Oct 092014


Reference ID Created Released Classification Origin
05MANILA1954 2005-04-29 08:31 2011-08-30 01:44 CONFIDENTIAL Embassy Manila
This record is a partial extract of the original cable. The full text of the original cable is not available.

290831Z Apr 05
C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001954



E.O. 12958: DECL: 04/29/2015

REF: A. 04 MANILA 5826

¶B. 04 MANILA 5654
¶C. 04 MANILA 4526
¶D. 03 MANILA 752
¶E. 02 MANILA 174

Classified By: (U) Pol/C Scott Bellard for reasons 1.4(b) and (d).

¶1. (C) SUMMARY. The state visit of Chinese President Hu
Jintao focused primarily on economic and trade issues, with
apparently no discussion of improving military-to-military
ties. Although Deputy Chief of the General Staff General
Xiong Guang Kai plans a trip Manila in May, observers do not
expect any rapid changes in the two countries’ defense
relationship. China plans to open a new consulate in the
northwestern Luzon town of Laoag to service the growing
number of Chinese tourists flocking to the area. END SUMMARY.

¶2. (U) Chinese President Hu Jintao’s April 26-28 state visit
to Manila included a meeting with President Gloria
Macapagal-Arroyo, a state dinner, an address to a joint
session of Congress, and a meeting with Filipino-Chinese
business leaders. In his remarks to Congress, Hu called for
greater cooperation between China and the Philippines and the
rest of ASEAN, especially in the area of trade. Before the
Chinese leader’s speech, Speaker Jose de Venecia awarded him
the Congressional Medal of Achievement, the Philippine
House’s highest decoration.


¶3. (C) PRC Embassy DCM Xiao Qian characterized the highlight
of the Hu visit as agreement on a “new definition” of the
bilateral relationship, one of “strategic cooperation” — not
“partnership,” he noted. He emphasized that this term
focused on a “long-term, comprehensive, overall
relationship,” with “higher, broader, and more” cooperation,
but did not refer specifically to a defense or military
relationship. He claimed that no defense officials had been
part of the Hu delegation and that there had been no separate
talks on this issue during the visit, to his knowledge. He
admitted that the PRC Deputy Chief of the General Staff,
General Xiong Guang Kai, is nonetheless expected to visit
Manila in May for the first round of a “defense and security
dialogue,” which Xiao Qian described as a PRC initiative
focused primarily on resolving disputes in the South China
Seas, among other issues. He pointed to an existing
agreement on new efforts at military training and exchanges,
including senior defense officials, attendance at each
other’s National Defense Academies and additional navy ship
visits. Separately, Secretary of National Defense Cruz’s
Senior Military Advisor Colonel Carlos Holganza emphasized to
pol/miloff that RP-China defense talks remained only
“exploratory in nature.”

¶4. (C) Xiao Qian added that the PRC had been pushing for
this new conceptual designation for some years, but the GRP
had been “reluctant,” perhaps because of concern over its
impact on US ties. He admitted that the GRP had pushed
instead to describe bilateral ties as a “golden age of
partnership,” but had finally accepted the PRC wording.
(Note: In President Arroyo’s public comments and in banners
throughout Manila, the GRP continued to use the term “golden
age of the relationship,” however. End note) He underscored
that the new definition of the relationship was “not aimed at
a third country,” specifically indicating the U.S. He noted
that the PRC had been satisfied that President Arroyo
reiterated the GRP’s “One China” policy, while admitting
continued PRC unhappiness at relatively senior visits to
Taiwan by GRP officials, which Hu did not raise.


¶5. (C) Xiao Qian emphasized that the most important
substantive aspect of the visit was on the economic and trade
side, with 15 new agreements (not 14 as reported in the
press) on various investment and trade deals. Most
significant were approximately $800 million to reopen an
existing nickel mine, and a new tranche of long-term, low
interest credits worth $500 million for the Northern Railway
project (in addition to an existing $400 credit that has not
yet been touched). One of the “major concessions” the PRC
had made, Xiao Qian said, was on the “Early Harvest program,”
in which the PRC will now allow Philippine agricultural
exports similarly concessional status as it already affords
Cambodia, Laos, and Vietnam. He indicated that these three
countries would likely be unhappy with the inclusion of the
more developed Philippines, but that the GRP had pushed hard
on this. (See septel for an in-depth review of RP-PRC
economic and trade ties.)


