Cablegate: British Discuss South China: Economic/Political

DE RUEHGZ #0883/01 1860758
R 050758Z JUL 06





E.O. 12958: N/A
SUBJECT: British Discuss South China: Economic/Political
but Security Concerns as well

1. (SBU) SUMMARY: At a recent meeting with British
Consulate colleagues, the topics for discussion included
growth in the high-end real estate market, prospects for
continued economic growth in South China, successful
strategies for requesting meetings with local officials on
sensitive topics, and the growing population of foreign
Muslims. We also heard how our British counterparts have
approached the issues of building rule of law and fighting
corruption as long-term goals best achieved through small-
scale projects, such as scholarships that expose promising
young Chinese to life in Britain. On visa affairs, we
learned that despite high issuance rates there is still a
perception that getting a British visa is difficult. As
part of ongoing efforts to curb fraud, the British will
begin fingerprinting applicants next year, are promoting
legal routes to obtaining a visa, and are cooperating with
local officials on forgery training. An ongoing human
rights dialogue with the Chinese government in Beijing will
include a visit to Guangzhou this year so that UK
participants can meet with local groups involved in the
themes of this year's meeting -- legal representation in the
courts and workers rights. END SUMMARY.

2. (SBU) The Consul General and Econoffs recently met with
British Consul General Chris Wood and Deputy Consul General
David Lusher for a periodic meeting to discuss South China
political and economic issues. This was the final meeting
between Consul General Dong and our British Colleagues, who
expressed a keen interest in continuing these meetings once
incoming Consul General Goldberg arrives at Post.

Adding Hunan Province

3. (SBU) CG Wood began by noting that Hunan Province had
been added to his consular district, and as a result, he had
recently paid a familiarization visit to that province. He
noted that he was surprised by the large amount of South
Korean investment he saw there. He explained that Hunan
Province will be the United Kingdom's third largest market
after Guangdong and Fujian, and he also noted that the
British Council sees a huge potential market in Hunan for
students who want to study in the UK.

Who is Buying all the Apartments?

4. (SBU) Several times throughout our meeting CG Wood
expressed his curiosity about the local real estate market,
asking rhetorically, who is buying all the luxury apartments
that are being built in the region? He commented that given
China's weak banking system and the lack of either risk
assessment or credit systems he was very surprised that
people were able to buy high-end apartments at a rate that
would justify the growth in this market.

What Will Stop the Growth?

5. (SBU) The discussion of the real estate market led Wood
to ask rhetorically what it would take to stop the economic
growth that South China has been experiencing. To this end,
we discussed the local water shortage, noting that while the
region also lacks power, power can be created, unlike water.
Econoff commented that further complicating the water
shortage issue is the fact that in addition to the shortage,
much of the limited water that is available is heavily

It's All in the Marketing: "Energy Efficiency" is In
--------------------------------------------- -------

6. (SBU) In discussing the local water and power shortages,
Wood emphasized that China energy issues and climate change
are at the top of his government's agenda. As such, the
British have recently named a new climate change envoy --
who incidentally is considered a "China hand" -- and the
topic of "climate security" is being addressed by his
consulate at the local level. He explained to us that in

GUANGZHOU 00020883 002 OF 003

his experience, local officials -- such as interlocutors
from the Development and Reform Commission -- will not meet
with officers from his consulate to discuss "climate
change," but they will meet if the meeting is framed as an
opportunity to discuss "energy efficiency." His said that
despite their interest in this topic, many officials appear
to be focused solely on energy efficiency at the industrial
level, to the exclusion of the consumer level.

Changing Society One Person at a Time

7. (SBU) The group next discussed the problems of corruption
and weak rule of law in China. Consul General Dong
commented that one advantage China has in the struggle
against corruption is that in China corruption is seen by
most people as morally wrong, which is not true in all
countries. This basic belief gives the Chinese government
some leverage for change in the fight against corruption.
Wood agreed and pointed out that his consulate is
approaching these issues through small-scale projects. He
explained that, for example, they have scholarship programs
to expose intelligent young people to life in the UK and to
free debate to help them learn more about these issues. He
said that his government sends roughly 200 scholars from
across China to study in the U.K. each year.

Visa Affairs

8. (SBU) Our British colleagues shared with us their belief
that there is a perception in South China that getting a
visa to the U.K. is difficult, despite an issuance rate of
roughly 85-90%. They noted that in regard to student visas,
they are seeing fewer applications, but the approval rates
for these applications are going up, which leads them to
believe that their outreach efforts are indeed educating the
general public about visa requirements and are encouraging
qualified applicants to apply. Lusher mentioned that they
would begin fingerprinting visa applicants next year.

9. (SBU) Lusher also mentioned that he had recently visited
Fujian Province to discuss visa issues. Exhibiting his
typical understated humor, Lusher noted that he went to
Fujian -- a region infamous for visa fraud -- because it is
home to "many of the people who come to see us without
documents." Lusher explained that he and his colleagues
wanted to share their expertise with Fujian officials, but
they encountered a good deal of denial from local officials,
who maintained that everyone who left had proper documents.
They claimed that any illegal activities that occur were
happening overseas. We have also encountered this type of
response when dealing with Fujian officials.

10. (SBU) To counteract the levels of fraud the British
Consulate is encountering, Wood mentioned that his staff is
working to promote the legal route to obtaining a British
visa as a way to stop applicants from taking illegal routes
(snakeheads) or from becoming involved with visa brokers.
Wood commented that his consulate is also cooperating with
officials on forgery training.

Human Rights Dialogue

11. (SBU) Wood next noted that his government has a human
rights dialogue with the Chinese government two times each
year. He explained that the China portion of the dialogue
would be occurring the week of 3 July. It would begin with
formal meetings in Beijing, followed by the U.K.
participants visiting Guangdong for two to three days.
During that time, the group would visit entities such as the
Federation of Trade Unions, the Public Security Bureau, and
various research institutes. The themes of this year's
dialogue are legal representation in the courts and workers

12. (SBU) In discussing workers rights, Wood mentioned that
the UK Ministry of Commerce is more interested in the issue

GUANGZHOU 00020883 003 OF 003

of corporate social responsibility (CSR) than it has been in
the past. He commented that at the local level his
consulate is involved in a "good practices" CSR working
group. He said he hopes that a local group will eventually
take the lead in this effort, but thus far no group has
offered to fill this role.

Growing Foreign Muslim Presence

13. (SBU) Turning to another topic, Wood also mentioned the
large number of itinerant Muslim traders in Guangzhou,
saying that their growing presence "give us pause for
thought." He said that based on his understanding, the
large number of foreign Muslim traders in Guangzhou do not
associate with either the local Hui Muslims or Xinjiang
Muslims. Underscoring his interest in this topic, Lusher
mentioned on another occasion that the growing Muslim
presence is of great interest to security officials at the
British Consulate.

Comment: Preaching to the Choir

14. (SBU) We find these periodic meetings with our British
counterparts to be quite useful as a means to "compare
notes" on our respective activities. It is also a good way
to share examples of what works when dealing with local
officials -- who can be quite cagy about agreeing to meeting
requests -- and more importantly perhaps, what does not
work. Because our two consulates share many of the same
goals in our work in South China, we often do not learn of
any surprising events or issues. Nonetheless, it is good to
get together periodically to know that we are not a lone
voice advocating for change in areas such as rule of law,
transparency, and CSR.


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