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Cablegate: Yunnan Officials On Evolving Economy, Alternative Energy,

VZCZCXRO2046
RR RUEHGH RUEHVC
DE RUEHCN #0171/01 2390319
ZNR UUUUU ZZH
R 270319Z AUG 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3379
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 4055

UNCLAS SECTION 01 OF 02 CHENGDU 000171

SENSITIVE
SIPDIS

DEPARTMENT PLEASE PASS TO PEACE CORPS
STATE FOR EAP/CM, EAP/MLS, DRL, EEB, AND OES

E.O. 12958: N/A
TAGS: EINV ETRD SENV PREL PHUM CH
SUBJECT: YUNNAN OFFICIALS ON EVOLVING ECONOMY, ALTERNATIVE ENERGY,
REGIONAL INTEGRATION, RELIGIOUS FREEDOM, PEACE CORPS

REF: A. A) 09 CHENGDU 000069
B. B) 07 CHENGDU 000274 AND PREVIOUS

CHENGDU 00000171 001.2 OF 002


1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.

2. (SBU) Summary: Yunnan Province lags behind other provinces in
economic development, though its rich resources offer great
potential. Its economy is slowly shifting from traditional
sectors such as tobacco, rubber, and metals to new industries
such as tourism and alternative energies. Yunnan's two biggest
trading partners were Myanmar and Vietnam; trade fell by 45.6
percent in the first half of 2009; foreign investment in 2008
grew by 40 percent from a low base. China is deepening economic
integration with its Southeast Asian neighbors, in part through
major investments in transportation infrastructure. Kunming's
Vice Mayor voiced surprisingly strong support for religious
freedom, saying the religiously-minded are less likely to be
criminals. Officials reacted warmly to the idea of possible
Peace Corps expansion into Yunnan. Consul General also did
advocacy on behalf of U.S. firms in water treatment and film
industries. End Summary.

Yunnan Officials Meet CG in Kunming
-----------------------------------

3. (SBU) During an August 11-13 trip to Kunming in Yunnan
Province, Consul General (accompanied by PolEcon Officer and
LES) met with Yunnan Province Vice Governor Gu Zhaoxi, Yunnan
Province Foreign Affairs Office Director Zhou Hong, Kunming
Party Secretary Qiu He, Kunming Vice Mayor and Director of the
Kunming Public Security Bureau Du Ming, and Chairman of the
Yunnan China Commission for the Promotion of International Trade
(CCPIT). (CG and ConGen staff subsequently traveled to Diqing
Tibetan Autonomous Prefecture in northwest Yunnan, reported
septel). The following summarizes officials' views as expressed
to the CG except where specifically attributed.

Yunnan Lagging in Economic Development
--------------------------------------

4. (U) Yunnan's economic development lags behind many other
provinces, partially due its many reserve areas in which
development is restricted. (Yunnan's tall mountains and
frequent natural disasters were also cited as reasons for its
lagging growth.) Nonetheless, it has its own advantages:

-- Tourism is one of Yunnan's top industries, ranked sixth among
Chinese provinces, with the province having received over 20
million visitors last year (four million of them foreign).

-- Yunnan accounts for 28 percent of China's tobacco output and
has the country's largest cigarette plant.

-- Yunnan is China's largest rubber producer and is also
well-known for its non-ferrous metal resources.

China's Great Western Development Plan has brought significant
benefits to Yunnan. In coming decades, inland and western parts
of China, especially areas bordering with foreign countries,
will have increasing economic opportunities.

Alternative Energy in Yunnan
----------------------------

5. (SBU) Yunnan has great potential for alternative energy
applications. Being rich in sunlight, officials are considering
using solar technology in remote areas. In addition, Yunnan
currently has six wind farms in Dali in southern Yunnan, and is
the second largest producer of sugarcane in China (much of which
is used to make biofuels), with an annual output of two million
tons. The primary sources of electric power in Yunnan, however,
remain thermal power generation and hydropower. Officials
estimate Yunnan has 90,000 megawatts of potential hydroelectric
power generation due to its six major rivers.

Foreign Trade Down in 2009; Investment Up in 2008
--------------------------------------------- ----

6. (U) The total value of Yunnan's foreign trade in the first
half of this year was USD 2.9 billion, down 45.6 percent from
the same period last year. Yunnan's top two trading partners
are neighbors Myanmar and Vietnam, followed by Indonesia, Japan,
Australia, and the United States, with foreign trade involving
India on the upswing.

7. (U) Although foreign investment in Yunnan in 2008 grew by 40
percent, actual foreign investment totaled only USD 470 million,

CHENGDU 00000171 002.2 OF 002


most of which went into tourism, agriculture (flowers), cement
and building materials, water and wastewater treatment, and
light industry. Officials noted that U.S. investment in Yunnan
is currently quite low.

Send More U.S. Business to Yunnan, Please
-----------------------------------------

8. (SBU) As the central government increases its focus on
China's West, there will be increasing opportunities for foreign
investment, and Yunnan welcomes increased participation by U.S.
companies. Yunnan's fixed asset investment for the first half
of 2009 increased by 49.1 percent over the same period last
year. Yunnan needs technology for environmental protection,
water and wastewater treatment, alternative energy production,
and mining of non-ferrous metals. Officials responded warmly to
CG's specific mention of Western Water Group and their projects
in Yunnan (reported septel), as well as plans already underway
by an American filmmaker to produce a Hollywood-backed film
telling the story of WWII's Flying Tigers, who were based in
Kunming. (Note: comments by other Yunnan officials on the
sidelines of one meeting confirmed the filmmaker's fears that
Hong Kong producer-director John Woo, who recently announced
plans to film his own version of the story, was already
attempting to outmaneuver Hollywood for local officials'
attention. End Note.)

Strengthening Links and Relations with Southeast Asia
--------------------------------------------- --------

9. (SBU) Several officials emphasized the benefits to Yunnan of
China's participation in the ASEAN 10 plus 1 structure, arguing
Yunnan's close relationships with its foreign neighbors helped
shield it from the effects of the economic crisis. (As China's
relationship with ASEAN deepens, Yunnan will benefit further.
Yunnan maintains strong transportation links with its Southeast
Asian neighbors, including 14 airports, with another 4-5
currently under construction, and several bilateral or
multilateral highway and rail links in varying states of
completion (Ref A). In addition, four of Yunnan's major rivers
flow into bordering countries, some of which provide shipping
links.

More Churches, Fewer Jails
--------------------------

10. (SBU) Of China's 56 ethnic groups, 25 are represented in
Yunnan. Officials repeatedly emphasized Yunnan's ethnic and
religious "harmony." Yunnan's ethnic groups "moved directly
from primitive society to socialist society," but get along well
as historically no one group is stronger than the others, Vice
Governor Yu said. Responding to specific questions about
religious freedom raised by CG, Vice Mayor Du said Kunming has
begun to pay particular attention to this issue (Ref B), for
example he instructed the Public Security Bureau to release
property it held belonging to a Kunming Catholic Church that had
been seized decades ago. I would "rather build more churches
than jails," Du added, citing statistics showing that citizens
in Kunming who practice a religion have a much lower crime rate
than those without a religious faith.

Yunnan Officials to Consider Expansion of Peace Corps
--------------------------------------------- --------

11. (SBU) Yunnan officials responded warmly to CG's suggestion -
cleared with Peace Corps in Chengdu - of the potential for Peace
Corps volunteers to teach English in Yunnan, saying they would
consider the issue, study the possibilities, and gather more
information.
BROWN

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