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PP RUEHAST RUEHCN RUEHDH RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
RUEHSL RUEHTM RUEHTRO RUEHVC
DE RUEHBJ #2071/01 2020601
ZNR UUUUU ZZH
P 210601Z JUL 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 5302
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 BEIJING 002071 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SECC/STERN, EAP/CAMPBELL AND NORRIS, OES/MIOTKE, OES/EGC, 
EAP/CM, EEB/ESC 
 
STATE PASS USTR FOR LINSCOTT AND STRATFORD 
COMMERCE FOR KASOFF AND MELCHER 
ENERGY FOR SANDALOW AND YASHIDA 
 
E.O. 12958:  N/A 
TAGS: ENRG KGHG ECON SENV PGOV CH
SUBJECT:  Secretaries Locke and Chu Discuss Energy and Climate 
Change with Premier Wen 
 
(U) This cable is Sensitive but Unclassified (SBU) and for official 
use only.  Not for transmission outside USG channels. 
 
¶1. (SBU) Summary:  In a meeting with Premier Wen Jiabao on July 16, 
Commerce Secretary Gary Locke and Energy Secretary Steven Chu 
highlighted the importance of the United States and China working 
together on clean energy and climate change.  Wen agreed that the 
U.S.-China relationship is the most important bilateral relationship 
in the world and affirmed that China is a responsible country and 
takes the challenge of climate change seriously.  He said he hopes 
energy and climate change cooperation can become two bright spots in 
the relationship.  Both sides expressed optimism that the Strategic 
and Economic Dialogue (S&ED), which will focus on these issues, will 
be successful.  Highlighting the recently-announced clean energy 
joint research center initiative, Secretary Chu identified three 
priority areas:  efficient buildings, clean coal and efficient 
transportation.  Wen expressed support for the research centers and 
said he hoped the initiative would produce tangible results and 
technology transfer.  Secretary Locke pointed out that China's 
government procurement policies appear to be biased against U.S. and 
other foreign companies at the local level.  Wen assured Locke that 
China will maintain a welcoming policy that provides equal treatment 
for all companies and called for both countries to reject 
protectionism.  End summary. 
 
Great Opportunities for U.S.-China Cooperation 
--------------------------------------------- - 
 
¶2. (SBU) Premier Wen opened the meeting by congratulating Secretary 
Locke and Secretary Chu, as Chinese-Americans, on their appointments 
as senior U.S. Government officials.  He stated that U.S.-China 
relations have improved since President Obama came into office and 
that the general trend has been positive, cooperative and 
comprehensive.  Sec. Locke responded that he is proud to be an 
American but is also proud of his Chinese heritage.  Together with 
Secretary Chu and White House Cabinet Secretary Chris Lu, who was 
also part of the delegation, he noted that they are three of the 
most senior officials in the U.S. Government of Chinese descent. 
Locke recalled that he had visited China in 2008 soon after the 
Sichuan earthquake and had been impressed at Wen's concern for the 
earthquake victims; he had also closely followed Wen's efforts on 
food safety, environmental protection, energy efficiency and climate 
change.  Locke said that unless all nations took action soon to 
address the world's pressing energy and climate change issues, the 
world could face disastrous consequences.  Praising China for its 
progress on energy efficiency and alternative energy, Locke said he 
knows that China has different policies than the United States, but 
he saw great opportunities for the United States and China to lead 
on climate change.  In doing so, they could also create millions of 
new job for both countries.  As China has a history of having made 
great contributions to the world, Locke said he hoped history would 
also be able to record that the United States and China acted 
together to save the planet from climate change disaster. 
 
China a Responsible Country 
--------------------------- 
 
¶3. (SBU) Wen agreed that the U.S.-China relationship is the most 
important relationship in the world and that its impact goes well 
beyond just the bilateral aspects.  He applauded Obama's continued 
high-level emphasis on the relationship and said he hopes the 
Strategic and Economic Dialogue (S&ED), set for late July, will be a 
great success.  Regarding climate change, Wen maintained that China, 
as a responsible country, is taking this global challenge seriously. 
 Indeed, the steps China is taking meet both China's interests as 
well as its international responsibilities.  Although the United 
States and China are at different levels of development, they face 
similar challenges on energy issues.  He hoped to see cooperation on 
climate change and environmental protection become two "bright 
spots" in the relationship. 
 
Research Center Priorities 
-------------------------- 
 
¶4. (SBU) Chu said he was pleased to see the progress China had made 
in reaching its clean energy goals and planned to take back a 
message that China is serious about its efforts to address its 
 
BEIJING 00002071  002 OF 003 
 
 
energy problems.  He hoped the United States can show the world how 
serious it is in reducing energy consumption and reducing emissions. 
 Regarding China's efforts to reduce energy intensity in the 11th 
Five-Year Plan, Wen noted that China has already reached 10.4 
percent of the overall 20 percent reduction goal in the first three 
years and is striving to reach its target in the remaining two 
years.  Chu congratulated China on its progress, and noted that the 
United States, as the world's largest developed country, needs to 
take a leading role in addressing these issues.  He, too, was 
looking forward to a successful S&ED that will include the public 
and private sector involvement in discussions of climate change.  In 
another area of U.S.-China cooperation, the recently-announced clean 
energy joint research center initiative, he said he anticipates the 
research will focus on three key priority areas:  1) energy 
efficient buildings, 2) clean coal (including carbon capture and 
storage), and 3) transportation efficiency.  Wen noted that in the 
area of nuclear energy, cooperation is already underway with China's 
launch of the AP1000 nuclear program. 
 
