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Cablegate: U/S Burns Meets with Chinese Scholars, Discuss

VZCZCXRO9957
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3392/01 3520850
ZNR UUUUU ZZH
R 180850Z DEC 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 7280
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHMFIUU/CDR USPACOM HONOLULU HI
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 BEIJING 003392

SENSITIVE
SIPDIS

PACOM FOR FPA PICCUTA

E.O. 12958: N/A
TAGS: OVIP BURNS WILLIAM PREL PGOV PHUM ECON
EFIN, KN, CH
SUBJECT: U/S BURNS MEETS WITH CHINESE SCHOLARS, DISCUSS
POTUS TRIP, CHINESE ATTITUDES, ECONOMIC RESTRUCTURING,
CLIMATE TALKS, NORTH KOREA

NOT FOR INTERNET DISTRIBUTION

1. (SBU) December 9, 2009; 11:30 a.m.; Beijing

2. (SBU) Participants:

U.S.
----
Under Secretary Burns
David Shear, EAP Deputy Assistant Secretary of State
William Weinstein, Economic Minister-Counselor, Embassy
Beijing
Laura Stone, Economic Officer, Embassy Beijing (notetaker)

CHINA
-----
Yu Yongding, Director, Chinese Academy of Social Sciences
Institute of World Economics and Politics
Ding Kuisong, Vice Chairman, China Reform Forum.

3. (SBU) Summary: U/S Bill Burns met on December 9, 2009
with prominent Chinese pundits Yu Yongding, Director of the
Chinese Academy of Social Sciences Institute of World
Economics and Politics, and Ding Kuisong, Vice Chairman of
the China Reform Forum. The scholars offered a wholly
positive assessment of the recent POTUS visit, and challenged
the idea that the trip had proved that China was now the full
equal of the still-robust United States. They agreed that
China's younger generation was more confident with a larger
role for China, and were easily provoke by negative foreign
media reporting. China faced serious economic problems,
including the need to readjust its economy to become less
dependant on exports. Politically, the leadership sought
methods to deal with local officials' abuse of power, and was
experimenting with greater intra-Party democracy and press
freedom. On the international stage, Beijing was serious
about addressing climate change, and aimed to bring Pyongyang
back to Six-Party talks. End Summary.

Positive Review of POTUS Visit
-----------------------

4. (SBU) Dr. Yu stated that the President's visit had been
very popular in China. He noted that the trip had emphasized
to many Chinese the fact that, in the long run, China and the
United States shared many common interests. Dr. Ding agreed,
commenting that this trip represented a broadening of the
relationship. While past visits had focused on narrow
bilateral concerns, this time the two sides also discussed
regional and multilateral cooperation including the Six-Party
talks, climate change, and Afghanistan. Dr. Ding asserted
that the visit had accomplished two important goals:
introducing the leaders, and consolidating the overall
relationship.

China not Equal of US
-----------------------

5. (SBU) Turning to the press reaction in China, Dr. Ding
noted that some "nationalist hard-line" voices claimed that
the POTUS trip had proved that China was now equal in stature
to the United States. Ding disagreed with this assessment,
arguing that the meeting was not so much a "G-2" session as
an attempt to coordinate policies. Dr. Yu agreed that most
older scholars could not see another country sharing the
United States' pre-eminent place on the global stage,
although a few large countries like China, India, and maybe
Canada and Australia, could grow into more important roles
over decades. Dr. Ding affirmed that, for China, the
Sino-U.S. relationship was still China's most important
foreign engagement.

6. (SBU) A bemused Dr. Yu noted that, of late, Chinese
scholars had spent much of their time at academic conferences
defending the United States from American academics anxious
to bemoan America's downfall. He claimed that, economically,
the United States was still young and strong. Although the
United States was going through a period of economic
adjustment, Dr. Ding expressed great confidence that the U.S.
economy's fundamentals were sound, and the United States
would find new technologies to reinvigorate certain
industries and drive growth.


BEIJING 00003392 002 OF 003


But Youth More Confident
-----------------------

7. (SBU) Both academics agreed that China's younger
generations were much more confident about China's power and
place in the world, although they resisted calling this
impulse "nationalistic." Dr. Yu praised China's youth,
noting that they were somewhat spoiled, but also much more
community-minded and courageous than their elders. He
offered the great outpouring of aid and volunteerism after
the 2008 Sichuan earthquake as an example of their higher
expectations for both themselves and their leaders.

8. (SBU) Dr. Ding explained that these more savvy and
confident youths were not willing to see China treated as a
"second-class citizen" by the foreign media. Events such as
the negative foreign coverage of the Olympic torch relay had
provoked real anger, which was fanned by market-oriented
Chinese media anxious to sell papers. He credited the
problem, in part, to foreign journalists who came to China
for a several-year tour without Chinese language skills and
ended up talking only to fellow journalists "and a few
dissidents." While he did not have a much higher opinion of
Chinese journalists overseas, he noted that they at least
spoke English.

China's Problems
-----------------------

9. (SBU) Dr. Yu asserted that China was currently facing a
host of long-term structural economic problems. He cited
China's overinvestment in production, resulting in
overcapacity that had been painfully reveled by the downturn
in export demand. The only way to utilize this capacity was
to stimulate domestic consumption, and re-orient investment
towards non-tradable services such as hospitals that could
provide care to China's aging society. Dr. Ding noted that
readjustment would not be quick, since incomes remained low
and people lacking social safety nets were loathe to spend
money. Dr. Yu felt that the Chinese economy's debt levels
were still low enough to provide some cushion until the
economy could readjust. He several times asserted that China
had to allow the RMB to appreciate in order to redirect
investment into such domestically-oriented sectors.

10. (SBU) Dr. Ding also raised the hot topic of land and real
estate seizures as a social stability problem. (Note: In the
last few weeks there have been some well-publicized cases of
clashes and protests, including a self-immolation, resulting
from local government seizures of land for redevelopment).
Dr. Ding noted that local governments had a large financial
stake in real estate, and as property prices climbed the risk
of conflicts with quasi-legal land occupants rose.

Corruption, Democracy, Free Press
-----------------------

11. (SBU) Dr. Ding asserted that the leadership was promoting
"democracy," and more specifically "democracy within the
Party" as a way of controlling the behavior of local
officials. He also claimed that the Chinese media was
increasingly free to report on local corruption, sometimes
giving the impression that corruption was on the rise when in
fact it was just more widely reported. As the leadership
sought new mechanisms to control individual officials, they
were also broadening the decision-making process, allowing a
greater number of non-governmental entities to be involved in
creating new policies.

Government Serious on Addressing Climate Change
-----------------------

12. (SBU) Dr. Yu stated that the Chinese government believes
that climate change and pollution pose a real threat to
China. Dr. Ding acknowledged that China is the world's
largest emitter, but pleaded with the developed world to
share their technology with China in the spirit of
"cooperation not competition." He reiterated that China had
made hard commitments to reduce emissions by 40 percent.

China Trying to Get DPRK to Table
-----------------------


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13. (SBU) Dr. Ding advocated promoting a multilateral
approach to North Korea through the Tumen River development
project, but said China had been stymied by South Korea's
lack of enthusiasm for the project. He stated that China was
trying hard to bring the North back to the Six-Party talks,
casting the recent visits by China's Premier and Defense
Minister as attempts to persuade Pyongyang to re-engage. He
welcomed direct US-DPRK talks, noting that even if nothing
was accomplished, "at least you're talking."

14. (U) U/S Burns cleared this message.
GOLDBERG

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