU) Summary: Much of Chancellor Merkel's October 23-25 
visit to Beijing to attend the Asia-Europe Meeting (ASEM) 
focused on the financial crisis, according to Chancellery 
advisors Ludger Siemes (Bilateral Relations to the Near and 
Middle East, Africa, Asia and Latin America) and Petra 
Sigmund (European Political Relations to the EU member 
states, EU Foreign Relations), during a briefing to the 
diplomatic community November 3.  Merkel's overarching 
message with her interlocutors, Siemes and Sigmund said, was 
to stress the need for the G-20 to produce results at the 
November 15 summit in Washington.  Merkel also had bilateral 
meetings with Chinese leaders, and met with leaders of 
Chinese civil society.  She also met with Chinese business 
leaders, accompanied by a delegation of German business 
representatives.  Siemes highlighted the positive nature of 
Merkel's talks with Chinese leaders after a strain in 
relations engendered by the Chancellor's 2007 private meeting 
with the Dalai Lama.  On the margins of ASEM, Merkel had 
bilateral meetings with the prime ministers of India and 
Japan, which also focused on the financial crisis, and with 
Pakistan, which focused on Pakistan's domestic situation and 
its fight against terrorism.  End summary. 
 
Merkel Received Well in China 
----------------------------- 
 
¶2.  (SBU) Siemes noted that Chancellor Merkel was surprised 
and touched with the efforts the Chinese leadership made to 
accommodate and welcome  her, including with military honors. 
 He noted that this was Merkel's third visit to China during 
her term as Chancellor and underlined the importance she 
places on the bilateral relationship.  Merkel's talks with 
Chinese Prime Minister Wen Jaibao and President Hu Jintao on 
October 23 and 24, respectively, highlighted the strength of 
the Sino-German economic relationship, Siemes said, adding 
that he would characterize the discussions with Wen and Hu as 
open and frank.  He noted that China and Germany reached USD 
100 billion in trade this year, two years earlier than 
forecast.  Siemes downplayed the rift between China and 
Germany that erupted after Merkel's October 2007 private 
meeting with the Dalai Lama in Berlin.  Siemes said that 
there had never been a "halt" in Sino-German engagement, that 
Merkel had spoken twice with Hu in 2008.  Siemes said that 
Merkel also stressed Germany's "one China" policy, but also 
underlined the need for China to engage in dialogue with the 
Dalai Lama and address the situation in Tibet and with the 
Muslim Uighur minority.  With regard to human rights issues, 
Siemes said that the Chinese listened, but did not change 
their position. 
 
¶3.  (SBU) Siemes noted that Merkel also met separately with a 
group of civil society representatives and that Merkel was 
particularly interested in how China had faced the challenges 
over the past year, including with Tibet, natural disaster, 
and world attention on the Olympics.  Participants 
highlighted China's new sense of self-confidence and 
modernity, including in rural areas. 
 
Merkel Seeks Action on Financial Crisis 
--------------------------------------- 
 
¶4. (SBU) In her meetings with Wen and Hu, Merkel spoke at 
length about the financial crisis, according to Siemes, 
focusing on the November 15 fiancial summit in Washington and 
the need to discuss a framework of regulation, the role of 
the IMF, and specific goals during those talks.  Merkel 
stressed the importance of leaving the Washington talks with 
a mandate for action.  Siemes said that the Chinese 
leadership was open to this view and that President Hu 
"entered into a discussion on this issue."  However, Siemes 
also characterized the Chinese vision of the crisis as 
"opaque," and said that they did not see the crisis as 
affecting them directly.  Siemes said that the Chinese 
indicated they would likely give the domestic market some 
stimulus. 
 
¶5. (SBU) Merkel made the same pitch in bilats with Japanese 
Prime Minister Aso and Indian Prime Minister Singh.  In her 
meeting with Aso, her first with the Japanese Prime Minister, 
Siemes said that Aso expressed concern about the strength of 
 
BERLIN 00001511  002 OF 002 
 
 
the Yen compared to the dollar.  Merkel and Singh agreed on 
the need for results in Washington and both agreed that it 
was not advisable for world leaders to engage in a series of 
talks on the financial crisis, but favored focusing on 
resolving issues during the November 15 meeting. 
 
¶6.  (SBU) Discussions of the financial crisis also dominated 
the 7th Annual ASEM summit, according to Sigmund, with 
participants agreeing on the need for reforms, including with 
regard to accounting standards, something which Merkel has 
proposed.  Sigmund said ASEM participants also agreed (1) to 
counter protectionism; (2) to finish the Doha round; (3) not 
to overreact to the financial crisis, including with 
over-regulation; and (4) on the importance of continuing to 
address the major global problems of hunger and climate 
change.  Sigmund noted that Merkel has already formulated the 
principles for reform that she will bring to Washington. 
 
Concern Over Pakistan 
--------------------- 
 
¶7.  (SBU) In Merkel's meeting with Singh, Siemes said, Merkel 
asked Singh about his impression of the new government in 
Pakistan.  Siemes said that Singh expressed concern about 
Pakistan's stability, noting that Pakistan is in a difficult 
economic situation.  Singh underlined India's interest in 
seeing a strong and stable Pakistan.  In Merkel's meeting 
with the Pakistani Prime Minister -- her first meeting with 
Gilani -- Merkel stressed the need for stability in Pakistan. 
 Gilani discussed Pakistan's efforts to combat terrorism -- 
including through dialogue with more moderate figures -- and 
through economic development, especially on the border with 
Afghanistan.  Gilani provided Merkel with a "wish list" 
regarding enhanced German-Pakistani engagement, which 
included increased economic development assistance and 
support for Pakistan in its talks with the IMF.  The wish 
list also called for an enhanced political dialogue between 
Germany and Pakistan, and increased cultural exchanges. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
KOENIG