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Cablegate: Labor Secretary Chao Meets Yin Weimin, Minister Of

DE RUEHBJ #3346/01 2420105
O 290105Z AUG 08





E.O. 12958: N/A

(U) This cable is Sensitive but Unclassified. Please
protect accordingly.

1. (SBU) SUMMARY: Secretary of Labor Elaine Chao met
with Ministry of Human Resources and Social Security
(MOHRSS) Minister Yin Weimin on August 22, 2008. Secretary
Chao said she was honored to serve as head of the
Presidential Delegation to the Closing Ceremonies of the
Olympic games, and expressed her condolences for the May
2008 Sichuan earthquake. The Secretary and Minister both
said they valued the productive relationship between their
two agencies. Yin said MOHRSS looks forward to continued
cooperation, which benefits the two agencies and
contributes to constructive bilateral relations. Yin
described the reorganization of his Ministry, and named
implementation of new labor legislation, reforming the
civil service system and the social safety net, and
supporting post-earthquake relief efforts in Sichuan
Province as MOHRR's main immediate priorities. Yin said he
saw no conflict between China's policy push to develop an
innovation economy and the need to maintain job
opportunities for China's still largely unskilled labor
force. He outlined policies to retrain the work force for
the high technology and service sectors, and to better
protect the rights and interest of migrant workers. Yin
said MOHRSS will create a new national labor inspection
department which will enhance the Ministry's ability to
deter child labor and other violations of labor laws and
regulations. END SUMMARY.

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2. (U) Secretary of Labor Elaine L. Chao met with Chinese
Minister of Human Resources and Social Security (MOHRSS)
Yin Weimin on August 22, 2008. The following MOHRSS
officials were present: Vice Minister Wang Xiaochu, Vice
Minister Hu Xiaoyi, Director General (DG) Yin Chengji, DG
Qiu Xiaoping, DG Zhang Yali, and Hao Bin, Zhao Hui
(interpreter), Li Feixia and Ren Xiuli from the MOHRSS
International Cooperation Department. United States
participants included Amb. Clark T. Randt, Department of
Labor (DOL) Associate Deputy Secretary Anna Hui, DOL Deputy
Assistant Secretary Jennifer Coxe, Special Assistant to the
Secretary Alden Sanborne, Embassy Labor Officer Bruce
Levine and Embassy Interpreter James Brown. This was Sec.
Chao's first opportunity to meet Minister Yin since his
appointment as MOHRSS Minister in March 2008.

3. (SBU) Secretary Chao told Yin she was honored to serve
as head of the Presidential Delegation to the Closing
Ceremonies of the Olympic Games. The Secretary and
Minister both said they valued the productive relationship
between their two agencies, and under the DOL's six active
letters of understanding on bilateral cooperation with its
Chinese counterparts. Secretary Chao said she saw China's
new Labor Contract Law and Labor Dispute Mediation and
Arbitration Law as concrete achievements of United States-
China cooperation, and said the United States is happy to
share its experience in labor standards enforcement and
social insurance.

4. (SBU) Minister Yin said MOHRSS is deeply satisfied
with the relationship with DOL and looks forward to
continued cooperation. This not only benefits the two
agencies, he said, but also contributes to constructive
bilateral relations. Minister Yin said the United States
and China have much to learn from each other about dealing
with the challenges created by economic globalization.
Minister Yin said China has become progressively more
integrated into the globalizing world economy over the past
30 years, and seeks to maintain a close and cooperative
relationship with the United States, regardless of who wins
the United States election this year. He noted that China
and the rest of the world depend on each other, and the
concept of a "China threat" makes no sense to anyone who
understands China's history and culture.

The Creation and Mission of MOHRSS

5. (SBU) Minister Yin described the creation of MOHRSS
through the merger of the former Ministry of Labor and
Social Security and Ministry of Personnel. He said it was
part of a government-wide effort to improve operational

BEIJING 00003346 002 OF 004

efficiency and provide better service. Primary functions
of the new Ministry include promoting job creation,
fostering harmonious labor relations, improving China's
social safety net, and carrying out reform of the Civil
Service. China has 7 million civil servants, Yin said,
plus another 30 million employees of public service
institutions (Shiye Danwei). These employees are regulated
by a labor relations system and covered by a social safety
net that is separate from those that apply to employees of
enterprises. One of MOHRSS's goals, Yin said, is to
integrate all employees in China in to a unified system.
Yin added that MOHRSS was also looking to even out wage
distribution between the public and private sector.

6. (SBU) Minister Yin said MOHRSS is carrying out the
Government's "people first" (yi ren wei ben) and
"scientific development concept" (kexue fazhanguan)
policies by promoting more stable labor relations and
improving China's social safety net. He stressed that
China is still a developing country and faces a challenge
creating employment for a workforce of 700 million and
providing a social safety net or 1.3 billion people. For
2008, alone, he sid, his Ministry sought to ensure the
creation of 10 million new jobs. Yin said in 2008, China
will have to create jobs for 5.9 university graduates and 6
million graduates of vocational high schools. Minister Yin
said China has kept its unemployment rate below 4.5%.
(Note: this "registered unemployment" rate only captures
registered urban residents who have applied for
unemployment benefits. It does not count migrant workers,
underemployed urban and rural workers, or the informal
sector. End note.) Minister Yin said China wants to have a
social safety net that covers all citizens in rural and
urban areas by the year 2020.

