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ZNR UUUUU ZZH
P 262318Z JUL 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 5358
INFO RUEHOO/CHINA POSTS COLLECTIVE
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UNCLAS SECTION 01 OF 03 BEIJING 002124 
 
STATE FOR EAP/CM-HABJAN, EAP/CM, EAP/PD-STOLTZ 
STATE FOR OES DAS MIOTKE, OES/EGC, OES/ENV, AND OES/PCI 
STATE FOR S/SECC-STERN, S/P-GREEN, EEB, AND ECA 
STATE PASS TO CEQ SUTLEY 
USDOE FOR INTERNATIONAL 
USDOC FOR MAC AND MAS 
USDOC PASS USPTO FOR WU 
EPA FOR INTERNATIONAL/MKASMAN/GIANNINI-SPOHN 
NSC FOR LOI, SHRIER 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV ECON PARM MARR SENV ENRG KGHG CH
 
SUBJECT: SECRETARIES CHU AND LOCKE DISCUSS CLEAN ENERGY PRIORITIES 
WITH CHINA'S STATE COUNCIL AND SCIENCE MINISTRY 
 
(U) Sensitive but unclassified.  Please handle accordingly. 
 
Summary 
------- 
¶1.   (SBU) During his recent visit to China, Energy Secretary Chu 
met with China's Minister of Science and Technology WAN Gang on July 
15 to discuss priorities for the new U.S.-China Clean Energy 
Research and Development Center, which they publicly announced later 
the same day at a joint press conference. Both agreed that clean 
coal technology including carbon capture and storage (CCS), energy 
efficiency and clean energy vehicles should be the initial research 
focus of the new center. Secretary Chu also suggested that smart 
grid technology be a development priority. Following this meeting, 
U.S. Commerce Secretary Locke joined Secretary Chu and Minister Wan 
for a discussion with State Councilor LIU Yandong, China's 
highest-ranking female government official, who has oversight 
responsibilities for the Ministry of Science and Technology (MOST) 
and the Ministry of Education. Madame Liu addressed Chinese efforts 
to weather the global financial crisis and highlighted fiscal 
stimulus spending on environmental protection. She noted that U.S. 
President Obama's priorities coincided with those of China's 
leaders, creating great opportunities to jointly address the 
challenges of clean energy and climate change. END SUMMARY. 
 
U.S.-China Clean Energy R&D Center Priorities 
--------------------------------------------- 
¶2.  (SBU) In advance of the press conference announcing the new 
U.S.-China Clean Energy Research and Development Center, MOST 
Minister Wan Gang met with Secretary Chu to privately express his 
views regarding China's clean energy priorities.  Wan said China's 
heavy reliance on coal-fired power requires the development of 
advanced clean coal and CCS technologies to address China's growing 
carbon emissions.  He also said that China's rapid pace of 
construction of new buildings warrants a heavy focus on energy 
efficient building technology. Regarding clean transportation, Wan 
noted that after more than a decade as an executive in the German 
auto industry the Chinese government had asked him to return to his 
home country to work on the development of clean energy vehicles. 
Referencing a speech that Secretary Chu gave on restructuring 
General Motors and the importance of developing clean energy 
vehicles, Wan said it was clear that U.S. and Chinese priorities in 
this area are aligned and it also should be an area of focus under 
the new center. 
 
¶3.  (SBU) NOTE: Under Minister Wan's leadership Beijing is 
aggressively trying to build up its clean energy vehicle industry. 
MOST has channeled significant funding into this effort with more 
than 70 types of energy-efficient vehicles currently in development. 
 MOST this year began the "Tens of Cities, Thousands of Electric 
Vehicles" initiative in 13 cities across China. This program calls 
for a minimum of 1000 clean energy public transportation vehicles in 
 
BEIJING 00002124  002 OF 003 
 
 
each of these cities, with plans to add several more cities over the 
next two years.  During his meeting with Secretary Chu, Wan said 
that China's state enterprises like the Shanghai Automotive Industry 
Corporation (SAIC) and the Dongfeng Motor Corporation (DMC) have 
invested substantial funds into developing hybrid and fuel-cell 
vehicles, but because of high R&D costs the Chinese government is 
providing subsidies to Chinese automakers who also build public 
transportation clean energy vehicles in order to ensure market 
competitiveness.  END NOTE. 
 
