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Cablegate: Ambassador Meets Shanghai Mayor and Attends Amcham

VZCZCXRO4746
RR RUEHCN RUEHGH
DE RUEHGH #0603/01 2550029
ZNR UUUUU ZZH
R 120029Z SEP 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6260
INFO RUEHBJ/AMEMBASSY BEIJING 1408
RUEHCN/AMCONSUL CHENGDU 0886
RUEHGZ/AMCONSUL GUANGZHOU 0865
RUEHHK/AMCONSUL HONG KONG 1011
RUEHSH/AMCONSUL SHENYANG 0887
RUEHIN/AIT TAIPEI 0708
RUEHGP/AMEMBASSY SINGAPORE 0083
RUEHKO/AMEMBASSY TOKYO 0205
RUEHUL/AMEMBASSY SEOUL 0122
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6732

UNCLAS SECTION 01 OF 03 SHANGHAI 000603

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/CM
STATE FOR INR/B
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN
FRANCISCO FRB FOR CURRAN/LUNG; NEW YORK FRB FOR DAGES/CLARK
STATE PASS CEA FOR BLOCK
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/ALTBACH/READE
USDOC FOR 4420
USDOC FOR ITA/MAC DAS KASOFF, MELCHER AND MCQUEEN
TREASURY FOR EXEC - TSMITH, OASIA/ISA -DOHNER/BAKER/CUSHMAN
TREASURY FOR WRIGHT AND AMB HOLMER
NSC FOR MCCORMICK AND TONG

E.O. 12958: N/A
TAGS: ETRD EINV EFIN PINR PGOV PREL KIPR ELTN CH
SUBJECT: AMBASSADOR MEETS SHANGHAI MAYOR AND ATTENDS AMCHAM
GOVERNMENT APPRECIATION DINNER


(U) This cable is sensitive but unclassified and for official
use only. Not for distribution outside of USG channels or via
the internet.

1. (SBU) Summary: On September 6, the Ambassador, together with
former Secretary of Commerce Don Evans, met with Shanghai Mayor
Han Zheng. Following the meeting, the three officials offered
remarks at AmCham Shanghai's 7th Annual Government Appreciation
Dinner attended by 120 Shanghai and provincial government
participants and over 300 AmCham members -- a record-breaking
turnout. The Mayor outlined Shanghai's continuing rapid
economic development and the important role U.S. investment and
trade plays in the city's economy. The Ambassador thanked
Shanghai for its support for U.S. business and welcomed
continued cooperation with AmCham and its member companies. He
also urged greater enforcement of intellectual property rights
and food and product safety standards as well as greater opening
of the financial services sector. Former Secretary Evans noted
that China could best modernize its financial services sector by
further opening to foreign competition. End summary.

--------------------------------------

Win - Win Results with U.S. Businesses

--------------------------------------

2. (SBU) The Mayor welcomed the contributions that U.S.
investors and businesses have made to Shanghai's economic
development and added that cooperation with U.S. businesses has
produced win-win results. Han said that the U.S.-Shanghai
business partnership is one of the closest in the world, noting
that there are over 5,500 U.S. investment projects in the city
with a cumulative total investment of USD 11.2 billion. U.S.
invested companies in Shanghai thus account for approximately
one-eighth of the total of 40,000 foreign invested companies in
Shanghai. Local U.S. businesses also account for a large
proportion of Shanghai's imports and exports.

-------------------
Shanghai Doing Well
-------------------

3. (SBU) Mayor Han summarized the most recent economic figures
this year for the municipality and was happy to announce that
Shanghai is "doing well." Through August 2007, Shanghai's GDP
growth reached 13.1 percent and FDI grew by 10 percent over the
same period last year. Exports also rose, increasing by 20
percent. Consumer retail sales were up 14 percent as was urban
capita disposable income; rural per capita disposable income was
up 10 percent. Meanwhile, the consumer price index had risen by
only 2.2 percent and unemployment had dropped by 0.2 percent.
(Note: During the dinner, Han offered slightly different
numbers: a 12 percent rise in consumer retail sales; and an 11
percent rise in rural disposable incomes. End note.)

