VZCZCXRO9157
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0666/01 0721814
ZNR UUUUU ZZH
O 131814Z MAR 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2881
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 05 BEIJING 000666 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL EFIN CH TW KN KS FR
SUBJECT: PREMIER ADDRESSES FINANCIAL CRISIS, TIBET, TAIWAN, 
DPRK IN NPC CLOSING PRESS CONFERENCE 
 
REF: A. BEJING 664 
     ¶B. BEJING 649 
     ¶C. BEJING 633 
     ¶D. BEJING 614 
     ¶E. BEJING 607 
     ¶F. BEJING 589 
     ¶G. BEJING 580 
     ¶H. BEJING 559 
     ¶I. BEJING 531 
 
 SUMMARY 
------- 
 
¶1. (SBU) Premier Wen Jiabao set the tone for his annual press 
conference at the conclusion of the National People's 
Congress (NPC) by noting on March 13 that this year's NPC 
session had been convened in the midst of the global 
financial crisis and therefore had focused on China's 
financial stimulus plan.  "Confidence, not gold or money" was 
the key to making China's stimulus plan a success, the 
Premier said.  China's plan for dealing with the economic 
crisis would include large government investment in 
infrastructure as well as the social safety net, industrial 
restructuring, environmental protection and technology; 
projects already included in the 11th Five-Year Plan such as 
roads and railways; and new projects such as tax relief, 
pension reform, employment training and rural health programs 
that would be funded separately.  China's foreign exchange 
reserves and sound financial system would help it get through 
the crisis; China would manage its forex reserves and RMB 
value according to its own interest; the eight percent 
economic growth rate target was "achievable"; and money would 
be spent in a "transparent process subject to oversight." 
Wen said he was "a little concerned" about the security of 
China's assets in the United States because of China's large 
holdings of U.S. debt and urged the United States to "honor 
its credit, abide by its promises, and ensure the security of 
China's assets."  (NOTE:  Xinhua news agency, in English, 
carried the comments about the Premier's "worries" while at 
the same time reporting that Wen expected U.S. measures would 
"counter" the international financial crisis and that Chinese 
reserves currently were "generally safe.") 
 
¶2. (SBU) Summary Continued:  Turning to Tibet, Wen reiterated 
China's hard-line stance by lashing out at the Dalai Lama's 
"lies" and asserting that the Dalai Lama was a political, not 
religious, leader bent on Tibetan independence.  China stands 
ready to continue talks with the Dalai Lama, as long as he 
abandons "separatism."  On Taiwan, the Premier stressed the 
need to "intensify" consultations on reaching an economic 
agreement.  Wen dodged a question on a possible North Korean 
missile launch, stating instead that the main task was to 
restart the Six-Party Process and avoid "contentious 
actions."  DPRK Premier Kim Yong-Il will visit China soon at 
Wen's invitation, based on PRC-DPRK "traditional friendship." 
 Addressing the state of Sino-French relations, the Premier 
said the onus was on Paris to repair the damage to the 
relationship caused by French President Sarkozy's meeting 
with the Dalai Lama.  End Summary. 
 
WEN FOCUSES ON ECONOMY, TIBET, TAIWAN, DPRK 
------------------------------------------- 
 
¶3. (U) Premier Wen Jiabao's March 13 press conference again 
served this year as the final event in China's annual 
political spectacle, the "two meetings" (the National 
People's Congress (NPC) and the Chinese People's Political 
Consultative Conference (CPPCC)).  Appearing at the press 
conference immediately following the formal close of the NPC 
earlier that morning (ref A), a confident and well-prepared 
Premier Wen met with a large contingent of foreign and 
domestic press for two and one-half hours, answering 
questions on China's financial stimulus package, Tibet, 
Taiwan, the DPRK and a range of other issues. 
 
¶4. (U) Wen set the tone for the event by first noting that 
this year's NPC had been convened in the midst of a global 
financial crisis and that the NPC Government Work Report had 
spilt considerable ink on China's financial stimulus plan. 
Reiterating his "confidence" mantra, Wen recalled that in 
September of last year when the true dimensions of the 
economic crisis were not yet clear, he had said that 
"confidence, not gold or money" would be required to tackle 
the problem.  Now, half a year later, confidence is the key 
to making China's stimulus plan a success.  All journalists, 
he declared, have a "responsibility" to spread this message 
of confidence. 
 
