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Cablegate: Up, Up, and Away: Shanghai's Fy-07 Visa Numbers Go Through

VZCZCXRO0611
PP RUEHCN RUEHGH
DE RUEHGH #0030/01 0250034
ZNR UUUUU ZZH
P 250034Z JAN 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC PRIORITY 6627
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1655
INFO RUEHCN/AMCONSUL CHENGDU PRIORITY 1068
RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 1039
RUEHSH/AMCONSUL SHENYANG PRIORITY 1069
RUEHHK/AMCONSUL HONG KONG PRIORITY 1196
RUEHIN/AIT TAIPEI PRIORITY 0879
RUEHGH/AMCONSUL SHANGHAI 7158

UNCLAS SECTION 01 OF 05 SHANGHAI 000030

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR CA/VO AND CA/EX
ALSO FOR EAP/CM
BEIJING FOR DCM, CG, NIV

E.O. 12958: N/A
TAGS: CVIS CMGT CH
SUBJECT: UP, UP, AND AWAY: SHANGHAI'S FY-07 VISA NUMBERS GO THROUGH
THE ROOF

SUMMARY
-------

1. (U) Consular officers in Shanghai adjudicated 16 percent more
NIV applications in FY-07 than in FY-06. This follows a 19
percent increase in FY-06 over the FY-05 NIV workload, which in
turn was up 20 percent over FY-04. This cable not only reports
the quantitative increases but also provides a qualitative
overview of Shanghai's NIV applicant pool. (Cable offering a
more in-depth qualitative analysis will follow septel.) Numbers
from the first two months of FY-08 indicate that these trends
will continue, giving Shanghai its fifth consecutive year of
double-digit growth in NIV demand. (END SUMMARY)

SHANGHAI NIV WORKLOAD TRENDS
----------------------------

2. (SBU) AmConGen Shanghai has experienced a steady increase in
its NIV workload since the post-9/11 worldwide downturn in NIV
demand in FY-02 and the impact of SARS across the Asia-Pacific
region in FY-03. Starting in FY-04 and continuing to the
present day, Shanghai's year-on-year growth rate in NIV workload
has been at least 10 percent. FY-07 alone saw a 16 percent
increase in overall visa demand over FY-06. Recent yearly visa
applicant figures for Shanghai are shown in the table below:

Year Number of Applicants Change in Volume
---- -------------------- ----------------
FY-01 101,216

FY-02 95,965 - 5 percent
FY-03 80,079 - 17 percent
FY-04 87,921 10 percent
FY-05 105,658 20 percent
FY-06 125,907 19 percent
FY-07 146,626 16 percent

Figures available for the first months of FY-08 indicate that
this double-digit increase in visa demand will continue in
Shanghai, with the October 2007 NIV workload up 21 percent over
October 2006, and November 2007 NIV adjudications up 19 percent
over November 2006.

Month Number of Applicants Change in Volume
----- -------------------- ----------------
Oct.06 9,316
Oct.07 11,268 21 percent
Nov.06 10,222
Nov.07 12,167 19 percent

3. (SBU) The following statistics are selected from Shanghai's
FY-07 applicant pool. Standout categories among Shanghai's
FY-07 NIV growth are J-1 applicants (27 percent) and
petition-based applicants including H-1B and L-1 visas (36
percent). (NOTE: The numbers in this cable were generated
using the NIV consular application and at-post resources.
Shanghai does not process immigrant visas -- all Chinese IV
cases are processed at AmConGen Guangzhou. END NOTE)

B-1/B-2 Travelers
-----------------

4. (SBU) General business and tourism travel (B-1/B-2) continues
to be Shanghai's primary visa category, representing 77 percent
of the total applicant pool in FY-07. As such, this category is
the primary driver of FY-07 visa demand. The demand for B-1/B-2
visas in FY-07 increased by 16 percent over FY-06 numbers,
mirroring the 16 percent increase in overall NIV demand over the
same period.

Year Number of B-1/B-2 Applicants Change in Volume
---- ---------------------------- ----------------
FY-06 97,744
FY-07 113,446 16 percent


Student Applicants
------------------

5. (SBU) Recently, the Institute of International Education
(IIE) released its "Open Doors" report on international students
in the United States. The report shows that Chinese enrollment

SHANGHAI 00000030 002 OF 005


in U.S. tertiary institutions increased 8 percent over the past
year, compared with an increase of 4 percent in general
international student enrollment. IIE reported that a record
67,723 Chinese students are studying in the U.S., which
represents 12 percent of the total 582,984 international student
population (just 3,339 off the FY-03 all-time high of 586,323.)
Of the total 67,723 Chinese students in the U.S., 15,027 (22
percent) came through Shanghai's visa section in FY-07.
Shanghai saw a 19 percent increase in student visa applicants,
compared with the 8 percent increase in overall Chinese
enrollment. This is a reflection of the high standard of living
in East China, with an increasing number of students able to
qualify for visas and to afford study in the United States.

