VZCZCXRO4713
OO RUEHCN RUEHGH
DE RUEHGH #0163/01 0840944
ZNY CCCCC ZZH
O 250944Z MAR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5626
INFO RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 0901
RUEHCN/AMCONSUL CHENGDU IMMEDIATE 0506
RUEHGZ/AMCONSUL GUANGZHOU IMMEDIATE 0489
RUEHHK/AMCONSUL HONG KONG IMMEDIATE 0611
RUEHUL/AMEMBASSY SEOUL PRIORITY 0051
RUEHSH/AMCONSUL SHENYANG IMMEDIATE 0513
RUEHIN/AIT TAIPEI PRIORITY 0414
RUEHKO/AMEMBASSY TOKYO PRIORITY 0099
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 5998

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000163 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B AND INR/EAP 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE 
TREAS FOR OASIA - DOHNER/CUSHMAN 
USDOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL:  X1 MANUAL REVIEW 
TAGS: PGOV PINR ECON EINV CH
SUBJECT: XI JINPING TAKES THE REINS IN SHANGHAI 
 
REF: A) SHANGHAI 101; B) SHANGHAI 23; C) BEIJING 1840 
 
CLASSIFIED BY: Simon Schuchat , Deputy Principal Officer,  , 
U.S. Consulate Shanghai. 
REASON: 1.4 (b), (d) 
 
 
 
¶1.  (C) Summary.  After months of speculation and waiting, Xi 
Jinping was named the new Shanghai Party Secretary on March 24. 
One contact assessed that Xi's transfer would also likely entail 
a position on the Politburo at the upcoming 17th Party Congress. 
 Xi, a princeling with broad connections, was likely a 
compromise candidate and one Hu Jintao was hoping to entice into 
his camp.  Xi also had ties to Zeng Qinghong and extensive 
experience in East China that made him appealing both to the 
Politburo and local Shanghai officials.  End summary. 
 
-------------------------------------- 
The Dark Horse Candidate Wins the Race 
-------------------------------------- 
 
¶2.  (C) According to a March 24 report from the Hong Kong-based 
PRC-owned press agency "Zhongguo Tongxun She," Central 
Organization Department Head He Guoqiang announced at a special 
meeting of Shanghai party and government officials on March 24 
that former Zhejiang Party Secretary Xi Jinping was now the new 
Shanghai Party Secretary, and Mayor Han Zheng would no longer be 
the acting Party Secretary.  Xinhua news agency confirmed the 
appointment in a terse statement that offered no details. 
While, there has been no official announcement of Xi's 
replacement, a March 24 South China Morning Post article 
reported that Deputy Head of the Central Organization Department 
Zhao Hongzhu was slated to be the next Zhejiang Party Secretary. 
 
 
¶3.  (C) Although it had been widely rumored that Xi would be 
promoted soon, most contacts--including some with connections at 
the highest levels in Zhejiang's government--believed he would 
be transferred to Beijing, possibly as a vice premier (Refs A 
and B).  Only one contact, Zhou Meiyan from Shanghai's Municipal 
People's Congress, had correctly predicted Xi's appointment, 
citing rumors she had heard in December 2007 (Ref B).  Xi 
himself was tight-lipped about his prospects during a March 11 
meeting with the Ambassador (REF C). 
 
¶4.  (C) During a March 21 meeting with Nanjing University 
Sociology Professor Zhou Xiaohong and a March 22 meeting with 
Nanjing University Philosophy and Law Professor Gu Su, both men 
said they had also heard that Xi might take over the Shanghai 
position.  Zhou believed, however, that Jiangsu Party Secretary 
Li Yuanchao or United Front Work Department Head Liu Yandong 
would be better choices.  Gu said given the amount of rumors 
flying, it was impossible to tell who would be the new Shanghai 
Party Secretary until the decision was made.  During a March 25 
conversation with Poloff, Ms. Zhou assessed that Xi's promotion 
would likely entail a promotion to the Politburo at the 17th 
Party Congress.  She doubted a promotion to the Politburo 
Standing Committee (PBSC) was likely and noted rumors that the 
PBSC would shrink back down to seven people at the autumn Party 
Congress. 
 
----------------------- 
Who's Man is Xi Anyway? 
----------------------- 
 
¶5.  (C) Many of our contacts had speculated that Hu needed "his 
man" in Shanghai in order to control the situation, leading us 
to ask, just whose man is Xi?  One unconfirmed March 25 Reuters 
report claimed that Xi was close to party elder Jiang Zemin and 
the Shanghai Faction.  Ms. Zhou, however, believed Xi was more 
of a compromise candidate.  Although not necessarily Hu's man 
now, Hu had supported Xi's selection in part because he hoped to 
use the promotion to buy Xi's allegiance.  Ms. Zhou said that 
Xi, a 53 year-old princeling with broad party connections and 
the son of party elder Xi Zhongxun, would be valuable player for 
Hu to co-opt. 
 
SHANGHAI 00000163  002 OF 002 
 
 
 
¶6.  (C) She added that Xi was an easy candidate for most in the 
Politburo to accept, noting that he knew Zeng Qinghong well, 
having grown up with and attended the same schools as Zeng.  Xi 
also had considerable experience in the so-called "East China 
District," having served both as Deputy Party Secretary and 
Governor in Fujian and Party Secretary in Zhejiang.  Ms. Zhou 
said that in considering anyone for the top position in 
Shanghai, the crown jewel in China's economy, the Politburo 
almost certainly looked at previous experience in China's 
dynamic coastal region as a prerequisite--something that would 
have automatically precluded rumored candidate Liu Yandong. 
Xi's experience in East China would make it easier for Shanghai 
officials to accept him as the new party boss, despite his never 
having served before in Shanghai proper.  Both Ms. Zhou and 
Professor Gu said Xi was also moderate to conservative in his 
political views, making him appear as a stable, calm, and 
assuring figure well-matched for the current political and 
economic chaos clouding Shanghai following the arrest of former 
Party Secretary Chen Liangyu six months ago. 
 
------------ 
What of Han? 
------------ 
 
¶7.  (C) The question remains of what will become of Mayor Han 
Zheng at the next Party Congress.  The unconfirmed Reuters 
report claimed that Han would be replaced as Mayor by current 
Anhui Party Secretary and Hu protege Guo Jinlong as a balance to 
Jiang's choice for Shanghai Party Secretary.  Zhou, however, 
believed that Han would remain in place as Mayor and Deputy 
Party Secretary of Shanghai.  She opined replacing him would be 
too destabilizing for Shanghai's economic and political 
situations.  Ms. Zhou did not believe Han would oppose Xi's 
promotion.  (Comment: Post finds the news of Guo's alleged 
transfer suspicious, given that it has not been picked up 
elsewhere and that it would mean a de facto demotion for Guo. 
End comment.) 
 
------- 
Comment 
------- 
 
¶8. (C) Xi served in Fujian from 1985 to 2002 during the height 
of the infamous Yuanhua/Xiamen smuggling scandal--one of the 
largest ever uncovered in modern China's history.  That he not 
only emerged unscathed from the scandal but has continued to 
advance through the ranks pays tribute to his ability, as well 
as his protected princeling status and the respect afforded his 
father. 
 
¶9.  (C) Now that a Party Secretary has been chosen for Shanghai, 
the city can begin to move on from the Chen Liangyu scandal. 
His experience in running two of the China's economically 
dynamic provinces bodes well for Shanghai's economic future. 
Whether this will burnish his chances of promotion to a central 
level or politburo standing committee depends on how rapidly 
Shanghai is able to recover its political importance. 
JARRETT