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INFO RUEHOO/CHINA POSTS COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 002087

SIPDIS

E.O. 12958: DECL: 05/29/2018

TAGS: PREL PTER PARM PGOV CH

SUBJECT: SCENESETTER FOR JUNE 4 SECURITY DIALOGUE 

Classified By: Political Minister Counselor Aubrey Carlson. Reasons

1.4 (b) and (d).

1.(C) The U.S.-China Strategic Security Dialogue provides the opportunity for bilateral engagement on sensitive issues central to both countries' national security. Our objective is to promote a long-term, strategic view of relations and to push China to be a responsible stakeholder in the international community, particularly in how they address crucial security issues such as Iran, nonproliferation and counterterrorism. The Chinese want us to understand their fundamental national interests, including the Taiwan issue and energy security, which is related to their dealing with Iran and Sudan. On the military side, we want to encourage greater Chinese transparency about military modernization plans and defense policies. Below we offer context and background for key areas of our engagement with China.

Backdrop: Sichuan Earthquake and Olympics -----------------------------------------

2.(C) Your visit occurs against the backdrop of the May 12 earthquake in Sichuan Province that killed over 68,000 people (with tens of thousands still missing), injured nearly 300,000 and left millions homeless. The Chinese Government is occupied with managing massive relief efforts, in which the PLA has played a significant role. These efforts, if viewed as successful, will likely strengthen regime legitimacy and enhance the reputation of the military. Chinese leaders expressed gratitude for U.S. Government assistance totaling USD 3.985 million and appreciated President Bush's condolence visit to the PRC Embassy in Washington. (Note: The entire U.S. contribution, including from the private sector and NGOs, is over USD 70 million to date.) U.S. earthquake-related assistance has had a military angle: our assistance included relief supplies delivered by C-17 military aircraft from PACOM, and China has asked that the United States sell Blackhawk engines and spare parts, which China says would assist helicopter-borne relief efforts. Since provision of such assistance would require overcoming Tiananmen Sanctions that prohibit U.S. military technology transfers to China, we suggested the Chinese take advantage of a Japanese offer of Chinook helicopters and crew.

3.(C) Despite the earthquake, China remains determined to host a successful Olympics August 8-24 (and Paralympics September 6-17). The Government and the public have reacted poorly to attempts to link the Olympics to issues like Tibet, Darfur or human rights. Attacks on the Olympic Torch Run in cities around the world and threats of an Olympic boycott led to nationalistic sentiments expressed through Chinese demonstrations and boycott campaigns aimed against foreign-owned businesses. After initially fanning the flames, the Chinese Government reined in nationalistic sentiment. The United States largely steered clear of this controversy. President Bush's clear statement that he plans to attend the Olympics and the lack of major incidents at the Torch Run in San Francisco earned us goodwill and gratitude in Beijing.

U.S.-China Mil-Mil Relations ----------------------------

4.(C) The Sichuan earthquake and the Olympics have recently improved the tone of the overall relationship, and other developments have contributed specifically to better U.S.-China military-to-military ties, which your visit will strengthen further. In April, DoD hosted a delegation from the PLA's Second Artillery and Academy of Military Science for a first-ever dialogue on nuclear strategy and policy, which the United States had long sought. In April, the USS Nimitz strike group and the USS Kitty Hawk made Hong Kong port calls and the USS Larsen visited Shanghai. A defense telephone link (DTL) went live in April. Over the last 12 months, the Secretary of Defense, the Chairman of the Joint Chiefs of Staff, the Chief of Naval Operations, the Commander of Pacific Command, the Commander of the Pacific Air Force and the Commandant of the Marine Corps all visited China, and China's PLA Navy Commander traveled to the United States. A PRC Central Military Commission (CMC) Vice Chairman, the PLA Air Force Commander, a CMC Member and a PLA Military Region Commander all plan visits this year. Pointing to these exchanges, PLA Deputy Chief of the General Staff Ma Xiaotian recently told visiting Deputy Secretary Negroponte that China provides much better access and greater transparency to the United States than it does to other countries.

5.(C) These recent positive developments, however, have not dispelled PLA distrust of and resentment toward the United States. PLA leaders say that before undertaking more robust mil-mil measures the two sides must first "build trust." The PLA sees senior leader exchanges as a key part of trust-building, whereas they view mid-level exchanges as more BEIJING 00002087 002 OF 004 functionally oriented. We have specifically protested in recent weeks how Chinese patrol ships, sometimes accompanied by PLA Navy surface vessels and aircraft, continue to shadow and interfere with U.S. naval auxiliary vessels conducting military surveys in China's Exclusive Economic Zone (but outside PRC territorial waters). On several occasions, most recently on April 24, Chinese vessels used aggressive and unsafe navigational practices when operating in close proximity to U.S. vessels. China has expressed unhappiness over what it says is a United States failure to follow through on offers of military exchanges. While it is true that the United States military has conducted many more visits to China thus far this calendar year than the PRC has made to the United States, this front-loading of visits to China was done at the request of the PLA in order to minimize the number of visits to China just prior to and during the Olympics.