STIMULUS PACKAGE: DISPELLING RUMORS 
----------------------------------- 
 
BEIJING 00000666  002 OF 005 
 
 
 
¶5. (U) Wen reviewed China's approach to the global financial 
crisis, particularly its financial stimulus package and 
expectations of a new stimulus plan, in response to several 
questions.  Wen lamented the many "rumors" which had led to 
"misunderstandings" of China's package, clarifying that the 
central government will only invest 1.18 trillion RMB out of 
the two-year four trillion RMB stimulus package.  The central 
government's investment mainly would go to projects 
addressing the people's well-being, projects concerning 
technological transformation, environmental protection and 
infrastructure investment. 
 
¶6. (U) The 1.18 trillion RMB did not include many other 
projects, such as tax relief, worker training, pension 
reform, increasing rural incomes, rural medical and health 
programs, Wen explained.  Wen also explained that some of the 
investment projects under the overall four trillion RMB 
package were already included in the 11th Five-Year Plan, 
such as public roads and railroads, projects that had already 
been evaluated and preparations made, so they would be 
accelerated under the stimulus package.  He emphasized that 
massive government investment in infrastructure and other 
projects would yield the "most direct, efficient, and strong" 
impetus to growth.  The 1.18 trillion RMB is all for "new 
investment," Wen said. 
 
¶7. (U) Turning to other economic issues, Wen provided 
statistics to argue that PRC debt had declined over the past 
five years and revenues had increased, which he claimed 
allowed the Government to feel confident about this year's 
deficit spending policy.  On increasing employment 
opportunities, Wen said the stimulus package will help small 
and medium enterprises (SMEs), which are the key to the 
employment problem, accounting for 90 percent of jobs in 
China.  There are specific policies to help migrant workers 
and students, Wen stated, claiming that "in general," the 
employment situation is "stable." 
 
¶8. (U) China was looking ahead to even tougher times and was 
prepared for whatever may come, Wen concluded.  Reiterating a 
strong theme in the NPC Government Work Report, he said "the 
entire process will be transparent and subject to oversight." 
 Wen sought to dispel "doubts" that the Government can 
achieve the eight percent growth rate it has set as this 
year's goal, in response to a Renmin Ribao reporter's 
question.  "It will not be easy," Wen said, acknowledging 
that "goals cannot determine everything," but this goal would 
be "possible" through hard work and a sense of necessity. 
The Government has "promised" to deliver and had a 
"responsibility" to do so.  Ongoing marketization, 
urbanization, industrial restructuring, expanding domestic 
consumption, investment in rural areas, China's competitive 
edge in labor and a healthy financial system were all factors 
that will contribute to continued economic development, Wen 
said.. 
 
TIBET: CONTINUED HARSH LINE 
--------------------------- 
 
¶9. (SBU) Wen maintained China's hard-line stance on Tibet by 
declaring that Tibet is an inalienable part of China's 
territory and that Tibet issues are purely China's internal 
affair.  The "door remains open" to discussions with the 
Dalai Lama's representatives "as long as he stops his 
separatist activities."  The Dalai Lama is a "political 
exile," not simply a religious figure," who is the leader of 
an "illegal, theocractic" government-in-exile.  Noting that 
the Dalai Lama "travels around the world meeting with 
government leaders," Wen urged the international community to 
"watch what the Dalai Lama does, not simply listen to what he 
says." 
 
¶10. (SBU) Wen lashed out at the Dalai Lama's response to 
Foreign Minister Yang Jiechi's March 7 press conference, in 
which when the Tibetan leader denied Yang's allegation that 
he had asked for the removal of Chinese military forces from 
Tibet and the expulsion of all Han Chinese.  Calling these 
comments "lies," Wen cited statements allegedly made by the 
Dalai Lama in a "five-point proposal" in 1987 and a 
seven-point proposal in 1988 in which the Dalai Lama 
supposedly called for these steps to be taken.  "The Dalai 
Lama can switch positions," Wen declared, but he "cannot deny 
what he has said in the past." 
 
¶11. (SBU) Tibet was "peaceful and stable overall," in line 
with the wishes of the "Tibetan people," Wen claimed.  The 
Chinese constitution and Law on Ethnic Autonomy stipulates 
freedoms, especially freedom of religious belief, and in 
recent years the Government has made a great effort to bring 
 
BEIJING 00000666  003 OF 005 
 
 
economic development to Tibet and improve the livelihood of 
Tibetan farmers and people.  This opening up policy would 
continue, Wen declared, asserting that Tibet's "stability and 
security" were ample evidence that China's policies there had 
been "correct." 
 
