Cablegate: Wang Yang Meeting with Consul General

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1. (SBU) Summary. A relaxed, confident and very much on-top of his
brief Guangdong Party Secretary Wang Yang told the south China-based
consular corps May 8 that he was determined to improve the quality
of life for those living in poor areas of the province, bring about
a far-reaching industrial transformation in the Pearl River Delta,
rationalize energy use, be a caretaker of the environment, and
change the way in which government officials, businesspeople and
ordinary citizens think about the contributions they can make to
Chinese society - all within five years. Sounding like someone with
his eye on the prize - i.e., leadership at the national level in
2013 - Wang called on consul generals to work closely and
cooperatively with his office and promised to work directly with
foreign governments, a real change from the far less open attitude
of his predecessor, current Vice Premier Zhang Dejiang. Comment:
Interestingly, Wang did not once mention the role of the current
governor, Huang Huahua, but praised generously the new and youngest
Vice Governor (at age 44), Wang Qingliang, as an example of someone
who had taken to heart Hu Jintao's ideas of scientific development
and Deng Xiaoping's injunction to liberate one's thoughts (jiefang
sixiang). End Summary and Comment.

Energy and the Environment

2. (SBU) Wang told the consular corps (32 consulates in all, with
the addition of Kuwait seven weeks ago) that he had wanted to meet
shortly after his arrival in Guangzhou in December 2007, but had
only now found the time to do so. After a few brief words, noting
the steep learning curve his assignment here poses, he moved
immediately and confidently to address the concerns of the CGs. He
acknowledged the many challenges posed by energy use in a province
that imports almost all of its energy and said that the collapse of
the provincial power grid during the winter storms this past
February had left the government dealing with a potential gap of
over 10,000 MW of power. But it wasn't just power problems that
could potentially cause problems for economic development - the
subprime mortgage crisis in the U.S. would have an impact on foreign
investment and RMB appreciation would make exports more expensive in
a world that might not be able to afford increases in the prices of
Chinese consumer goods.

3. (SBU) Returning to the theme of increasing power output, Wang
said that the National Development and Reform Commission in Beijing
had approved adding 10,000 MW of installed capacity to Guangdong,
which would include major new nuclear power plants. In addition,
oil-fired generators were being installed; he was mindful, he said
of the need to ensure that energy was more efficiently produced and
consumption reduced, where possible. He closed out a very brief
discussion of the environment by noting his commitment to improving
air and water quality.

Industrial Transformation in the Delta

4. (SBU) Wang acknowledged that in the first quarter of 2008, 25,000
enterprises had closed their doors in the PRD, an increase of 52.5
percent over the first quarter of 2007; however, at the same time,
27,000 new enterprises had registered to operate there (it was
unclear whether they had begun operations yet; it was also unclear
whether new approvals were value added, higher technology
enterprises). These closings and start-ups, he said, were part of
an industrial transformation that was sweeping the Delta as that
area sought to move up the value-added chain. Wang told us that he
was committed to having in place policies that would support this
transformation and he also viewed job retraining as an important
aspect of this process. Those companies which were not able to
upgrade and to continue operating in the Delta area would be
assisted in relocating to other areas of Guangdong; moreover, the
province would also help find new locations in less developed areas
of Hunan, Jiangsi, Guangxi, and Chongqing, leaders of which have
visited Guangdong to discuss relocation of enterprises. Wang's
generosity even extended to suggesting that Guangdong would be
willing to help low-tech businesses move to other developing
countries. He hoped this transformation could take place within
five years; he predicted the Delta area would have a modern
industrial base underpinned by innovation within ten years.
Reverting for the first time to terminology a bit more ideologically
charged, Wang said this transformation would help China "scale new

Liberating One's Thoughts

5. (SBU) Without Deng Xiaoping, Wang averred, there would be no
reforms and no new economy. Deng had liberated China from the
shackles of economic orthodoxy; he had also been the first to see
that China had more or less addressed the material issues of good,
clothing, housing, health and education; however, they still needed

GUANGZHOU 00000266 002 OF 002

a philosophy where people could not only better themselves, and in
enriching themselves, enrich their country. Credit was also due to
Hu Jintao for his views on "scientific development" and liberating
one's thoughts.

6. (SBU) Wang said that what had surprised him most in coming to
Guangdong was the gap between rich and poor. How could such a rich
province have so many poor people and how could the quality of life
for these people be improved? The key to improvement, he suggested,
was education, which would give them the ability to earn a good
living. He intended to emphasize vocational training, in
particular, and would make it free, a move away from trends
elsewhere to charge for education. He also intended to allocate
more resources to improving public services. Those from poor areas
who had professional qualifications and jobs in the more developed
areas of Guangdong would be allowed to register themselves and their
family members and live there; there would be no charges or
penalties for changing their hukou (residency permits). Those who
remained behind in the countryside would be provided better housing,
at lower costs, and the provincial government would work to improve
agriculture output by increasing inputs and farming know-how. He
claimed that this could all be accomplished within five years.

Registering Foreign Legal Entities

7. (SBU) The Korean Consul General had the final word, more or less,
asking for assistance in registering foreign legal entities in
China. He noted that there were 40.000 Koreans in Guangdong
province and they were unable to register their local chambers of
commerce as legal persons and were having difficulty in getting
their schools recognized as not-for-profit entities. Wang promised
to look into the situation.

In Conclusion: Reaching Out

8. (SBU) In closing the Party Secretary, sounding more like a
governor and an administrator than a party official, reiterated his
interest in reaching out to the foreign community and promised to be
available in case anyone wished to bring problems to his attention.
Of course, the problem is always that to do that, one has to get
through the local Foreign Affairs Office and experience has shown
that's not exactly the easiest thing to do. Still Wang in six
months has shown more interest in the international side of his
portfolio than his predecessor showed in the past five years.


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