Military Modernization ----------------------

6.(C) The direction and opaqueness of China's ambitious military modernization program continue to concern the United States. China is reaping the benefits of over fifteen years of investment in military construction and modernization projects. Defense spending is climbing sharply with an emphasis on quality-of-life improvements in the areas of military pay, housing and uniforms, as well as the acquisition of sophisticated weapons systems. Approximately one-half to two-thirds of China's defense spending is not reflected in published defense expenditures. Weapons development, retirement salaries and foreign acquisitions, including Kilo submarines, Sovremenny-class guided missile destroyers and SU-27/SU-30 aircraft, are not covered in official figures. While the PLA does have resource constraints, strong economic performance and the absence of an external threat have afforded China favorable conditions to invest in modern equipment.

7.(C) China has coupled the acquisition of hardware with an aggressive training program and development of a new joint war-fighting doctrine. The intent is to develop a joint force that can operate effectively in a high-technology environment. While PLA joint training and operations remain rudimentary, senior leaders are vocal about fostering inter-service cooperation. Command, control, communications, computer, intelligence, surveillance and reconnaissance systems (C4ISR) continue to expand in quality and quantity, especially with the launch of dozens more ISR satellites. Once the Beidou positioning system is complete, the PLA will have better than one-meter accuracy throughout China and bordering areas. Within the next few years, the PLA Navy could be running limited operations from an ex-VARYAG carrier, although a fully indigenous carrier is not expected in the near term. The combination of new weapons systems, improved training and increased operational ranges gives the PLA confidence in its ability to respond to a wider range of threats.

8.(C) China has not provided an explanation for its January 2007 anti-satellite (ASAT) test, saying only that the test posed no threat to any nation and targeted no third country. Chinese officials have expressed support for the peaceful use and non-weaponization of outer space and have said China will never participate in an arms race in space. Some Chinese academics, however, described the ASAT test as a "political statement" about China's potential to knock out satellites comprising a U.S. missile defense system. Without such countermeasures, these experts said, the United States would have the freedom to interfere in other countries' internal affairs. We continue to call for a full explanation of the test and of China's future intentions for its ASAT program.

Taiwan: Near-Term Progress, Long-Term Uncertainty ---------------------------------------------

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9.(C) The Taiwan issue has provided the mission focus that has dominated the direction of China's military modernization, acquisition and training. In addition, it is the area most likely to bring U.S. and Chinese military forces into direct conflict. The election of less-independence-minded leadership in Taiwan has reduced that possibility considerably, at least in the short-to-medium term. With Taiwan President Ma Ying-jeou (perceived in Beijing to be less likely than his predecessor to take precipitous action) in office, most observers expect improved cross-Strait relations, including resumption of official dialogue, moving forward on cross-Strait charter flights, opening Taiwan to Mainland Chinese tourism and currency exchanges as early as July. However, Beijing's leaders seem unsure what Ma's victory may mean in the longer term, and Chinese observers worry about the limited potential for significant progress on political issues such as Taiwan's BEIJING 00002087 003 OF 004 identity and international space. The change of administration in Taiwan poses challenges for the PRC Government to manage the Taiwan issue with sophistication and subtlety. For the military, it may mean shifting from a single-minded focus on a Taiwan contingency to a broader and more strategic approach to national defense.

10.(C) Taiwan has traditionally been the hottest friction point in U.S.-China relations. U.S. opposition to the March referendum to join the UN "in the name of Taiwan" was appreciated by Beijing. Still, the Chinese oppose continued U.S. support for Taiwan, especially arms sales and refusal to rule out the possibility of coming to Taiwan's defense. Currently, Chinese leaders are most concerned about the possibility of a significant U.S. sale to Taiwan of weapons, such as F-16 C/D aircraft. We have reminded Beijing of our one China policy and our obligations under the Taiwan Relations Act and have urged China's leaders to take advantage of the historic opportunity to improve cross-Strait relations and to consider confidence-building measures such as withdrawing missiles, aircraft and artillery currently deployed opposite Taiwan.

