¶1. (C) Summary. XXXXXXXXXXXX, a well-known U.S.-China specialist at XXXXXXXXXXXX, claimed the sudden removal of former Foreign Minister Li Zhaoxing was due to President Hu´s increasing dissatisfaction with the MFA. XXXXXXXXXXXX linked this to Hu´s lingering anger about the handling of his visit to the United States, three defections of MFA officials this past year and a general deterioration of discipline within the MFA. He believed that new Foreign Minister Yang Jiechi would follow the central leadership´s direction. End Summary.

¶2. (C) During a May 21 lunch with Consul General, XXXXXXXXXXXX said former Foreign Minister Li Zhaoxing was hastily replaced because President Hu Jintao had become dissatisfied with Li´s management of the Ministry of Foreign Affairs (MFA). Hu blamed Li for his less than perfect visit to the United States in April 2006. In addition to the presence of a Falun Gong protestor during his remarks on the White House lawn, Hu was upset that the visit was not treated as a State visit. There were no flags between the White House and Blair house and no state dinner at the White House. XXXXXXXXXXXX added that he had heard that the Chinese Embassy in Washington had reviewed the script for the emcee at the White House ceremony and did not catch the "Republic of China" reference.

¶3. (C) According to XXXXXXXXXXXX, there were other signs that the MFA was being badly mismanaged. In the last year, three diplomats had defected and at least 60 MFA officials were subjected to disciplinary investigations. MFA´s image had suffered greatly under Li´s mismanagement and MFA had become less influential. XXXXXXXXXXXX said Li´s removal was also highly unusual in that it did not come in a tidy package, with for example, simultaneous announcement of a new position for Li. During a May 14 discussion, XXXXXXXXXXXX, said that former Foreign Minister Li Zhaoxing had been surprised about his sudden "retirement" since he had expected to be able to serve out his term, stepping down at the spring 2008 People´s Congress. XXXXXXXXXXXX had also heard that Hu Jintao disliked Li and was supporting Yang instead.

¶4. (C) XXXXXXXXXXXX opined that there would be no major changes in China´s policy towards the United States. While Li´s replacement Yang Jiechi was the former Ambassador to the United States and considered to be very knowledgeable about the United States, and well-connected there, Yang was expected to very much follow the central leadership´s direction.