Learning by Doing 
----------------- 
 
¶5. (SBU) Wen suggested that China still has great potential in 
further development of renewable energy, which currently only 
supplies nine percent of China's energy needs; China, he said, has a 
renewable energy goal of 20 percent by 2020.  China is also making 
progress on clean coal technology, such as coal gasification and 
improving the efficiency of coal-fired power plants.  He also 
emphasized the importance of developing environmentally-friendly, 
energy-efficient new building materials to improve building 
efficiency.  As the United States has some of the best cutting-edge 
technology, Wen said he looked forward to further cooperation with 
the United States in these areas, and firmly supports the new 
research center initiative.  He said he hoped that the initiative 
will be able to produce tangible results and that the United States 
will transfer advanced technology to China.  In this process, he 
pledged that China would observe intellectual property laws. 
 
¶6.  (SBU) Chu said he hoped the joint research initiative will allow 
U.S. and Chinese scientists and engineers to develop new 
technologies that can then be taken to the market place.  For 
example, he anticipated that they will be able to use 
computer-designed tools to create more efficient buildings.  He said 
he hoped that the two countries can develop more new ideas together 
than they could develop separately.  Chu explained that he has 
observed that many of the most important advances are not in patents 
or in research papers; it is in the actual doing.  Just as reading a 
cookbook or gardening book is not enough, one can better learn to 
cook and garden by working together with professionals and applying 
their skills.  In his 24 years as a professor, Chu said he has 
learned that the most important things were not in the textbooks. 
Wen said he agreed that one could learn far more from practice than 
from reading textbooks. 
 
A Level Playing Field for Foreign Companies 
------------------------------------------- 
 
¶7. (SBU) Referring to Wen's comment that China is open to the United 
States' most advanced technologies, Locke noted that the United 
States is also open to China's most advanced technologies.  He said 
the delegation had just visited the State Grid Corporation and 
expressed envy at the progress it was making in grid technology.  He 
said he hoped that China will put into place policies that will 
ensure a level playing field for both Chinese and U.S. companies in 
this area.  He pointed out that even when there is a level playing 
field at the central government level, provincial government 
policies often appear to be biased against U.S. and other 
foreign-invested companies on procurement decisions.  As China seeks 
to address energy efficiency and climate change concerns, it is 
important that China have access to the best technologies that 
foreign companies can provide. 
 
Rejecting Protectionism 
----------------------- 
 
¶8. (SBU) Responding to Locke's comments, Wen insisted that China 
maintains a policy that welcomes foreign companies to China, but 
 
BEIJING 00002071  003 OF 003 
 
 
cooperation must be based on equal access and mutual benefit and 
companies must follow Chinese laws.  In this way, he asserted, there 
will be an open, fair environment for all.  Wen said China had 
already taken steps such as reforming the VAT rebate system to level 
the playing field.  China's economic stimulus program to encourage 
people to replace household appliances and autos provided for equal 
treatment for all companies and joint ventures.  The United States 
and China are both big manufacturing and trading nations and both 
should reject protectionism - there should be no "buy America" or 
"buy China" policies.  He said he has repeatedly told American 
friends that only the open flow of people, financial resources and 
trade will allow the world economy to revive.  Locke pointed out 
that President Obama has also spoken out against protectionism and 
closing markets.  President Obama had expressed concerns about the 
"buy America" provisions that Congress inserted into U.S. programs 
and Locke himself had waived these provisions. 
 
Cooperation Mechanisms 
---------------------- 
 
¶9. (SBU) Returning to the issue of the S&ED, Wen said that although 
this will be an important mechanism, it will be important that other 
cooperation mechanisms in the U.S.-China relationship continue to 
run in parallel and mutually supportive ways.  He stressed that the 
United States and China have shared responsibilities in addressing 
climate change and the financial crisis and they must work together 
to address these concerns and take immediate action.  Locke said he 
looked forward to the Chinese delegation coming to Washington for 
the S&ED.  He noted that he and USTR Ambassador Kirk would be coming 
to China in late October for the Joint Commission on Commerce and 
Trade (JCCT) and that his staff was already working with Chinese 
counterparts on this.  Concluding the meeting, Wen asked that the 
delegation convey his greetings to President Obama. 
 
¶10. (U) Secretary Chu and Secretary Locke's delegations did not have 
the opportunity to clear this message before departing. 
 
GOLDBERG