VZCZCXRO8617
OO RUEHAST RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
RUEHTRO RUEHVC
DE RUEHBJ #0903/01 0930933
ZNR UUUUU ZZH
O 030933Z APR 09
FM AMEMBASSY BEIJING
TO RHEHNSC/NSC WASHDC IMMEDIATE
RUEAEPA/HQ EPA WASHDC IMMEDIATE
RUEHC/SECSTATE WASHDC PRIORITY 3270
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHLO/AMEMBASSY LONDON PRIORITY 3518
RUEHNY/AMEMBASSY OSLO PRIORITY 0901
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 BEIJING 000903 
 
STATE FOR OES, OES/EGC, OES/ENV, EAP/CM/HABJAN/FLATT, 
EEB/ESC/HENGEL, EEB/ESC/IEC/ENR/HENRY/KOPP/SECOR 
TREASURY FOR OASIA/ISA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON ENRG SENV EPET EMIN KCOR CH
 
SUBJECT: CHINA/EITI: CHINESE ACADEMIC STRESSES NEED TO BUILD 
AWARENESS OF EITI 
 
REFTEL A: 08 BEIJING 4394 
REFTEL B: 08 BEIJING 4602 
 
Summary 
------- 
¶1. (SBU) Summary.  Chinese officials and academics lack a clear 
understanding of the Extractive Industries Transparency Initiative 
(EITI), according to Dr. He Wenping, of the Chinese Academy of 
Social Sciences (CASS).  In He's view, Chinese officials will not 
support the EITI unless they can be convinced of its effectiveness 
in implementing countries where Chinese companies operate.  He 
predicted that Chinese officials will wait for other developing 
countries to take the lead in becoming EITI supporting countries and 
noted that encouraging fiscal transparency abroad may be difficult 
for China, which faces its own challenges in this area.  He 
suggested that the EITI Secretariat and EITI supporting countries 
coordinate with Chinese think tanks to create opportunities to 
inform policymakers and influential academics about the EITI. End 
Summary. 
 
Chinese officials need evidence of EITI's utility 
--------------------------------------------- ---- 
¶2. (SBU) Dr. He Wenping, Director of the African Studies Section, 
Institute of West Asian and African Studies, Chinese Academy of 
Social Sciences (CASS), told Econoff that Chinese officials lack an 
understanding of the Extractive Industries Transparency Initiative 
(EITI) and will remain hesitant to support it without clear evidence 
of its effectiveness in EITI implementing countries where Chinese 
companies operate.  In He's view, Chinese policymakers are focused 
on ensuring stable trade and investment environments for Chinese 
companies operating overseas.  Chinese leaders would likely be more 
inclined to support the EITI if a clear connection could be drawn 
between stability in the implementing countries and EITI 
implementation. 
 
Few officials, academics familiar with EITI 
------------------------------------------- 
¶3. (SBU) As a relatively new international organization, the EITI 
remains largely unfamiliar to Chinese officials and the academic 
community.  Dr. He claimed she is one of a handful -- if not the 
only -- Chinese scholar familiar with the structure and purpose of 
the EITI.  (Note: Dr. He learned about the EITI during an academic 
exchange program in Norway and was the only Chinese national in 
attendance at the EITI's annual conference in Doha in mid-February.) 
 She pointed out that not a single academic paper has been written 
in China on the EITI and concluded that "if Chinese academics are 
uninformed about the EITI, Chinese leaders are also uninformed," as 
think tanks play an important role in advising policymakers. 
 
China will wait to follow other developing countries 
--------------------------------------------- ------- 
¶4. (SBU) Dr. He argued that China considers itself a developing 
country and that Chinese leaders could be uncomfortable with 
economic distinctions between "supporting" and "implementing" 
countries.  Most EITI supporting countries belong to the OECD, while 
most implementing countries are part of the developing world, she 
noted.  China could be misperceived if it were to join developed 
countries by becoming an EITI supporting country and it would not 
want to take the lead in becoming the first developing country to do 
so.  He noted that China would likely wait for countries like India, 
Brazil, and Mexico to make the first move in this regard.  She also 
pointed out that many developed countries have yet to support the 
EITI, noting that Japan only recently announced its intentions to 
become a supporting country. 
 
China has its own fiscal transparency problems 
--------------------------------------------- - 
¶5. (SBU) Dr. He noted that although the central government has 
placed a greater emphasis on fiscal transparency in recent years, 
implementation of measures aimed at enhancing fiscal transparency 
and accountability among state-owned enterprises (SOEs), including 
in the domestic extractive industries, continues to be a challenge. 
Given China's challenges in achieving fiscal transparency at home, 
China would not be well-positioned to promote such requirements 
abroad through the EITI, He asserted. 
 
Next steps:  Raise awareness of EITI in China 
 
BEIJING 00000903  002 OF 002 
 
 
--------------------------------------------- 
¶6. (SBU) Dr. He suggested that the EITI Secretariat and EITI 
supporting countries coordinate with Chinese think tanks to create 
opportunities to inform policymakers and influential academics about 
the EITI, including through conferences, travel by think tank 
officials to implementing countries, and by providing funding to 
conduct assessments on the impact of the EITI in implementing 
countries.  Inviting officials from implementing countries to China 
to discuss the EITI's impact on economic and political stability 
would be particularly useful, He noted.  He reported that her 
institute is currently working with the United Kingdom's Department 
for International Development (DFID) to organize a conference that 
would include discussions on the EITI, tentatively scheduled for 
late September, 2009.  Emboffs will follow up with DFID's Beijing 
office to seek more detailed information about these plans. 
 
Comment 
------- 
¶7. (SBU) China has not designated a specific ministry to handle EITI 
issues.  Officials from agencies that could have a stake in EITI 
matters, including the Ministry of Foreign Affairs (MFA), the 
National Energy Administration (NEA), and the Ministry of Land and 
Resources (MOLAR), have been reluctant to discuss the EITI with 
Emboffs (reftel A, B).  China's MFA and NEA decided not to send 
observers to the EITI's annual conference in Doha in February this 
year and in December 2008, China declined to include language in the 
Strategic Economic Dialogue (SED) outcomes document that would have 
linked bilateral energy cooperation to language welcoming efforts by 
EITI implementing countries to strengthen transparency and 
accountability in the extractive sector.  As future discussions with 
Chinese officials on the EITI are likely to move ahead at a slow 
pace, engaging Chinese think tanks -- which play an important policy 
advisory role -- may be the most effective means of raising the 
EITI's profile in China in the near-term. 
 
PICCUTA