TAIWAN: FOCUS ON THE ECONOMY 
---------------------------- 
 
¶12. (U) Wen praised the great progress made in cross-Strait 
economic integration, stating that the economies of the 
Mainland and Taiwan are "indivisible."  He called for an 
"intensification" of consultations to reach an economic 
agreement and develop a cooperation mechanism.  Economic 
progress must be "aligned with" a continued improvement in 
cross-Strait relations, the realities of trade and the 
special features of cross-Strait economic relations and trade 
in order to produce a "win-win" solution. 
 
TAIWAN AND THE WHA? 
------------------- 
 
¶13. (U) Responding to a question on Taiwan's possible 
participation in the World Health Assembly (WHA) this year, 
Wen referred to the Government Work Report in which he had 
reiterated China's position that it would make "fair and 
reasonable arrangements" for Taiwan regarding some 
international bodies, "such as the WHA," involving the 
interests of "Taiwan compatriots."  When asked if he would 
like to visit Taiwan, the Premier said Taiwan was a "treasure 
island of the motherland" and a place he had always wanted to 
go.  Though now 67 years old, Wen said he would be willing to 
"crawl" to Taiwan if he could no longer walk. 
 
DPRK: RESTART SIX-PARTY TALKS 
----------------------------- 
 
¶14. (U) Wen sidestepped a question about North Korea's 
possible missile launch, replying instead that the most 
important task was to restart the Six-Party Talks.  China was 
committed to the denuclearization of the Korean peninsula, 
which would contribute to the security not only of Korea but 
all of Northeast Asia.  All parties to the Talks should "keep 
the big picture in mind, handle well differences and not take 
any contentious action."  China would continue to "strengthen 
consultations" with the other five parties and keep the talks 
process "moving on a sound track."  In answer to a question 
about the upcoming visit to China by DPRK Premier Kim 
Yong-il, Wen emphasized the "traditional friendship" between 
the two countries and said the discussion would include the 
"full range" of bilateral, regional and international issues, 
while also noting that Kim would be traveling in response to 
Wen's invitation. 
 
CONCERN OVER CHINA'S HOLDING OF U.S. DEBT 
----------------------------------------- 
 
¶15. (SBU) Premier Wen was asked how he would evaluate U.S. 
measures to counteract the global financial crisis in light 
of China's large holdings of U.S. debt and what China's 
strategy was for spreading its investment risks if the U.S. 
dollar depreciated.  Wen responded that China was "paying 
close attention" to the U.S. economic situation and "looks 
forward to the results" of measures taken by the new Obama 
administration.  However, Wen said, "after lending an 
enormous sum" to the United States, "we are certainly 
concerned about the security of our assets."  "Frankly 
speaking," he said, "I am a little concerned."   Wen urged 
the United States to "honor its credit, abide by its promises 
and ensure the security of China's assets."  (NOTE:  After 
the press conference, China's Xinhua news agency's 
English-language coverage carried Wen's comments by 
acknowledging the Premier's "worries" while at the same time 
reporting that Wen expected U.S. measures would "counter" the 
international financial crisis, and that Chinese reserves 
currently were "generally safe.")  China's "huge foreign 
exchange reserves" demonstrated the strength of its economy, 
Wen said, asserting that China's first principle in managing 
this reserve was to "guard against risk" through maintaining 
the "security, liquidity and good value" of forex to pursue a 
"diversification strategy."  China's top priority was to 
protect its own national interests, but it needed to also 
consider the interrelated issue of the stability of the 
international finance system. 
 
CHINA'S CURENCY 
--------------- 
 
¶16. (U) Wen also addressed a reporter's question as to 
whether China could guarantee that it would assist 
 
BEIJING 00000666  004 OF 005 
 
 
international economic interests by not devaluing the RMB. 
Wen rejected the reporter's suggestion that the value of the 
RMB was depreciating, noting that it had appreciated against 
the U.S. dollar by 21 percent since July of 2005, and that 
the falling Euro and Asian currencies meant the RMB was 
appreciating and that this was putting great pressure on 
China's export sector.  China's goal was to maintain a 
"basically stable value of the RMB."  "We ourselves will make 
the decision," he declared, stating that "no country can 
pressure China to appreciate or depreciate" its currency. 
 
