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Cablegate: Eu-China Summit Reaches Agreement for More Talks

VZCZCXRO8302
PP RUEHAG RUEHCN RUEHDF RUEHGH RUEHIK RUEHLZ RUEHROV RUEHVC
DE RUEHBJ #7430/01 3450200
ZNR UUUUU ZZH
P 110200Z DEC 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 3936
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHGV/USMISSION GENEVA 2055
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 007430

SIPDIS

SENSITIVE

SIPDIS

STATE PASS USTR STRATFORD

GENEVA PASS USTR

E.O. 12958: N/A
TAGS: ETRD WTRO ECON CH

SUBJECT: EU-CHINA SUMMIT REACHES AGREEMENT FOR MORE TALKS

SUMMARY
-------
1. (SBU) The EU-China Summit held in Beijing November 27-28, 2007
covered over thirty topics ranging from the EU arms embargo on China
and human rights to macroeconomic issues and exchange rates. In a
47 paragraph joint statement, borrowing from last year's language,
the two sides agreed to upgrade macroeconomics and financial
services level dialogues to the Vice Primier level. In addition, a
high-level dialogue will be held in early 2008 which will cover
intellectual property rights and market access issues. A European
Monetary Union delegation raised renminbi appreciation with the
People's Bank of China but got no commitments. Mandelson was very
displeased with the tenor of his exchange with Xinhua's President
over Xinhua's infringement on the rights of financial information
providers. Outgoing Minister of Commerce Bo Xilai dampened
expectations for any Chinese movement on services beyond existing
agreements. In the only apparent deliverable, a five hundred
million Euro loan to China was signed for projects combating climate
change. End summary.

----------------------------------------
Upgrading the Dialog
----------------------------------------

2. (SBU) EU Mission Economic Minister Counselor Miguel Ceballos
told Econoffs that the chief outcome of the 10th EU-China Summit was
an agreement to upgrade to the Vice Premier level two senior
dialogues on macroeconomic issues and financial services next year.
No apparent progress was made on the rising trade deficit, but a
high-level dialogue is expected to be held in March or April of 2008
which will include IPR and market access issues.

3. (SBU) At a Joint Committee meeting in June 2007 with
then-Chinese Minister of Commerce Bo Xilai, Mandelson pointed out
that existing economic tools were not successfully addressing the
expanding trade deficit with China. Mandelson took the step to make
public his discontent and a working group meeting soon followed.
However, the EU and China held significantly divergent points of
view, according to EU officials, with the EU citing lack of market
access as the primary driver of the deficit and China offering to
increase the number of trade fairs.

--------------------------------------------- ---
No Movement on Renminbi or Market Economy Status
--------------------------------------------- ---

4. (SBU) In its first foray out of Europe, the European Monetary
Union Troika (Eurogroup President Juncker, EU Commissioner Almunia
and ECB-President Trichet) pushed renminbi appreciation in meetings
with the People's Bank of China. Apart from setting up a working
group with the People's Bank of China to deal with exchange rate
related issues, the Troika did not achieve other concrete results,
the EU Mission officials said.

5. (SBU) While China continued to push for market economy status the
EU agreed to review China's concerns. Since the dialogue includes
both political and economic issues the EU also brought up their
concerns over human rights. Though not explicitly linking the two
the EU delegation sought a "comprehensive" look at the overall
EU-China relationship, according to EU officials.

--------------------------------------------- -------
Xinhua Infringement, National Security, and Foreign Lies
--------------------------------------------- -------

6. (SBU) Mandelson raised the issue of Xinhua's infringement on the
rights of foreign financial information providers in a two-hour side
meeting with Tian Congming, President of Xinhua News Agency. The EU
has concerns over Xinhua acting as a regulator and an operator.
Xinhua, in implementing governing rules is also now requiring
foreign companies to divulge proprietary information about their
clients (including rates they charge). Tian, frequently
interrupting Mandelson brought up references to national security,
"foreign lies," and China's territorial integrity. Mandelson,
clearly frustrated with this response, told Tian that he had been
dealing with this issue for over one and half years, and "would have
to draw his own conclusions" from the tenor of Tian's remarks.

--------------------------------------------- -----
Don't Expect Movement on Services Says Outgoing Bo
--------------------------------------------- -----


BEIJING 00007430 002 OF 002


7. (SBU) In perhaps his last meeting as Minister of Commerce, Bo
Xilai told Mandelson not to expect much movement on services beyond
existing WTO and multilateral commitments under the Doha Development
Agenda.

--------------------------------------------- --------
Five Hundred Million EU Loan to Combat Climate Change
--------------------------------------------- --------

8. (SBU) In the only apparent hard deliverable of the summit, a
five hundred million Euro framework loan from the European
Investment Bank to the People's Bank of China was signed. The loan
would support projects combating climate change.

RANDT

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