VZCZCXRO7650
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #4700/01 3660749
ZNR UUUUU ZZH
R 310749Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 1666
INFO RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 BEIJING 004700 
 
DEPARTMENT FOR EAP/EX LARRY BAER, OBO/PE JOE TOUSSIANT, OBO/SPCD, 
L/BA, OFM AND EAP/CM 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ABLD AMGT CM
 
SUBJECT:  DCM URGES MFA TO SIGN COCA II AGREEMENT 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE 
ACCORDINGLY. 
 
¶1. (SBU) SUMMARY:   China cannot go forward on the COCA II agreement 
unless the renovation of the old Chinese chancery in Washington DC 
is included under the 2003 COCA I agreement, MFA Department of 
Administration Director General Li Chao told the DCM in a December 
30 meeting.  China would like to see the design/permitting of the 
renovation, the shipment of construction materials and the issuance 
of visas related to the old chancery renovation project all 
controlled by COCA I terms.  The DCM requested the meeting with DG 
Li to urge the Chinese to sign the COCA II agreement.  The 
Ambassador and DCM have repeatedly raised the issue in high-level 
meetings, including the Ambassador's December 29 meeting with MFA 
Assistant Foreign Minister Liu Jieyi and the DCM's December 19 and 
29 meetings with MFA North American and Oceania Affairs Department 
Director General Zheng Zeguang.  The Ambassador and DCM also 
discussed COCA II in detail with PRC Ambassador to the United States 
Zhou Wenzhong in Beijing on December 24.  End Summary. 
 
No Deal Unless COCA I Applies to Chancery Renovation 
--------------------------------------------- ------- 
¶2. (SBU) DG Li said China agrees that COCA II - the Agreement on 
Conditions of Construction of the U.S. Consulate in Guangzhou and 
the Renovation of the PRC Permanent Mission to the UN - should be 
signed, but only on the condition that the renovation of China's old 
chancery in Washington DC fall under the 2003 COCA I agreement.  He 
stressed that putting the old chancery renovation project under COCA 
I is as important to China as maintaining visual control of 
construction materials and equipment is to the United States.  He 
said the Chinese would like to see COCA I terms apply to the 
design/permitting of the renovation, the shipment of construction 
materials and the issuance of visas related to the old chancery 
renovation project. 
 
¶3. (SBU) DG Li noted that he and other MFA officials have repeatedly 
made this request, adding that the inclusion of the renovation 
project under COCA I would be for the "convenience" of both sides. 
He urged the Department to assist in streamlining the local approval 
of the planning and design of the renovation project.  He argued 
that the "excuse" of local DC laws is "unreasonable" and reiterated 
that moving forward on construction of the U.S. Consulate in 
Guangzhou is contingent upon "strong U.S. support" for China's old 
chancery renovation project. 
 
December 18 Dip Notes Confusion 
------------------------------- 
¶4. (SBU) DG Li said the Embassy's three diplomatic notes delivered 
to the MFA on December 18 caused some "confusion" in the MFA. He 
said the terms of the Dip Notes conflicted with the Chinese 
understanding of earlier consensus reached by the two sides.  He 
claimed that Diplomatic Note 2152 runs counter to the conversation 
between Under Secretary Patrick Kennedy and Ambassador Zhou in 
regard to the sale of the U.S. Embassy's Er Ban compound. 
Apparently, Li believes Zhou informed us that the Er Ban sale should 
not be linked to the renovation of China's old chancery or 
consulates in the United States.  DG Li also similarly requested 
that the Er Ban sale not be linked to approval for leases for the 
Xinhua News Agency, as the MFA does not control Xinhua. 
 
China Knows Rush and Risks 
----------------------------- 
¶5. (SBU) DG Li noted the importance of the U.S.-China relationship, 
adding that the recent construction of new U.S. and Chinese 
Embassies marks a starting point for further development of the 
bilateral relationship.  He said he has been responsible for budgets 
and understands what can happen to "idle" money.  Although Li 
stressed the "urgent task" of reaching an agreement and mentioned 
China's "maximum sincerity" in meeting U.S. needs, he also made it 
clear that the Chinese would hope to continue negotiations to 
success in the new year if necessary. 
 
DCM Responds 
------------ 
¶6. (SBU) The DCM promised to convey DG Li's message to Washington 
and to stress the Chinese desire for relief from DC planning and 
permitting laws.  The DCM observed that the issues of visas and 
shipment of materials for the renovation project were less likely to 
be problematic.  However, he cautioned that the location of the old 
chancery in Washington DC and not on land owned by the USG makes it 
difficult if not impossible for the Department to get the renovation 
"exempted" from DC permitting by applying COCA I.  The DCM stressed 
the PRC could count on the USG's good faith efforts in support of 
the Chinese renovation.  He also expressed concern that the 
expiration of the bids on construction of the new U.S. Consulate in 
Guangzhou could diminish the USG appetite for continuing 
negotiations in 2009, particularly given that delay may jeopardize 
funding. 
 
BEIJING 00004700  002 OF 002 
 
 
 
RANDT