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Cablegate: Henan Province's Nine-City Urbanization Plan

VZCZCXRO2080
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #4171/01 3340439
ZNR UUUUU ZZH
P 300439Z NOV 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 2549
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 024171

SIPDIS

SENSITIVE
SIPDIS

USDOC FOR 4420
STATE PASS CEA FOR BLOCK
TREASURY FOR OASIA/CUSHMAN
USDA/ERS FOR LOHMAR, TUAN, SYLVANA LI
USDOL FOR ILAB
E.O. 12958: N/A
TAGS: ECON EAGR ELAB PGOV SOCI CH
SUBJECT: HENAN PROVINCE'S NINE-CITY URBANIZATION PLAN

REF: BEIJING 2661

SUMMARY
-------

1. (SBU) Provincial and municipal level officials in
Central China's Henan Province look to rapid urbanization
to accelerate economic growth and absorb excess rural labor.
Henan's urbanization plan focuses on nine cities that
account for 40 percent of the province's population and 60
percent of its economic output. Policymakers in Zhengzhou,
the provincial capital, have designated specific roles for
each of the cities, and they hope the policy will attract
more farmers to urban areas. Local officials in Kaifeng
are optimistic about economic development, but display
concern about the long-term impact of rapid urbanization on
rural stability. (Note: Zhengzhou is an APP city. End
Note.) END SUMMARY.

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TRAVEL TO HENAN
---------------

2. (SBU) Econoff, Conoff, and Econ Assistant traveled to
Henan Province, November 6-8. In Zhengzhou, Emboffs met
with Provincial officials at the Development and Reform
Commission and Foreign Affairs Office. They also visited
Henan People's Radio, and discussed the government's rural
policy with faculty at the Henan Agricultural University.
On November 7, Emboffs traveled to Kaifeng where they met
with officials at the Municipal Development and Reform
Commission and Municipal Agriculture and Forestry Bureau.

HENAN'S RAPID URBANIZATION
--------------------------

3. (SBU) Henan Provincial Government officials continue to
emphasize that the best hope for the province's 70 million
rural residents is to find work for them in the cities
(reftel). With excess rural labor already heading to urban
areas in search of employment, accelerating industrial
development is a key objective for the government, said
Shao Yingnan, Deputy Director of the Foreign Economy
Department at the Henan Provincial Development and Reform
Commission. Shao estimated that as much as 30 percent of
rural income is derived from part-time work in the cities.
Henan Province wants to attract investment from more
private sector companies, including foreign investors, Shao
said. Rapid urbanization and industrialization resulted in
13.9 percent GDP growth during the first nine months of
2006 compared to the same period the previous year. (Note:
Henan's projected GDP growth rate in 2006 is consistent
with its 14.1 percent growth rate in 2005. End Note.)

POLICY FOCUS ON NINE CITIES
---------------------------

4. (SBU) Henan Province's apparent urgency to attract
private sector investment reflects officials' recognition
that the land-locked province remains backward compared to
its coastal neighbors. The China Daily reported in March
2006 that Henan Province's urbanization rate, at 30.7
percent, is significantly lower than the national average
of 43 percent. Henan Province's urbanization plan focuses
on nine cities that currently account for 40 percent of the
province's population and 60 percent of its economic output.
The nine cities, Zhengzhou, Kaifeng, Luoyang, Jiyuan,
Xinxiang, Jiaozuo, Xuchang, Pingdingshan, and Luohe, each
have specific designated roles. Provincial government
officials stated, for example, that Zhengzhou and Luoyang
will remain the province's industrial bases and financial
centers, with other cities serving specific roles such as
Kaifeng as a tourism hub, Jiaozuo as a coal producer, and
Luohe as a livestock center. Zhengzhou, the provincial
capital, also serves as Central China's major
transportation and logistics hub.

KAIFENG: OPTIMISTIC ABOUT PROSPECTS...
--------------------------------------

5. (SBU) In Kaifeng, a city of 4.87 million residents east
of Zhengzhou, municipal government officials expressed

BEIJING 00024171 002 OF 002


optimism about the Nine Cities plan and Kaifeng's role.
Kaifeng, one of the "Seven Ancient Capitals of China,"
attracted 18 million tourists in 2005, and the city also
emphasized development in its transportation and banking
sectors during the year, said An Honghai, Director of the
Kaifeng Development and Reform Commission. Rural residents
in Kaifeng still account for approximately 80 percent of
the municipality's population, but officials at the Kaifeng
Agriculture and Forestry Bureau said that as in other parts
of Henan, non-farm income is increasingly important in
rural areas. Taken together with agricultural sector
modernization, wage income from part-time work in the city
or non-farm work in the countryside contributed to a 14
percent increase in Kaifeng's rural incomes in 2005, higher
than the provincial average of 7.5 percent during the year.

...BUT WORRIED ABOUT REALITIES
------------------------------

6. (SBU) Rural residents in Kaifeng remain poor, however,
and per capita rural income is only RMB 2714 (USD 340), An
stated. Local officials said that they will continue to
focus on raising rural incomes and strengthening social
services such as education and health care. Officials
stated that their greatest concern in Kaifeng is the
growing conflict between rapid industrialization and
preserving arable land. They claimed that the local
government always offers compensation to farmers whose land
is expropriated for development projects, and the most
important element of the compensation is providing training
to farmers who want to work in the city. Officials at the
Agriculture and Forestry Bureau said that they remain
concerned, however, about the long-term impact of rapid
urbanization and resulting land confiscations on rural
stability.

7. (SBU) Conflicts over the use of land are not limited,
however, to the fringes of urban areas. In a model village
development outside Kaifeng, one visibly upset farmer
shouted to visiting Emboffs that she wanted to tell them
her story about how she had been prevented from moving to
the model village. Local officials would say only that 80
of 200 families in the village "had the ability to pay" to
move to units in the model village.

RANDT

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