7. (SBU) Minister Yin said that China is in a phase of
deepening its reforms, establishing the rule of law and
building democracy. On labor relations, Yin said MOHRSS's
most pressing task was to implement effectively the Labor
Contract Law, which took effect on January 1, 2008. The
State Council is still drafting implementing regulations
for the law, he said. To help implement China's new labor
legislation and better protect the rights and interests of
workers, Minister Yin said MOHRSS is also organizing an
enhanced, national-level labor inspection department.
Minister Yin added that the Chinese people's legal
awareness is growing, a sign that China will develop on the
right track.

8. (SBU) Secretary Chao complimented MOHRSS on its smooth
and rapid reorganization, noting how difficult United
States Government agencies have found similar
reorganizations. The Secretary said MOHRSS's efforts to
enhance China's labor dispute mediation and arbitration
system is important work that requires special skills and
great patience.

Migrant Workers and the Urban Rural Divide

9. (SBU) Secretary Chao asked Minister Yin how China is
addressing the issues of internal migrant labor and Urban-
Rural economic disparities. Minister Yin said MOHRSS
estimates that China now has 170 million migrant workers,
and that 9 million new workers from rural areas enter the
urban work force each year. He said that despite China's
rapid economic growth, there remain sharp disparities
between urban and rural areas, and even between different
urban areas and rural areas in different parts of the
country. China is working to build up rural areas through
its "New Socialist Countryside" program, as well as special
social safety net and educational initiatives for rural
areas. However, Minister Yin did acknowledge that much
higher incomes in urban areas provided a great incentive
for rural labor to migrate to the cities. A rural resident
can work for two years in the city, he said, and earn
enough to build a house. Already, Minister Yin said, rural
migrants make up 80 percent of the workforce in the
construction and catering industry in urban areas. He said
large cities like Beijing and Shanghai would "collapse"
without migrant workers. To respond to this challenge, and
better protect migrants' rights and interests, Minister Yin

BEIJING 00003346 003 OF 004

said MOHRSS is creating a new Migrant Labor department.

10. (SBU) MOHRSS Vice Minister Hu Xiaoyi said the main
challenge is ensuring equal employment opportunity for
migrants, including through the provision of free job
placement services. Social insurance for migrants is
another major problem. Vice Minister Hu said it is
relatively easy to provide health and work injury insurance
for migrants, but very difficult to provide pension
insurance under the current structure of China's pension
system. Hu said MOHRSS is working to design a special,
portable pension system specifically for migrant workers.

Maintaining Job Opportunities in an Innovation Society
--------------------------------------------- ---------

11. (SBU) Secretary Chao asked how China intends to
provide jobs for its large workforce, even as government
policy encourages innovation and the private sector turns
to labor saving technology. She noted China's rapidly
rising wages and fast-growing service sector, and asked how
China would help its labor force make the transition from
labor-intensive industry to service sector employment.
Minister Yin said MOHRSS sees no inconsistency between the
government's innovation program and job creation. He said
China's labor market has enough potential to absorb new
workers, and described a series of government measures to
retrain the labor force and promote employment. He noted
that Vice-Premier Zhang Dejiang chairs an interagency task
force to promote job creation nationwide. Government
measures include soft loans, tax incentives and other
financial incentives to promote job creation. Minister Yin
said the government believes that employment is essential
to economic well-being and social stability.

12. (SBU) Minister Yin said MOHRSS recognizes that a
relative shortage of talented and skilled workers in China
is an obstacle to technological innovation and the
development of the service sector. He said MOHRSS is
addressing this problem through programs to upgrade the
skills of professionals, high-skilled workers and rural
migrant workers. He said China has 13,000 vocational high
schools, and that local government labor bureaus manage
another 3,000 vocational schools in rural areas. The
government provides subsidies for vocational training, and
schools target the hotel industry and other fast-growing
sectors of the economy. Minister Yin said rising wages
were due to market forces, but that MOHRSS also has a
mandate to provide voluntary wage guidelines and set
mandatory minimum wage standards.

13. (SBU) Minister Yin said China also hopes to attract
foreign-trained skilled Chinese workers back from overseas.
He noted that 1.2 million Chinese students have gone abroad
to study since 1978, and that only about 25% returned to
China. Yin mentioned that Beijing Life Science Institute,
which has a research center that actively recruits Chinese
experts studying overseas.

14. (SBU) Minister Yin said government initiatives to
promote the development of small- and medium- sized
enterprises, and high technology industries contribute to
the development of an innovation society and create jobs.
Yin acknowledged that some companies have been reducing
operations in China and moving labor-intensive activities
to Viet Nam and other countries. However, Yin said China
has enough development potential to provide adequate job
opportunities for its work force, especially in the high
technology and service sectors.

Child Labor

15. (SBU) Secretary Chao asked how MOHRSS intended to
deal with the problem of child labor. Yin said Chinese law
already strenuously forbids child labor and that MOHRSS is
creating a national labor inspectorate department, which
will enable the Ministry to deal more severely with
violations all types of laborlaw violations.

The Sichuan Earthquake

BEIJING 00003346 004 OF 004

16. (SBU) Secretary Chao expressed her condolences for
the May 2008 Sichuan earthquake. Minister Yin said China
was grateful to the United States Government and the
American people for the assistance and support provided
following the earthquake. Yin said MOHRSS is actively
involved in relief efforts in earthquake-devastated areas
in Sichuan, helping with job placement in affected areas,
and encouraging other regions to actively recruit workers
from earthquake-affected areas. These measures have
created 800,000 jobs, Yin claimed. Yin said MOHRSS is also
acting to ensure that residents of affected areas entitled
to social insurance benefits are paid on time and in full.

17. (U) The Department of Labor cleared this message.


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