Cablegate: Booming Jiangsu Province Welcomes Consulate Observers To

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RR RUEHCN
DE RUEHGH #0027/01 0270650
ZNR UUUUU ZZH
R 270650Z JAN 10
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 8507
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 2155
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHML/AMEMBASSY MANILA 0158
RUEHBS/USEU BRUSSELS 0036
RUEHPS/USMISSION OEDC PARIS FR
RUEHUL/AMEMBASSY SEOUL 0660
RUEHGP/AMEMBASSY SINGAPORE 0319
RUEHKO/AMEMBASSY TOKYO 0871
RUEHGH/AMCONSUL SHANGHAI 9174

UNCLAS SECTION 01 OF 03 SHANGHAI 000027

SENSITIVE
SIPDIS

DEPT FOR EAP/CM
NSC FOR MEDEIROS, LOI, SHRIER
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/KATZ/MAIN
USDOC FOR ITA DAS KASOFF, MELCHER, SZYMANSKI, MAC/OCEA
TREASURY FOR OASIA/INA -- DOHNER/HAARSAGER/WINSHIP
TREASURY FOR IMFP -- SOBEL/CUSHMAN
STATE PASS CEA FOR BLOCK
STATE PASS CFTC FOR OIA/GORLICK
MANILA FOR ADB USED

E.O. 12958: N/A
TAGS: PGOV ECON EIND ETRD CH
SUBJECT: BOOMING JIANGSU PROVINCE WELCOMES CONSULATE OBSERVERS TO
PEOPLE'S CONGRESS OPENING

REF: A. 09 SHANGHAI 444
B. 09 SHANGHAI 451

SHANGHAI 00000027 001.2 OF 003

1. (SBU) Summary: Jiangsu Governor Luo Zhijun pledged to
"transform" the province's economy towards a greater emphasis on
home-grown innovation and domestic consumption in the Jiangsu
Provincial Government's 2010 Work Report delivered January 26.
The provincial government will continue to address "livelihood
problems" such as education and health care -- and is especially
focused on rising housing prices -- but Luo offered few policy
details. Governor Luo mentioned the Shanghai 2010 World Expo and
Yangtze River Delta integration only once -- a somewhat
surprising lack of emphasis given that Jiangsu borders Shanghai
and the Expo is less than 100 days away. He also said little
about Jiangsu's emerging civil society and growth of NGOs.
CongenOffs' attendance at the opening of Jiangsu's annual
legislative session generated considerable interest from
provincial leaders and the media, as it was the first time in
recent memory that foreigners had attended. End Summary.

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JIANGSU MAINTAINS DOUBLE DIGIT GROWTH DESPITE GLOBAL DOWNTURN
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2. (SBU) Governor Luo opened his 90-minute address by stating
that 2009 was a "difficult year" for Jiangsu's export-driven
economy. As one of China's wealthiest provinces located in the
Yangtze River Delta region, Jiangsu struggled to cope with the
global financial crisis during the previous year, Luo
acknowledged. However, despite the challenges, Jiangsu's economy
continued to grow, as GDP increased by 12.4 percent -- only 0.1
percentage points slower than in 2008 and over two points higher
than the target announced a year ago -- and fiscal revenue rose
18.2 percent, 8 points higher than the 2009 revenue target of 10
percent. At year's end, average urban per capita income stood at
RMB 20,552 and rural per capita income eclipsed RMB 8000.

3. (SBU) The Work Report highlighted the growing contribution of
Jiangsu's poorer and less developed northern region (Subei) to
the provincial economy, noting that the areas north of the
Yangtze River accounted for 42.3 percent of provincial GDP in
2009, an increase of 2.9 percent over the previous year. Much of
the increase in both northern and southern Jiangsu was due to
ongoing infrastructure projects, including new rails, roads, and
development zones. According to Luo, development projects in
Jiangsu (similar to the claim frequently made by Shanghai
officials) increasingly are "high-tech" investments designed to
minimize environmental pollution.

4. (SBU) Despite its accomplishments during 2009, Jiangsu still
faces five major challenges as 2010 opens, Luo said. According
to the Work Report, the primary areas of concern are: (1) low
levels of consumption, (2) an economic development strategy that
is too resource-intensive, (3) low incomes in rural areas, (4)
pressure on fiscal income due to the financial crisis, and (5)
unemployment. In addition, Luo also cited inflation, food and
drug safety, market supervision and product safety, livelihood
problems, and safeguarding social stability as areas of ongoing
concern.

