VZCZCXRO6106
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DE RUEHBJ #3335/01 3490642
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O 150642Z DEC 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7229
INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUEILB/NCTC WASHINGTON DC IMMEDIATE

UNCLAS SECTION 01 OF 02 BEIJING 003335 
 
SIPDIS 
 
S/CT: RHONDA SHORE AND NCTC: RUEILB 
 
E.O. 12958: N/A 
TAGS: PTER ASCE CH
SUBJECT: CHINA: 2009 COUNTRY REPORTS ON TERRORISM 
 
REF: SECSTATE 122733 
 
¶1. (U) SUMMARY:  Below is China's submission for the 2009 
Country Reports on Terrorism. The Embassy POC is Donna 
Gorman, who can be reached via email at GormanDX@state.gov. 
 
¶2. (U) China continued its counterterrorism cooperation with 
the United States and other nations throughout the year. In 
September, the United States and China held bilateral 
counterterrorism talks in Washington, DC. Plans are underway 
for multi-agency Track 1.5 talks (to include both government 
and non-government actors) on counterterrorism. In November, 
representatives from the Shanghai Cooperation Organization 
(SCO) attended an international counterterrorism conference 
in Kyrgyzstan. In July, China held a joint Sino-Russian 
counterterrorism exercise in Jilin Province. In June, China 
and Singapore conducted joint counterterrorism exercises in 
Guilin. 
¶3. (U) Implementation of the Yangshan Deep Water Megaports 
project was resumed in July 2009 and is administered by the 
Department of Energy (DOE). The General Administration of 
China Customs requested that the scope of the Shanghai 
Megaports project be expanded to 18 Nuctech Radiation Portal 
Monitors (RPMs) instead of the original 12 RPMs. Because of a 
global shortage of the helium isotope He3, DOE and Nuctech 
have had to develop a design revision to accommodate this 
increased project scope without increasing He3 demand. A 
solution has been identified with final design contract 
discussions planned for December 2009. Deployment of this new 
design will begin in the summer of 2010. 
¶4. (U) China's cash-based economy and robust cross-border 
trade contributed to a high volume of difficult-to-track cash 
transactions. Though mechanisms were in place for tracking 
financial transactions in the formal banking sector, the 
large size of the informal economy, prevalence of counterfeit 
identity documents, and large numbers of underground banks 
presented major obstacles to law enforcement authorities. 
According to International Monetary Fund statistics, money 
laundering in China may account for as much as $24 billion 
per year. 
¶5. (U) China's anti-money laundering and counter-financing of 
terrorism (AML/CFT) system was significantly strengthened 
during 2009, although several key deficiencies have yet to be 
addressed. In July, at the US-China Strategic and Economic 
Dialogue (S&ED) held in Washington, DC, the United States and 
China agreed to strengthen their cooperation on AML/CFT, 
including counterfeiting. In August, the Securities 
Association of China provided AML/CFT guidelines to 
securities firms in China, in an effort to cut off possible 
sources of funding to terrorists. In November, the Supreme 
People's Court released a judicial interpretation on money 
laundering law. The interpretation further expands 
application of the law to specific non-banking/financial 
institutions and more widely covers terrorist financing 
activities. 
¶6. (U) Terrorist financing is a criminal offense in China, 
however the government has yet to develop an asset freezing 
and confiscation regime that meets international standards or 
that adequately implements UN Security Council Resolutions 
1267 and 1373, according to the Financial Action Task Force 
(FATF). In addition, China's cross-border declaration and 
disclosure system needs to be strengthened to better prevent 
terrorist financing activity. China's Financial Intelligence 
Unit (FIU), housed within the People's Bank of China, works 
closely with the Financial Crimes Enforcement Network 
(FINCEN) in the United States to develop its capabilities. In 
addition to its domestic collection and analysis activities, 
the FIU exchanged information with foreign FIUs on a 
case-by-case basis. Coordination in the area could be further 
enhanced through China's membership in the Egmont Group, an 
umbrella body that coordinates the activities of over 100 
FIUs worldwide. Though China has applied for membership in 
the Egmont Group, political concerns about Taiwan's 
participation in the organization have hampered membership 
discussions. 
¶7. (U) China expanded its role in international efforts to 
combat terrorist finance and money laundering by becoming a 
full member of the FATF in June 2007. Since 2004, China has 
also been a member of the Eurasian Group (EAG), a FATF-style 
regional body that includes China, Russia, and most Central 
Asian countries. In June 2008, China also reactivated its 
membership in the Asian Pacific Group (APG), the FATF-style 
regional body serving countries primarily located in South 
Asia and East Asia. In December, China hosted the EAG's 
bi-annual plenary, providing China an opportunity to enhance 
its leadership role in AML/CFT issues. The United States 
actively participates in both the APG and EAG (as a member 
state and an observer, respectively). 
¶8. (U) Human rights organizations have accused China of using 
counterterrorism as a pretext to suppress Uighurs, a 
 
BEIJING 00003335  002 OF 002 
 
 
predominantly Muslim ethnic group that makes up the majority 
of the population within the Xinjiang Uighur Autonomous 
Region (XUAR) of western China. After widespread rioting in 
urban areas of Xinjiang in July and September, police moved 
in and arrested more than 200 people, 17 of whom have so far 
been sentenced to death. The Chinese government claims that 
the riots were orchestrated from abroad and that they were 
therefore terrorist attacks on China. 
¶9. (U) Formally established in 2002, the FBI Legal Attach 
Office in Beijing bolsters US-China cooperation on 
counterterrorism investigations. During the 2008 Summer 
Olympics, China provided substantive intelligence in some 
cases, however, the bulk of intelligence information 
regarding potential terrorist threats was provided by the FBI 
to the Chinese. In 2009, the FBI legal attach and FBIHQ 
Counterterrorism Division personnel participated in a round 
table discussion with the China Institute of Contemporary 
International Relations on terrorism issues. FBI personnel 
also provided a general overview to Ministry of Public 
Security Terrorism Department personnel on counterterrorism 
investigations. Although more work remains to be done in 
terms of depth and overall responsiveness to US requests, the 
Ministry of Public Security has agreed to allow FBI agents 
and other personnel to travel to China in 2010 to provide 
training sessions on Investigating Terrorism Cases and 
Policing and Terrorism Investigations. 
GOLDBERG