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Cablegate: China/Eiti: Supportive in Principle, But

VZCZCXRO0242
PP RUEHAST RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
RUEHVC
DE RUEHBJ #4602/01 3540301
ZNR UUUUU ZZH
P 190301Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 1479
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 2330
RUEHNE/AMEMBASSY NEW DELHI 4691
RUEHOS/USMISSION OECD PARIS FR

UNCLAS SECTION 01 OF 02 BEIJING 004602

STATE FOR EEB/ESC/HENGEL,
EEB/ESC/IEC/ENR/HENRY/KOPP/SECOR
OES/EGC, OES/ENV, EAP/CM/HABJAN/FLATT
TREASURY FOR OASIA/ISA/DOHNER/HOLMER/WRIGHT

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET EMIN ECON SENV KCOR CH

SUBJECT: CHINA/EITI: SUPPORTIVE IN PRINCIPLE, BUT
MISPERCEPTIONS REMAIN

REFS: A: STATE 115798; B: BEIJING 4394

Summary
-------
1. (SBU) Summary. In a discussion with EEB DAS Douglas
Hengel in Beijing, a Foreign Ministry official said the
objectives of the Extractive Industries Transparency
Initiative (EITI) are consistent with China's efforts to
promote corporate social responsibility. He welcomed
inviting China's National Energy Administration (NEA)
head to the next EITI conference and assured Hengel that
he would discuss the EITI with his NEA counterparts. A
leading government advisor on energy also said he agrees
with the EITI's principles and told Hengel he would
discuss the EITI with the NEA and NDRC. Despite the
officials' agreement with the EITI's general principles,
however, it appears that some misperceptions about the
EITI remain; suggesting that further efforts are needed
to ensure the Chinese government understands the EITI's
objectives and the benefits of becoming a supporting
country. End Summary.

2. (SBU) EEB DAS Douglas Hengel discussed the Extractive
Industries Transparency Initiative (EITI) with Ministry
of Foreign Affairs (MFA) Deputy Director General for
International Affairs Li Junhua, Energy Research
Institute (ERI) Director General Han Wenke, Director for
the Center of China Studies at Tsinghua University Dr. Hu
Angang, and PetroChina President Zhou Jiping in Beijing
December 3rd and 5th in conjunction with his participation
in the 5th Strategic Economic Dialogue. DAS Hengel also
passed background information in reftel A to the
participants in each meeting.

MFA will consider EITI and discuss it with NEA
--------------------------------------------- -
3. (SBU) DAS Hengel provided MFA's Li with background
information on EITI and encouraged China to become a
supporting member. Hengel noted that the EITI
Secretariat plans to invite National Development and
Reform Commission (NDRC) Vice Minister and National
Energy Administration head Zhang Guobao to attend the
next EITI conference in Doha in February 2009.

4. (SBU) Li said the Chinese government encourages
efforts to reduce corruption and improve fiscal
transparency. The EITI's objectives are consistent with
the concept of Corporate Social Responsibility, which has
gained broad support from the Chinese government.
Although China is not a supporting member of EITI, he
explained, Chinese companies investing abroad must comply
with all host country laws and policies. Li emphasized
that China is an active participant in the UN Global
Compact, which aims to enhance corporate responsibility.
The Chinese government has encouraged all large Chinese
companies to associate themselves with this initiative.
Li compared the EITI to the Kimberley Process and
suggested that, like the Kimberley Process, it will take
some time for the EITI to gain broader international
acceptance.

5. (SBU) On next steps, Li agreed it would be useful for
the EITI Secretariat to invite Vice Minister Zhang to
attend the next EITI conference. He assured Hengel that
MFA would give EITI "serious consideration" and promised
to follow up with his NEA counterparts to determine how
China could best participate in the EITI. He noted,
however, that the NEA would also need to "develop its own
views" on the issue.

Academics, oil officials agree with EITI principles
--------------------------------------------- -----
6. (SBU) Hengel also raised EITI with Dr. Han Wenke,
Director General of the NDRC-affiliated Energy Research
Institute (ERI), Dr. Hu Angang, Director for the Center

BEIJING 00004602 002 OF 002


of China Studies at Tsinghua University, and Zhou Jiping,
President of PetroChina. All three remarked that
although they are not very familiar with EITI, the
fundamental concepts behind it are consistent with
China's support for transparency and corporate
responsibility. ERI DG Han, one of the leading advisors
to the Chinese government on energy policy, added that
his institution would study EITI informally and discuss
it with the NEA.

Comment
-------
7. (SBU) Comment: Although Chinese officials agreed with
the EITI's basic principles, their comments and questions
revealed gaps in their understanding of the EITI's
purpose and structure. For example, MFA DDG Li stated
that he understood the EITI had broadened its mandate
beyond the extractive industries to include all major
industries. PetroChina President Zhou also sought
clarification on the different roles played by
implementing countries and supporting countries, and
asked why the U.S. was not an implementing country.
These comments suggest that further work is needed to
ensure the Chinese government understands the EITI's
objectives, the USG's intentions regarding enlisting
China's support of it, and the obligations incurred were
China to become a supporting country. In addition, per
reftel B, it remains unclear which ministry has the lead
in coordinating China's policy toward the EITI. During
negotiations regarding a paragraph in the SED outcomes
document concerning the EITI, emboffs were informed that
MFA had the lead, yet NDRC and NEA appeared to ultimately
play a more significant role in determining China's
position on the issue. End Comment.

8. (U) DAS Hengel has cleared this cable.

RANDT

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