VZCZCXRO9006
PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHKO #0852/01 1040806
ZNY CCCCC ZZH
P 140806Z APR 09
FM AMEMBASSY TOKYO
TO RUEKJCS/SECDEF WASHDC PRIORITY
RUEATRS/TREASURY DEPT WASHDC PRIORITY
RHHJJPI/PACOM IDHS HONOLULU HI PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 2280
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 8784
RUEHUL/AMEMBASSY SEOUL PRIORITY 4807
RUEHFK/AMCONSUL FUKUOKA PRIORITY 3504
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 7305
RUEHKSO/AMCONSUL SAPPORO PRIORITY 4041
RUEHGH/AMCONSUL SHANGHAI PRIORITY 0570
RUEHSH/AMCONSUL SHENYANG PRIORITY 0693

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 000852 
 
SIPDIS 
 
STATE FOR E, EAP/J AND EAP/CM 
NSC FOR DANNY RUSSELL AND JIM LOI 
 
E.O. 12958: DECL: 04/13/2019 
TAGS: ECON EFIN PREL PGOV PMIL JA
SUBJECT: CODEL MCCAIN MEETS WITH PRIME MINISTER ASO 
 
TOKYO 00000852  001.2 OF 002 
 
 
Classified By: CDA James P. Zumwalt, Reasons 1.4 (B) and (D). 
 
¶1. (C) Summary: Senators John McCain (R-AZ), Lindsay Graham 
(R-SC), and Amy Klobuchar (D-MN) met with Prime Minister Aso 
April 9 and exchanged views on China's defense spending and 
its economy, North Korea, and the London G20 Summit and 
nuclear energy.  Senator McCain thanked PM Aso for Japan's 
contributions to the efforts to stabilize Afghanistan and 
Iraq and reaffirmed that the U.S.-Japan Security Alliance has 
broad bipartisan Congressional support.  The Prime Minister 
in turn thanked the United States for its close collaboration 
before, during and after the launch of the North Korean 
missile and said Japan is "extremely satisfied" with the 
level of cooperation. End Summary. 
 
Concerns -- Chinese Defense Expenditures and Export-led Growth 
--------------------------------------------- ----------------- 
 
¶2. (C) PM Aso told CODEL McCain Japan is concerned about two 
issues in China: the number one concern is the 
non-transparent double-digit annual increase in expenditure 
on defense, and the second concern is China's reliance on 
export-led growth to fuel its economy.  Aso explained that 
Japanese-Chinese relations have "not been good" during the 
1,500 years of bilateral relations.  "Today might be the best 
relationship ever," Aso proclaimed, and said the December 
2008 trilateral Japan-China-South Korea trilateral summit was 
the first time the three leaders had met in a stand alone 
summit meeting.  He said China had been reluctant to hold 
talks during his time as Foreign Minister, but the leadership 
changed its mind in 2008 because of deteriorating economic 
conditions.  However, China's regional intentions remain 
unclear and its defense priorities remain non-transparent. 
The Chinese are working to become a naval power and are 
building an aircraft carrier, a development Aso described as 
troubling because German, Japanese and Russian efforts to 
develop each facet of military power resulted in global 
problems. 
 
¶3. (C) The second major concern for Japan is China's 
worsening economic situation, which Aso described as "much 
worse than Japan's."  China remains a "merchant economy" that 
only exports goods.  Aso said Chinese firms are good at 
making profits, but are not particularly strong in 
manufacturing.  In order to manage the worsening economy, the 
Chinese government is sending workers to inland provinces, 
but not to their homes because of concerns over unrest.  Aso 
said there were over 8,000 "turmoils" (riots) in 2008 and the 
Chinese government is giving laid-off workers jobs in 
construction industries in an effort to maintain social 
stability.  Aso added the only way the Chinese Communist 
Party can maintain political stability is through economic 
growth, and that requires policies to stimulate domestic 
demand. 
 
North Korea 
----------- 
 
¶4. (C) Aso explained Japan has tightened regulations on 
remittances to North Korea following the April 4 missile 
launch to include lowering the reporting threshold on 
remittances from JPY30 million to JPY10 million.  Japan's 
actions, however, are not dissuading the DPRK from moving 
forward on its missile programs because China has increased 
its trade with North Korea as Japanese exports fell. 
China-DPRK trade exceed JPY500 billion in 2008, more than 
offsetting Japan's export ban, Aso told the Senators. (NOTE: 
Aso said Japanese-DPRK trade fell to JPY800 million in 2008 
from a high of JPY60 billion. END NOTE). 
 
¶5. (C) The DPRK remains a very capable developer of missiles 
and bombs and the situation on the Korean peninsula is "very 
serious."  Aso is skeptical the DPRK can develop a nuclear 
weapon and questions their technological ability to 
miniaturize it for a warhead, but added the DPRK is improving 
its programs as evidenced by three successively better 
missile launches and two missile varieties: the Nodong medium 
range and Taepodong long range ballistic missile. 
 
TOKYO 00000852  002.2 OF 002 
 
 
 
G20 Impressions 
--------------- 
 
¶6. (C) Aso told the Senators the United States, UK and Japan 
understand the importance of fiscal stimulus and recognize 
government expenditures are "very important" right now.  He 
added Germany and other EU members were reluctant to do more 
during the London Summit because they do not have Japan's 
experience with deflation. 
 
Nuclear Energy 
-------------- 
 
¶7. (C) Describing Japan's 30 year successful history with 
nuclear energy, Aso told the Senators Japan has constructed 
31 reactors since 1980 without a single fatal accident. 
Japan's has world class technology and many countries want to 
procure Japan's nuclear know-how.  Aso told CODEL McCain the 
Russian government attempted to buy nuclear technology from 
Japan in 2007, but when contract talks failed the Russian 
government attempted to purchase the companies outright. 
Fortunately, Aso said, the price of oil plummeted from 
$150/barrel to below $40/barrel ending the Russian bids for 
Japanese nuclear technology companies. 
ZUMWALT