¶17. (U) In answer to a question on whether China would 
contribute more to the IMF, Wen said the IMF issue was 
"complex" and that China was "paying close attention" to it. 
China's approach was based on several principles:  structural 
reform of the IMF (including guarding against investment 
risks, balancing rights and obligations and considering the 
interests of developing countries), member states' 
responsibilities in accord with their quotas, expanding the 
variety of financing offered by international financial 
institutions and ensuring that countries increased their 
funding "on a voluntary basis and in line with national 
conditions." 
 
REFORM WILL CONTINUE, INCLUDING POLITICAL REFORM 
--------------------------------------------- --- 
 
¶18. (U) China intended to "accelerate reform," which, Wen 
said, "was the only way to remove institutional barriers" and 
"implement the stimulus package," in response to a CCTV 
reporter's question on the impact of the financial crisis on 
reform.  Wen called for reliance on the "market" to allocate 
resources and for non-governmental and private organizations 
to invest and contribute to the success of the stimulus plan. 
 More "political structural reform" was also an essential 
part of the economic policy, Wen said, including boosting 
"socialist democracy, freedom and rights," further judicial 
reform to foster "social equity and justice" and "oversight 
by various social sectors" to ensure that government 
administration "acts according to law." 
 
CHINA-HONG KONG-MACAO 
--------------------- 
 
¶19. (U) The impact of the financial crisis was becoming "more 
acute" in Hong Kong and Macao, Wen said, asserting that China 
was nevertheless confident Hong Kong would maintain its 
status as a "global finance center."  The Mainland would 
strengthen Hong Kong's financial situation and China-Hong 
Kong financial interactions, as well as boost Hong Kong 
access to China's markets.  The Government Work Report had 
said China would accelerate infrastructure projects linking 
Hong Kong, Macao and the Mainland and that Beijing was 
solidly behind the Pearl River Delta development plan, which 
allowed the three areas to draw on each others' strengths. 
Wen concluded with a vote of confidence in the leadership of 
Hong Kong and Macao, saying they had proved their mettle in 
dealing with the Asian Financial Crisis and that China was 
confident they would also weather this storm. 
 
SCO COPES WITH DOWNTURN 
----------------------- 
 
¶20. (U) In response to a Russian journalist's question on how 
Shanghai Cooperation Organization (SCO) countries would 
respond to the economic crisis at their next meeting, which 
China will host this year, Wen said they would tackle the 
crisis by "strengthening cooperation."  The impact on member 
states varied, but there would be "no problem tiding over 
difficulties through cooperation."  Wen cited oil and 
financing agreements with Russia, and financial, energy and 
resources cooperation with Kazakhstan as examples.  Wen 
predicted SCO cooperation on infrastructure projects in 
energy, resoruces, transportation, agriculture and high-tech 
fields. 
 
FINANCIAL CRISIS AND DEVELOPING COUNTRIES 
----------------------------------------- 
 
¶21. (U) Developing countries were suffering the most from the 
global economic downturn, Wen said, stating that as the 
world's "largest developing country," China supported giving 
developing countries a bigger role in solving the financial 
crisis.  The upcoming G-20 summit in London should make this 
a "major" item on the agenda.  China believed there should be 
no change in the Millennium Development Goals.  Developed 
countries should give more weight to supporting developing 
countries, Wen said, and China will keep the commitments it 
made at the G-20 in Washington by continuing to forgive 
developing countries' debt and cutting tariffs on the goods 
 
BEIJING 00000666  005 OF 005 
 
 
they export to China.  He also stressed China's ongoing aid 
to Africa. 
 
SINO-FRENCH RELATIONS: ONUS ON PARIS 
------------------------------------ 
 
¶22. (U) Wen said China-French relations had experienced 
"twists and turns" since the two countries established ties 
45 years ago and that the two should move forward.  The issue 
of French President Sarkozy's meeting the Dalai Lama, 
however, had hit at the core of China's interests.  Thus, the 
onus was on France to repair the damage so that relations 
could be quickly restored, Wen said. 
 
BIO NOTE: WEN'S COMMON TOUCH 
---------------------------- 
 
¶23. (SBU) Demonstrating his popular touch, at the conclusion 
of the press conference, Premier Wen stepped off the rostrum 
and spent several minutes mixing with the assembled press 
corps, shaking hands, chatting and waving as he made his way 
to the exit. 
WEINSTEIN