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Cablegate: East China Dispatches, July 5, 2007

VZCZCXRO3367
RR RUEHCN RUEHGH
DE RUEHGH #0413/01 1860742
ZNR UUUUU ZZH
R 050742Z JUL 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5993
INFO RUEHBJ/AMEMBASSY BEIJING 1227
RUEHGZ/AMCONSUL GUANGZHOU 0733
RUEHCN/AMCONSUL CHENGDU 0753
RUEHSH/AMCONSUL SHENYANG 0755
RUEHHK/AMCONSUL HONG KONG 0871
RUEHIN/AIT TAIPEI 0613
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6426

UNCLAS SECTION 01 OF 03 SHANGHAI 000413

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP/CM AND INR - CLARKE
NSC FOR WILDER AND TONG

E.O. 12958: N/A
TAGS: PGOV PINR CVIS SOCI CH ECON
SUBJECT: EAST CHINA DISPATCHES, JULY 5, 2007

REF: SHANGHAI 283

(U) Sensitive but Unclassified - please protect accordingly.
Not for dissemination outside USG channels.

1. (SBU) Summary: In this Dispatch, we learn that Shanghai
Party Secretary Xi enjoys the opera, SOE executives have
unlimited expense accounts for domestic trips, Chinese
millionaires love conventions, Ferrari training for beginners is
available at a price, visa applicants are getting younger and
Shanghai has the most expensive taxis. This is the second in a
series of periodic short-subject cables designed to offer more
anecdotal reflections on life in East China. End Summary.

Party Secretary Xi Jinping Enjoys Night at the Opera
--------------------------------------------- -------

2. (SBU) The Consul General unexpectedly encountered Shanghai's
new Party Secretary at a weekend performance of a local style of
Peking Opera. Xi and his wife, a professional singer of western
opera, sat in the audience without any entourage -- except for
the head of the opera troupe -- and were not recognized by other
patrons until the CG struck up a conversation during the
intermission. The CG had become aware of Xi's presence because
of a running conversation Xi was having with the opera troupe
director. The CG, who was sitting virtually in front of Xi,
turned around to see who was responsible for the racket only to
discover that it was Shanghai's top leader. After the
performance, Xi slipped away without any fanfare. The opera was
devoted to the love story of a Tang dynasty (618 to 907 C.E.)
emperor and his favorite concubine Yang Guifei, one of China's
greatest beauties.

Expat with SOE Surprised at Per Diem and Benefit Arrangements
--------------------------------------------- ----------------
3. (SBU) A western businessman working for one of China's most
prominent auto makers expressed amusement at his firm's odd per
diem and benefit system for top executives. For international
travel, per diem was capped at $90 a day, regardless of the
location. The expat said this was true for all state-owned
enterprises (SOE). When he was in China, however, he had an
unlimited expense account -- at all times, not just when he
traveled. The company would reimburse him for anything he
bought in China. Since most top executives were out of pocket
on foreign trips, he said they typically looked for ways to make
up the difference by padding expenses when in China. Although
this particular executive did not seek reimbursement for all his
in-country expenses, he said his immediate staff was always
urging him to do so.

Millionaire Fair
----------------

4. (U) On June 1-3, Shanghai once again played host to the
Millionaire Fair. The fair was begun six years ago by
Amsterdam-based Gijrath Media Groep BV (GMG) publishing company
with the purpose of bringing together readers of its
"Millionaire" magazine and advertisers. Previous fairs were
held in the Netherlands, Russia, France, and Belgium. This was
the second time the fair was held at the Shanghai Exhibition
Center which is also used for the Shanghai Municipal Party
Congress and other governmental meetings. This year's fair
attracted 14,000 guests, mostly from Shanghai, Zhejiang
Province, Hong Kong, and Taiwan. To keep the riff-raff from
attending, tickets cost approximately RMB 800 (USD 105) for
daytime sessions and RMB 1800 (USD 237) for the evening sessions
when guests were instructed to wear formal attire.

5. (U) After walking the red carpet, guests entered a large
convention hall filled with booths showcasing luxury goods. What
were the Chinese millionaires interested in? There were booths
advertising the usual luxury goods such as jewelry, whiskey, and
art. There were also booths that sold poodles (one sold for RMB
120,000 or USD 15,789), investment deals in Australia and Great
Britain, and modern furniture. This was just the latest fair
that has targeted China's new millionaires. According to the
fair's website, the Chinese are now the world's third-largest
consumer of high-end fashions, accessories and other luxury
goods and in ten years China is expected to overtake Japan as
the world's top market for luxury goods. Shanghai held a boat
show in April and will also host a luxury property show and a
luxury travel fair in the upcoming months.