Nonproliferation ----------------

11.(C) Nonproliferation is another key security-related issue with China. While we recognize that China's export control regulations have improved since first promulgated in the 1990s and remain a work in progress, enforcement remains opaque and is considered the weakest link in the export control system. Beijing shares little information on its investigations into cases of concern that we raise and has publicly fined only a handful of Chinese firms. The Security Dialogue is an opportunity to remind Beijing that a responsible global power has an obligation to prevent proliferation. PRC conventional arms exports are another concern, as Chinese-made or designed weapons continue to be discovered in Iraq and used against coalition forces.

12.(C) In November 2007, China formally welcomed enhanced bilateral nonproliferation cooperation that ISN PDAS McNerney proposed during the Nonproliferation Dialogue in August 2007. China agreed to meet Embassy officers quarterly to discuss China's investigations into cases raised by the United States, while we committed to strengthening bilateral export control cooperation with China and to engaging in candid discussions with sanctioned Chinese companies. We have already begun implementing this arrangement. Under the auspices of the Export Control and Related Border Security program (EXBS), we organized a government-industry outreach workshop in Beijing in January, and U.S. officials met on several occasions with executives from two Chinese entities: the China North Industries Corporation (NORINCO) and the China Great Wall Industry Corporation. Although MFA officials have told us they "have been working hard" on a list of cases we provided in November 2007 and updated in March 2008, China has yet to agree to hold the first quarterly review of Chinese investigations. You should urge your Chinese interlocutors to agree to hold this review at an early date.

Counterterrorism Policies -------------------------

13.(C) Chinese experts say terrorism has been generally declining in China since the 1990s. This year, however, Chinese authorities claim to have successfully raided "terrorist" camps in the Xinjiang Uighur Autonomous Region in January and to have foiled an incident on March 7 intended to destroy a Chinese airliner in flight. Unfortunately, the Chinese authorities have shared little information with us on these incidents. With the Olympics in mind, the Chinese maintain that China is safe and no effort will be spared to ensure the Games' security. The PLA established a security unit consisting of army, navy and air force personnel for the Games and have conducted several anti-terrorism training drills. The PLA conducted counterterrorism exercises with the Indian military in Yunnan in December 2007 and with the Russian military and other Shanghai Cooperation Organization (SCO) members in August 2007. We held our Counterterrorism Dialogue with the Chinese in early May.

Iran and China's Energy Diplomacy ---------------------------------

14.(C) Iran is among the most contentious, sensitive and important areas in which we conduct diplomacy with the PRC. We share a basic interest in preventing Iran from acquiring nuclear weapons, but differ over steps to take to realize this goal. Our engagement with the Chinese on this issue is nearly constant, at all levels of the government. Assistant Foreign Minister He Yafei (your counterpart for the Security BEIJING 00002087 004 OF 004 Dialogue) often speaks with U/S Burns; AFM He is the PRC lead in the P5-plus-1 process and the Secretary speaks regularly to Foreign Minister Yang Jiechi. The Chinese response to this engagement is carefully nuanced to reflect the complexity of their interests on the issue. They agreed to back a third round of UNSC sanctions earlier this year, but were vocal in private on the need to protect China-Iran energy cooperation in the bargain. As it has become apparent there is little room left for UNSC sanctions China can support, Beijing has suggested that a framework resembling the Six-Party Talks would be appropriate in the Iranian case as well. AFM He has engaged more directly wih the P5-plus-1 in recent months, and hosted aproductive drafting session in Shanghai for the incentive package proposal, but China also regularly reiterates the need for recognition of Iran's right to nuclear energy and for "confidence-building measures" from all sides.

15.(C) The world's number two energy consumer, China identifies secure energy supplies for its rapidly growing economy as a "core interest." China uses development aid, lucrative contracts and vigorous diplomacy to cultivate major energy exporters, including pariah states. China's participation in international peacekeeping operations, especially in Africa, and its (albeit grudging) willingness to criticize pariah regimes, such as Iran, Burma, Sudan and the DPRK, demonstrate China's movement away from a foreign policy of noninterference in other countries' internal affairs. However, China's interest in being seen as a responsible stakeholder is balanced against its interest in securing and maintaining long-term access to energy supplies, as demonstrated by its reluctance to forego major energy-related deals with Iran, Burma and Sudan.

One Possible Success Story: DPRK --------------------------------

16.(C) You will hear the Six-Party Talks mentioned by the Chinese as an example of positive Sino-U.S. security cooperation. Chinese officials rightly attribute passage of UN Security Council Resolution 1718 and progress thus far in the Six-Party Talks to close coordination between the United States and China. They also stress the need for bilateral consultation on building a future peace and security mechanism for Northeast Asia. We continue to urge Beijing to do more to convince Pyongyang to conclude rapidly Phase II of the denuclearization process and begin Phase III, to include verification of North Korea's nuclear declaration and other Six-Party Talks priorities. 
PICCUTA