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TRANSFORMATION IN 2010: INNOVATION AND CONSUMPTION
--------------------------------------------- -----

5. (SBU) Much of the Jiangsu Provincial Work Report focused on
"transforming the economic development model" by emphasizing
home-grown innovation and domestic consumption in accordance
with what Luo said would be a primary objective of the Central
Government's 12th Five-Year Plan. According to the Work Report,
Jiangsu's economic growth target in 2010 is a 10 percent
increase in GDP, but unlike previous years, the increase would

SHANGHAI 00000027 002.2 OF 003

be driven by an estimated 17 percent in domestic consumption
versus only 5 percent from exports (with FAI remaining steady at
an annual increase of 18 percent). He added that the provincial
government would encourage developing consumer credit in order
to build a stronger "consumption environment." The automobile,
tourism, and communications sectors would help drive consumer
demand.

6. (SBU) Luo said self-reliant innovation would be at the core
of Jiangsu's "sound and fast economic development." The province
also would need to develop its own intellectual property in
order to improve its international competitiveness. Improving
Jiangsu's human resource base would be necessary to support the
provincial government's innovation goals, Luo said.

--------------------------------------------- ------------------
TACKLING EVERYDAY PROBLEMS: HEALTH CARE, EDUCATION, AND HOUSING
--------------------------------------------- ------------------

7. (SBU) As in the previous year, the Work Report focused
attention on "livelihood problems" such as education and health
care, but Luo offered few policy details. On infectious disease
prevention, however, Luo twice mentioned H1N1 prevention as a
priority for the provincial government. He also said the
provincial government would increase its annual expenditure for
the rural cooperative medical system (RCMS) to RMB 120 per
person. He also stressed the importance of "improving the
quality of education" in the province -- both at the high-end to
contribute to home-grown innovation and at the low-end to help
alleviate poverty in the countryside.

8. (SBU) In particular, Luo focused on controlling spiraling
housing prices while at the same time promoting the growth of a
"healthy" real estate sector. Addressing housing problems in the
Work Report's section on "sound and fast economic development"
as the second priority behind only "promoting domestic
consumption," Luo expressed the provincial government's
continuing concern that rising housing prices are "quickly
reaching a point beyond which average people will be unable to
afford."

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NOT MUCH ON SHANGHAI EXPO OR BUILDING CIVIL SOCIETY
--------------------------------------------- ------

9. (SBU) Somewhat surprisingly given Jiangsu's location adjacent
to Shanghai, the Work Report referred only once to the upcoming
Shanghai 2010 World Expo, which is set to open May 1. Luo said
only that Jiangsu would "enthusiastically participate in and
serve" the World Expo while working to improve Yangtze River
Delta integration. It was the only mention of the Expo or YRD
integration in the 27-page Work Report document.

10. (SBU) The Work Report also said little about the province's
emerging civil society and growth of NGOs. It did however
highlight the provincial government's efforts at greater
transparency, particularly in the area of inviting comments from
the public on provincial and local government appointments.

--------------------------------------------- ---
CONSULATE BREAKS NEW GROUND WITH JIANGSU LEADERS
--------------------------------------------- ---

11. (SBU) Comment: We were pleased that the Jiangsu Provincial
Foreign Affairs Office and Provincial People's Congress approved
our request to attend this year's legislative session, which was
the first time in recent memory that foreigners have been given
permission to attend the "Two Meetings" in Jiangsu. Provincial
Party Secretary Liang Baohua, who previously met Ambassador
Huntsman in December and hosted a delegation from the state of

SHANGHAI 00000027 003.2 OF 003

New York in October, made a point of welcoming "representatives
from foreign consulates" during his opening remarks on January
26. CongenOffs' attendance also generated considerable local
media attention and the Consulate's Deputy Principal Officer was
mobbed by reporters from both print and television media after
the opening session concluded. Several, mostly provincial, media
outlets published articles touting the openness of the Jiangsu
People's Congress. The Deputy Consul General was quoted praising
Jiangsu's openness and transparency as well as the government's
management of the economy in spite of global economic
difficulties. End Comment.
CAMP

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