¶6. (C) The two sides exchanged notes regarding the
establishment of a Chinese Consulate in Laoag in northern
Luzon, with an eye on opening this post later this year if
possible. The PRC is now scouting for suitable housing and
office space and identifying a suitable Consul from its
Consular Department. Xiao Qian explained the rationale as
taking care of a growing number of Chinese tourists
(approximately 30,000 per year) who come to this area for
“gaming” (i.e. gambling) on one of the three direct routes
(from Guangzhou, Chengdu, and Xiamen) now offered by
Philippine Air charter flights. He dismissed the validity of
speculation that the PRC wanted this site in order to “watch
Taiwan,” emphasizing instead the consular aspect that was
currently plaguing the Chinese Embassy in Manila. The PRC
already has a Consulate General in Cebu, but currently has no
plans to open any other consular establishments. There had
been an ROC Consulate in Davao before the establishment of
relations with the PRC 30 years ago, and the PRC still
retains this property, along with a bay front site in Manila
that it too small for construction of a new Chancery. (The
Philippines has consulates in Shanghai, Guangzhou, Xiamen,
and Hong Kong.)

——————————————— ————

¶7. (C) Counterterrorism and counternarcotics came up
“briefly” during the Hu-Arroyo discussions in the context of
bilateral cooperation, with general pledges of greater
cooperation, but no new action programs apart from a
long-awaiting assignment of a PRC police official at the
Embassy in Manila, which should happen later in 2005,
according to Xiao Qian. He indicated that this official
would work to combat all “illegal trafficking,” which he
indicated might also refer to trafficking in persons as well
as narcotics. Hu also referred to the GWOT in talks with
Senate President Franklin Drilon and Speaker of the House Joe
De Venecia, calling it a “global and complex struggle”
against “extremists, separatists” and others.


¶8. (C) Chinese Foreign Minister Li Zhaoxing and Philippine
Foreign Secretary Alberto Romulo separately discussed UN
reform, with the PRC urging that UN members “not hasten”
these decisions and emphasizing the importance of consensus,
according to Xiao Qian. He claimed that the two sides did
not discuss a possible Japanese seat on the UNSC. They
touched upon the upcoming East Asia Summit without going into
detail, he added.

——————————————— —————

¶9. (C) Other observers discounted the possibility of any
quick warming of RP-China military-to-military relations.
According to De La Salle University Professor Renato De
Castro, the Department of National Defense (DND) and Armed
Forces of the Philippines (AFP) are wary of jeopardizing
defense ties with the United States, especially while the DND
and AFP are engaged in the beginning stages of the
comprehensive Philippine Defense Reform (PDR) effort — a
view offered separately by Singapore Political Counselor
Raymond Chow. De Castro noted that while China is
“impatiently” pushing for military exercises, the DND has
adopted a “go-slow” approach. De Castro, Chow, and pundit
Alex Magno, all agreed separately, however, that while the
AFP, DND, and professional staff of the National Security
Council are leery of getting too close to China, elements of
the Department of Foreign Affairs (DFA) are pushing for
better ties. Magno noted Philippine strategic thinking was
largely nonexistent, quipping, “We can’t see beyond the end
of our noses.”

¶10. (C) An unknown factor in Philippine government thinking
is the role of the “taipans,” the leading members of the
Filipino-Chinese business community. Lucio Tan, the owner of
Philippine Airlines and reportedly a leading financier of
President Arroyo’s 2004 presidential campaign, was among the
delegation greeting Hu Jintao when he arrived, and the
Chinese leader stayed in Tan’s Century Park hotel (not one of
Manila’s leading establishments) during his visit. Magno, De
Castro, and Chow all separately observed that Tan and San
Miguel Corporation chairman and one-time presidential
aspirant (and Marcos crony), Eduardo “Danding” Cojuangco,
were among those positioning themselves to benefit from
greater Philippine trade ties with China.


¶11. (C) Hu Jintao’s charm offensive in Manila appears little
different than his stops in other ASEAN capitals. We believe
the Philippine defense establishment has taken aboard US
concerns about closer RP-PRC military or intelligence ties,
and will do little to jeopardize the close relationship with
the United States. We will continue to monitor closely
Chinese overtures here, and believe the upcoming visit of the
Deputy Secretary and Foreign Secretary Romulo’s subsequent
trip to Washington offer opportunities for us to remind the
Philippines not to get too close to its northern neighbor.

Visit Embassy Manila’s Classified website:
http://www.state.sgov.gov/p/eap/manila/index. cfm



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