Year Number of F-1 Applicants Change in Volume
---- ----------------------- ----------------
FY-06 12,642
FY-07 15,027 19 percent

Generally speaking, Shanghai's student applicants fall into two
distinct categories. One group is comprised of excellent
students with outstanding standardized test (frequently perfect
quantitative scores) and generous scholarships to well-known
schools. The other group contains students without English
skills who have been admitted without test scores to relatively
small, lesser known (at least to Chinese applicants) schools.
There is a large void between these two groups -- an absence of
applicants headed to mid-sized regional and state schools.


Exchange and Visitor Applicants
-------------------------------

6. (SBU) In FY-07, exchange and visiting scholar applicants
seeking J-1 visas increased by 27 percent, a much greater
percentage than the increase in the general visa pool.

Year Number of J-1 Applicants Change in Volume
---- ------------------------ ----------------
FY-06 4,222
FY-07 5,373 27 percent


FY-02 Comparisons
-----------------

7. (SBU) FY-02 is generally considered a watershed year for
student and academic exchange visa applications. Due to
post-9/11 safety fears and post-9/11 tightening of visa
security, starting in FY-02 international students began to go
someplace other than the U.S. to study -- Canada, Australia,
U.K., etc. For Shanghai in FY-07, F and J applicant volume has
not only returned to, but far surpassed pre-9/11, FY-01 levels.


Year Number of F-1 Applicants Change in Volume
---- ------------------------ ----------------
FY-01 9,581
FY-07 15,027 57 percent

Year Number of J-1 Applicants Change in Volume
---- ------------------------ ----------------
FY-01 2,742
FY-07 5,373 96 percent


Third Country Nationals
-----------------------

8. (SBU) As China's economic center, Shanghai has an
ever-increasing expatriate community. This fact is reflected by
the increase in Shanghai's third country national (TNC) visa
applicants, which grew 19 percent in FY-07.

Year Number of TNC Applicants Change in Volume
---- ------------------------ ----------------
FY-06 1,928
FY-07 2,300 19 percent


Petition Travelers
------------------

SHANGHAI 00000030 003 OF 005

9. (SBU) Petition-based applications (H, L, M, O, and P
categories) grew more than any other visa category in FY-07. In
particular, Shanghai saw a significant increase in the number of
highly skilled Chinese workers (H-1B) and Chinese managers
(L-1), with a total increase in petition-based travelers of 36
percent.

Year Petition-Based Applicants Change in Volume
---- ------------------------- ----------------
FY-06 6,359
FY-07 8,652 36 percent


MANTIS Program
--------------

10. (SBU) Despite an increase in overall applicant volume
(especially J-1 visiting scholars), Shanghai's special advisory
opinion (SAO) MANTIS volume decreased by 5 percent during FY-07.
In response to this decrease, Shanghai consular management
queried SAO coordinators in Washington who replied that
Shanghai's current SAO volume is appropriate. This implies that
in the past Shanghai ConOffs had erred on the side of caution in
their decisions to submit SAO requests and require MANTIS
clearances.

Year Number of Applicants Change in Volume
---- -------------------- ----------------
FY-06 6,882
FY-07 6,639 - 5 percent


FAO Applicants
--------------

11. (SBU) Chinese applicants carry one of four kinds of passport:
diplomatic, service, public affairs, or private. Diplomatic,
service, and public affairs passports are collectively referred
to as "official" passports and are issued to members of
governmental organs or employees of state-owned enterprises on
official travel. Applications from these passport holders are
submitted through the provincial Foreign Affairs Offices (FAO),
which ensure that the applicants generally have verified
employment and are traveling for official purposes. Whereas in
Beijing FAO passports constitute a quarter of the workload,
Shanghai's FAO applicants represent only 15 percent of the visa
pool. Although the number of "official" applicants increased
only slightly (2 percent) in FY-07, FAO applicants continue to
be "high maintenance" applicants -- frequently requesting
expedited services and routinely expecting preferential
treatment.

