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Cablegate: Ningbo's Economy - Out with the Old and in with the New

VZCZCXRO0193
RR RUEHCN RUEHVC
DE RUEHGH #0326/01 2270707
ZNR UUUUU ZZH
R 140707Z AUG 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7065
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7638

UNCLAS SECTION 01 OF 02 SHANGHAI 000326

SENSITIVE
SIPDIS

TREASURY FOR OASIA/INA/CUSHMAN AND WINSHIP
DEPT FOR EAP/CM
EMBASSY BEIJING PASS WUHAN
USDOC FOR ITA/MAC/OCEA

E.O. 12958: N/A
TAGS: ECON PGOV ELAB ETRD KIPR CH
SUBJECT: NINGBO'S ECONOMY - OUT WITH THE OLD AND IN WITH THE NEW

REF: SHANGHAI 318

SHANGHAI 00000326 001.2 OF 002


1. (SBU) Summary. During an August 4 farewell visit to Ningbo
in Zhejiang Province, the Consul General (CG) discussed Ningbo's
economy and development plans with Mayor Mao Guanglie and
Ningbo Foreign Affairs Office Director Kong Weiwei. The two
officials said Ningbo aims to "upgrade" its economy by moving
out the old manufacturing industry and ushering in a service and
R&D-based economy. International educational institutions will
play a key role in this effort. Ningbo's biggest concern now is
its 3.3 million migrant workers, many displaced by the economic
downturn in the United States and other export markets. Kong
said Central Government approval for resumed provincial-level
cooperation with the Consulate on IPR has not yet been received,
but may materialize after the Olympics. In a separate meeting,
Ningbo Entry-Exit Inspection and Quarantine Bureau officials
discussed trends in U.S. agriculture imports, U.S. food and
product safety concerns, and opportunities for cooperation
(reftel). End Summary.

Understanding is the Basis of Cooperation
-----------------------------------------

2. (SBU) Mayor Mao emphasized that relations and cooperation
between Ningbo and the Consulate have been very good during the
CG's tenure and noted the need to continue working together. As
part of the greater Yangtze River Delta (YRD) development along
with Hangzhou, Nanjing and Shanghai, Ningbo actively seeks to
build relationships with and attract businesses from other
cities within China. In foreign relations, the city hopes to
establish a special relationship with Atlanta, but Atlanta has
not yet made a final decision. (Note: Wuhan is also courting
Atlanta. Atlanta has not yet decided which city it will choose
and whether it will be a "sister city" relationship or a
"friendship city" relationship. Ningbo has suggested that
Atlanta select both and simply describe them differently.
Ningbo would be satisfied as the "friendship" city. End Note.)


A Vision for Future Development
-------------------------------

3. (SBU) According to Mao, Ningbo is developing rapidly (11.4
percent GDP growth in 2007) and integrating more closely with
the rest of the YRD. Modern transportation connections support
the integration of the region, including the new Hangzhou Bay
Bridge (opened May 2008), which has reduced the travel time from
Shanghai to Ningbo by two hours. The highway and rail
infrastructure plays a major role in connecting the region.
However, Mao said that, to date, the Hangzhou Bay Bridge has not
had a measurable effect on the Port of Ningbo's throughput. Mao
emphasized that there is much misunderstanding in the West about
China's efforts on environmental protection. Many foreigners
come to Beijing "expecting dust storms," not realizing China has
made great strides in improving environmental conditions.
Ningbo is doing its part and paying attention to the environment
in its quest to develop.

"Education Is Key to Service Sector Development"
--------------------------------------------- ---

4. (SBU) Mao said that as the city strives to upgrade its
economy to compete in the service sector, it wants to upgrade
its education system. Ningbo people are highly innovative, and
the Ningbo Government wants to build on this foundation. In
order to become more competitive, Ningbo wants to establish a
world-class education system. The city plans to introduce
international education institutions and give them
responsibility for a part of the curriculum, up to 30 percent,
in certain occupational training programs such as accounting and
law. Ningbo has already started this type of collaboration,
with an educational institution from Nottingham, England. Mao
welcomes U.S. educational institutions' participation in the
"modernization" of Ningbo's universities and believes this
collaboration would be profitable for both sides. These
international institutions will lay the groundwork for a service
industry that meets international standards.

5. (SBU) In addition, Mao noted the city has great potential
for development, but needs land. The city is using financial
incentives to encourage old factories to move away from the city
to inland areas. Mao said that this effort will not only
provide land for service and R&D industries, but also help
alleviate pollution, energy shortages, and migrant labor issues.


SHANGHAI 00000326 002.2 OF 002


Displaced Workers Causing Instability
-------------------------------------

6. (SBU) Mao noted that the issue of unemployed migrant
laborers is the most pressing question on his plate. There is
now more unrest due to displaced labor than either environmental
degradation or land dispute issues. In total, the city has more
than 3.3 million migrant workers, mostly from neighboring
provinces. Since 20 percent of the economy is dependent on
foreign trade, many migrant workers are losing jobs as the
United States' and other countries' economies begin to slow
down. Migrant workers do not have Ningbo residency and are not
entitled to participate in municipal social programs. Ningbo
industries hit the hardest include plastics, petrochemicals,
toys and textiles. The new Labor Contract Law has made
companies more hesitant to hire laborers. Adding to the
difficulty, inflation (approximately 6.5 percent according to
Mao) is hitting these displaced workers the hardest.

IPR Cooperation Still Not Approved
----------------------------------

7. (SBU) In a separate discussion with FAO Director Kong, CG
inquired whether the resumption of intellectual property rights
(IPR) cooperation in the JCCT meant that the provinces would
also resume cooperation on IPR. (Note: Since the filing of
the IPR-related WTO cases in 200X, Zhejiang, including Ningbo,
has consistently rejected every request from the Consulate to
meet on IPR issues.) Kong replied that approval from the
Central Government has not yet arrived, but thought that
approval might be forthcoming after the Olympics. He added his
regret about the disruption in exchanges on the issue and hoped
the situation would change in the near future.
JARRETT

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