--------------------------

A Busy Season for Shanghai

--------------------------

4. (SBU) The Mayor stated that Shanghai is entering a busy
season for the next few months. It will host the FIFA Women's
World Cup on September 10, a Formula 1 race later in the month,
the Special Olympics in October, and several other major events.
He welcomed the Ambassador's participation at the Special
Olympics and thanked the President for his support of the Torch

SHANGHAI 00000603 002 OF 003


Run event in Washington, D.C. Han joked that with all of these
high-profile events going on in the municipality, the Ambassador
might want to consider setting up an office in Shanghai. Former
Secretary Evans expressed appreciation for Shanghai's

SIPDIS
willingness to host the Special Olympics, noting that the event
is much like trade: everyone who participates wins.

5. (SBU) The Ambassador acknowledged the Mayor's busy schedule
and thanked Han for taking the time to attend the Amcham event.
The Ambassador noted that the large number of Shanghai
government officials attending the dinner is a tangible symbol
of the Shanghai government's support for U.S. businesses.

--------------------------------------------- -----
Push the Relationship Forward, Reject Isolationism
--------------------------------------------- -----

6. (SBU) In his dinner remarks, the Ambassador noted that U.S.
companies make a meaningful contribution to Shanghai's economic
growth. He acknowledged that the bilateral trading relationship
faces critics in both countries. The best response to U.S.
criticism would be for China to do more to protect and enforce
intellectual property rights, improve and enforce food and
product safety standards, and take additional steps to open up
the financial services sector. He noted that the upcoming
meetings of the Joint Commission on Commerce and Trade and the
Strategic Economic Dialogue will present opportunities to push
forward bilateral economic relations.

7. (SBU) Former Commerce Secretary and current CEO of the
Financial Services Forum, Don Evans, noted that over the past
four years, the United States and China together have accounted
for more than half of the world's economic growth. China is the
United States' second largest trading partner, and its fastest
growing. Open commerce, Evans said, is a win-win situation for
both countries and is never a zero-sum game. The world has
nothing to fear from China's economic growth which, in fact,
creates opportunities for U.S. businesses and U.S. workers. To
fully enjoy the benefits of trade, however, we must reject
protectionism by either side. For example, Evans said, the
fastest way for China to modernize its financial services sector
is to open it further to foreign competition. That will allow
China to utilize foreign firms' expertise and talents to benefit
China's consumers.

-------------------------
Developing a Dynamic City
-------------------------

8. (SBU) Speaking without any notes, Mayor Han gave an overview
of Shanghai's economic policy objectives and infrastructure
expansion plans. He explained that in accordance with Central
Government directives, Shanghai is drawing on the best practices
of all regions and cities to become an economic center, a
financial center, a trade center, and a shipping center.
Shanghai is focused on innovation as the future driver of
economic growth. To make Shanghai more dynamic, its businesses
-- both foreign and domestic -- must be more dynamic. To that
end, Shanghai is committed to improving education to provide
talent for businesses seeking to locate in the municipality, and
Shanghai is committed to protecting the environment.

9. (SBU) Shanghai is also focused on improving its
infrastructure. By 2010, the combined passenger capacity at
Pudong and Hongqiao airports will be 80 million people. By
2012, they will be able to handle 100 million people and 8
million tons of air cargo per year. Shanghai's seaport is
expected to handle 26 million TEUs this year alone. Shanghai is

SHANGHAI 00000603 003 OF 003


also focusing on improving regional transportation links with
the 15 other cities within the Yangtze River Delta region. By
2010, there will by 8,000 kilometers of highway linking all of
the major cities together. Han noted that there are currently
120 subway stations under construction in Shanghai. By 2010,
Shanghai will have 400 kilometers of subway lines, compared to
the current 130 kilometers. By 2012, that will have increased
to 500 kilometers of subway lines in operation.
KJARRETT

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