VZCZCXRO0242
PP RUEHAST RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
RUEHVC
DE RUEHBJ #4602/01 3540301
ZNR UUUUU ZZH
P 190301Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 1479
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 2330
RUEHNE/AMEMBASSY NEW DELHI 4691
RUEHOS/USMISSION OECD PARIS FR

UNCLAS SECTION 01 OF 02 BEIJING 004602 
 
STATE FOR EEB/ESC/HENGEL, 
EEB/ESC/IEC/ENR/HENRY/KOPP/SECOR 
OES/EGC, OES/ENV, EAP/CM/HABJAN/FLATT 
TREASURY FOR OASIA/ISA/DOHNER/HOLMER/WRIGHT 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ENRG EPET EMIN ECON SENV KCOR CH
 
SUBJECT: CHINA/EITI: SUPPORTIVE IN PRINCIPLE, BUT 
MISPERCEPTIONS REMAIN 
 
REFS: A: STATE 115798; B: BEIJING 4394 
 
Summary 
------- 
¶1. (SBU) Summary.  In a discussion with EEB DAS Douglas 
Hengel in Beijing, a Foreign Ministry official said the 
objectives of the Extractive Industries Transparency 
Initiative (EITI) are consistent with China's efforts to 
promote corporate social responsibility.  He welcomed 
inviting China's National Energy Administration (NEA) 
head to the next EITI conference and assured Hengel that 
he would discuss the EITI with his NEA counterparts.  A 
leading government advisor on energy also said he agrees 
with the EITI's principles and told Hengel he would 
discuss the EITI with the NEA and NDRC. Despite the 
officials' agreement with the EITI's general principles, 
however, it appears that some misperceptions about the 
EITI remain; suggesting that further efforts are needed 
to ensure the Chinese government understands the EITI's 
objectives and the benefits of becoming a supporting 
country.  End Summary. 
 
¶2. (SBU) EEB DAS Douglas Hengel discussed the Extractive 
Industries Transparency Initiative (EITI) with Ministry 
of Foreign Affairs (MFA) Deputy Director General for 
International Affairs Li Junhua, Energy Research 
Institute (ERI) Director General Han Wenke, Director for 
the Center of China Studies at Tsinghua University Dr. Hu 
Angang, and PetroChina President Zhou Jiping in Beijing 
December 3rd and 5th in conjunction with his participation 
in the 5th Strategic Economic Dialogue.  DAS Hengel also 
passed background information in reftel A to the 
participants in each meeting. 
 
MFA will consider EITI and discuss it with NEA 
--------------------------------------------- - 
¶3. (SBU) DAS Hengel provided MFA's Li with background 
information on EITI and encouraged China to become a 
supporting member.  Hengel noted that the EITI 
Secretariat plans to invite National Development and 
Reform Commission (NDRC) Vice Minister and National 
Energy Administration head Zhang Guobao to attend the 
next EITI conference in Doha in February 2009. 
 
¶4. (SBU) Li said the Chinese government encourages 
efforts to reduce corruption and improve fiscal 
transparency.  The EITI's objectives are consistent with 
the concept of Corporate Social Responsibility, which has 
gained broad support from the Chinese government. 
Although China is not a supporting member of EITI, he 
explained, Chinese companies investing abroad must comply 
with all host country laws and policies.  Li emphasized 
that China is an active participant in the UN Global 
Compact, which aims to enhance corporate responsibility. 
The Chinese government has encouraged all large Chinese 
companies to associate themselves with this initiative. 
Li compared the EITI to the Kimberley Process and 
suggested that, like the Kimberley Process, it will take 
some time for the EITI to gain broader international 
acceptance. 
 
¶5. (SBU) On next steps, Li agreed it would be useful for 
the EITI Secretariat to invite Vice Minister Zhang to 
attend the next EITI conference.  He assured Hengel that 
MFA would give EITI "serious consideration" and promised 
to follow up with his NEA counterparts to determine how 
China could best participate in the EITI.  He noted, 
however, that the NEA would also need to "develop its own 
views" on the issue. 
 
Academics, oil officials agree with EITI principles 
--------------------------------------------- ----- 
¶6. (SBU) Hengel also raised EITI with Dr. Han Wenke, 
Director General of the NDRC-affiliated Energy Research 
Institute (ERI), Dr. Hu Angang, Director for the Center 
 
BEIJING 00004602  002 OF 002 
 
 
of China Studies at Tsinghua University, and Zhou Jiping, 
President of PetroChina.  All three remarked that 
although they are not very familiar with EITI, the 
fundamental concepts behind it are consistent with 
China's support for transparency and corporate 
responsibility.  ERI DG Han, one of the leading advisors 
to the Chinese government on energy policy, added that 
his institution would study EITI informally and discuss 
it with the NEA. 
 
Comment 
------- 
¶7. (SBU) Comment: Although Chinese officials agreed with 
the EITI's basic principles, their comments and questions 
revealed gaps in their understanding of the EITI's 
purpose and structure.  For example, MFA DDG Li stated 
that he understood the EITI had broadened its mandate 
beyond the extractive industries to include all major 
industries.  PetroChina President Zhou also sought 
clarification on the different roles played by 
implementing countries and supporting countries, and 
asked why the U.S. was not an implementing country. 
These comments suggest that further work is needed to 
ensure the Chinese government understands the EITI's 
objectives, the USG's intentions regarding enlisting 
China's support of it, and the obligations incurred were 
China to become a supporting country. In addition, per 
reftel B, it remains unclear which ministry has the lead 
in coordinating China's policy toward the EITI.  During 
negotiations regarding a paragraph in the SED outcomes 
document concerning the EITI, emboffs were informed that 
MFA had the lead, yet NDRC and NEA appeared to ultimately 
play a more significant role in determining China's 
position on the issue.  End Comment. 
 
¶8. (U) DAS Hengel has cleared this cable. 
 
RANDT