Anyone Need a Racetrack?

SHANGHAI 00000413 002 OF 003


------------------------

6. (U) During a July 2 discussion, one of our high-flying
contacts reported that he had just returned from two days of
private racing instruction at the Formula One Racetrack in
Anting. The track had been rented June 28-29 by Ferrari to
provide training for China's "beginner" level Ferrari owners to
teach them how to get the most out of their vehicles. Our
contact - himself a novice Ferrari owner - said that there were
a total of 120 Ferraris in China, 30 percent of which were in
Shanghai. Eighteen drivers from Shanghai, Zhejiang, Beijing and
Taiwan attended the exclusive event, each paying an undisclosed
- and presumably outrageous - fee for the privilege of having
private lessons with world class racing instructors on China's
best race track. Unfortunately, advanced driving training was
only available in Italy. And who says consumer spending isn't
alive and well in China?

Visa Applicants Getting Younger, Visa Officers Feeling Older
--------------------------------------------- ---------------

7. (U) No, the interviewing officers on the visa line aren't
just imagining it - the students in Shanghai really are getting
younger. Consulate's Visa section did a quick run of the
numbers to determine if the anecdotal evidence was, in fact,
accurate. The results: the number of students aged 17 and under
applying for F1 student visas in Shanghai during the peak summer
season of April 1 to June 30 has more than tripled over the past
two years from 75 in 2005 to 262 this year. This year's gain
was the biggest yet - a whopping 100 percent increase over last
year's total of 130 applicants. Not only had the numbers of
young students increased, their visa issuance rates had also
increased to nearly 70 percent this year, a 10 percent gain over
last year and a 20 percent rise over 2005.

8. (U) What amazed the interviewers most about these students
was the willingness and ability of their parents to finance two
or three years of private high school tuition in the United
States--often followed by four more years in a U.S. college--at
roughly USD 30,000 to 40,000 per year. In addition to the
record number of full-time high school and middle school
applicants, the number of students applying for short-term
visitor visas had similarly grown. During this summer's peak
student season, Shanghai interviewed 2779 B2 visitor visa
applicants aged 17 and younger, a 72 percent increase over 2005
and massive 160 percent increase over 2004. This explosive
growth continues to be one of the main drivers of the relentless
increase in overall visa applications. The dramatic increase in
the number of young Chinese heading to the United States for
short-term visits has already yielded one very tangible result:
a noticeable spike in the number of full-time student applicants
who have already spent time in the United States.

The Taxi Index
--------------

9. (U) Traveling around the country--and especially around the
consular district--over the last few months got us thinking
about the significant regional differences in prices of basic
commodities. Finding a common standard measure, however, proved
difficult until we hit upon the basic taxi fare (while riding in
a basic taxi). Since it combines many of the key factors
defining the new Chinese economy--energy, high-value added
manufacturing and a rapidly expanding service sector--we decided
to create our own version of the Economist's legendary Big Mac
index by charting the costs of the initial three kilometer taxi
fare in several cities around the country.

The results:
Shanghai: 11 RMB (USD 1.45)
Hangzhou, Zhejiang Province: 10 RMB (USD 1.32)
Suzhou, Jiangsu Province: 10 RMB (USD 1.32)
Beijing: 10 RMB (USD 1.32)
Nanjing, Jiangsu Province: 8 RMB (USD 1.05)
Zhenjiang, Jiangsu Province: 7 RMB (USD .92)
Guangzhou: 7 RMB (USD .92)
Hefei, Anhui Province: 6 RMB (USD .79)
Xian: 6 RMB (USD .79)
Wuhu, Anhui Province: 5 RMB (USD .66)
Chengdu: 5 RMB (USD .66)

10. (U) Shanghai's top spot was no major surprise, but the
second place rankings for Hangzhou and Suzhou indicate the

SHANGHAI 00000413 003 OF 003


continuing economic preeminence of East China, even when
compared to other major cities across the country. We are not
sure how accurately our index reflects the true cost of living
in Shanghai, of course, but we will be sure to include the
results in Post's next Cost of Living Allowance (COLA) survey.

11. (U) Regards from Shanghai.
JARRETT

© Scoop Media

 
 
 
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