¶4.  (SBU) Wan emphasized that a lot of "backroom" discussion had 
already taken place to ensure that both countries were in agreement 
regarding priorities of the new joint energy research center. 
Secretary Chu concurred with the three proposed areas of development 
but suggested that efficient electricity transmission and 
distribution networks, or so-called "smart-grid technology," be 
added as a fourth key R&D effort under the new center.  Noting 
China's aims to increase renewable energy consumption to 15 percent 
by 2020 (up from approximately 8 percent today), with an emphasis on 
supplying advanced solar and wind energy technologies to rural 
China, Wan said smart-grid technology will be critical to this 
effort and agreed it should be part of the center's research 
platform.  Secretary Chu noted that as more of the electric 
distribution system was put under advanced computer control, 
cyber-security will become a major issue and should be considered as 
both countries move forward with development of a new electric grid. 
 In concluding the meeting, Wan suggested that following the public 
announcement both countries should establish a steering committee to 
define the roles of participating agencies, funding, intellectual 
property rights, and other legal issues associated with the new 
joint research and development center. 
 
Madame Liu Says S&T central to Bilateral Relationship 
--------------------------------------------- -------- 
¶5.  (SBU) Following the joint energy center discussion, U.S. 
Commerce Secretary Locke joined Secretary Chu and Minister Wan for a 
meeting with State Councilor LIU Yandong.  Madame Liu's portfolio 
includes oversight of the Ministry of Science and Technology (MOST) 
and the Ministry of Education.  She led off the discussion by 
detailing China's response to the global financial crisis, noting 
that the 4 trillion RMB (USD 586 million) stimulus package, tax 
cuts, and an increase in domestic demand have helped China weather 
the crisis.  Liu highlighted stimulus spending on technology 
development associated with improving energy efficiency, stating 
that it was valued at 580 billion RMB (USD 85 million), making it 
among the largest investments in the stimulus package. 
 
¶6.  (SBU) Liu also noted the auspicious timing of the Secretaries 
visit, observing that China was celebrating the 60th anniversary of 
the founding of the PRC.  Moreover, our two countries are 
celebrating 30 years of diplomatic relations and S&T cooperation 
 
BEIJING 00002124  003 OF 003 
 
 
under the 1979 U.S.-China S&T Agreement. Liu said that science and 
technology collaboration is critical to China's continued 
advancement towards developed-country status and she is pleased to 
see S&T as a central theme going forward in the bilateral 
relationship.  China will have 70 million new university graduates 
this year, according to Liu, so green industries that develop as a 
result of joint S&T cooperation are critical to meeting the high 
demand for quality jobs in both countries. Finally, Liu said that 
the U.S. President's priorities coincided with those of China, 
leading to a very positive relationship not only on the clean energy 
front, but also in areas such as anti-terrorism, arms control, 
nonproliferation, and climate change. 
 
Chu and Wan Announce U.S.-China Clean Energy R&D Center 
--------------------------------------------- ---------- 
¶7.  (SBU) Following the two meetings, a joint press conference was 
held at the Great Hall of the People to announce the creation of the 
joint clean energy R&D center.  [COMMENT: Although Secretary Chu and 
MOST Minister Wan formally addressed the large international press 
delegation, it is worth noting that Zhang Guobao--powerful head of 
the National Energy Administration (NEA) and Vice Chairman of the 
National Development and Reform Commission--was present on the 
podium during the announcement as this is a three way agreement 
between U.S. DOE, MOST and NEA. The Chinese Academy of Sciences will 
also have a role.  The next steps, on both sides, include the 
development of a management process to direct this new effort. 
Although it remains to be seen whether the good cooperation between 
MOST and NEA will endure, the initial dynamic represents an 
unprecedented example of cooperation among agencies that don't 
traditionally work well together.  END COMMENT] 
 
GOLDBERG