Year Number of FAO Applicants Change in Volume
---- ------------------------ ----------------
FY-06 21,399
FY-07 21,724 2 percent


AMCHAM Program
--------------

12. (SBU) Shanghai is home to Asia's largest American Chamber of
Commerce (AmCham). U.S. invested companies in Shanghai account
for approximately one-eighth of the total of 40,000 foreign
invested companies in Shanghai, amounting to USD 11.2 billion
worth of investment as of August 2007. Shanghai's AmCham boasts
more than 1,500 member companies, 3,600 members, and about 80
new members a month. To facilitate business with the U.S.,
Shanghai offers a special visa appointment process that
expedites visa interviews for member companies of AmCham's
Corporate Visa Program (CVP). Participation in Shanghai
AmCham's CVP program is on the rise, growing 23 percent in
FY-07.

Year Number of CVP Applicants Change in Volume
---- ------------------------ ----------------
FY-06 9,450
FY-07 11,605 23 percent

Despite a 23 percent increase in visa volume, NIV refusals for
CVP applicants dropped dramatically in FY-07. This would seem

SHANGHAI 00000030 004 OF 005


to indicate that Shanghai is becoming more accommodating to
business travelers to the United States

Year Number of AmCham Refusals Change in Volume
---- ------------------------- ----------------
FY-06 232
FY-07 141 - 40 percent


Visa refusals
-------------

13. (SBU) Visa officers are not just bullish about AmCham
applicants. There is a perception among Shanghai visa officers
that the quality of applicants in the East China region is
generally improving. The FY-07 drop in refusal rates bears this
out. As can be seen in the table below, both the raw refusal
rate and the adjusted refusal rate (taking into account refusals
subsequently overcome or waived) fell significantly from FY-06
figures:

Year Refusals Raw Refusal Rate Adjusted Refusal Rate
---- -------- ---------------- ---------------------
FY-06 33,506 36 percent 21 percent
FY-07 29,826 26 percent 14 percent

The decrease in refusals appears to have accelerated recently,
as demonstrated by a comparison between October 2006 and October
2007, with a year-on-year decrease from 30 percent to 16
percent.

Month Number of Refusals Raw Refusal Rate
----- ------------------ ----------------
Oct. 06 2,168 30 percent
Oct. 07 1,532 16 percent

Many factors likely contribute to this decrease in refusal
rates, but it would seem that the simplest explanation is that
Shanghai's applicants are significantly better than many other
regions in China, and are getting better all the time. TDY
exchanges bear this out. In FY-07, Shanghai participated in
several NIV officer exchanges with Guangzhou, Hong Kong, Taipei,
Beijing, Shenyang, and other posts. Line officers say that
TDY-ing out of Shanghai, and receiving TDY-ers from other areas
in the region allows them to more accurately evaluate Shanghai's
visa applicant pool. When push comes to shove, applicants from
Shanghai are more likely to return (and overcome 214(b)) because
they see greater opportunities in Shanghai than they might have
in the United States.


Fraud Workload
--------------

14. (SBU) Aware of a decreasing refusal rate, Shanghai has been
extra-cautious to ferret out fraud and discourage
out-of-district applicants who "visa shop" at higher issuance
posts. Although the number of refusals went down, the number of
fraud investigations in Shanghai increased by 75 percent.

Year Fraud Investigations Percent Increase
---- -------------------- ----------------
FY-06 425
FY-07 745 75 percent

Despite a decrease in refusals, Shanghai's consular district
remains very economically diverse, with many impoverished
regions. Eastern China's economic wave has left many people
behind. There are several well-known high fraud areas, and
document fraud is rampant, especially in and around the
production "boomtown" of Wenzhou. As with most of China,
family-based fraud is also an ongoing concern.

Visa Reciprocity
----------------

15. (SBU) Shanghai routinely issues 12-month, multiple-entry
visas to Chinese nationals applying in the B-1/B-2 category. By
comparison, China normally issues Americans tourists a 1-month,
single-entry visa. China-wide numbers for calendar year 2006
showed that 18 percent of B-1/B-2 applicants had been issued a
visa in the previous 24 months, and that 28 percent had been

SHANGHAI 00000030 005 OF 005


issued a visa in the previous 60 months. Based on these
numbers, a significant increase in visa validity reciprocity
would decrease B-1/B-2 demand (the primary visa category) by
almost 40 percent. The current limited visa reciprocity not
only ensures that Shanghai's visa demand will continue to
outstrip its resources, but it also means Shanghai's applicant
pool will see double-digit growth in FY-08, FY-09, and beyond.
JARRETT

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