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DE RUEHGZ #0088/01 0940906
ZNR UUUUU ZZH
R 040906Z APR 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 3469
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI
RUEAHLC/HOMELAND SECURITY CENTER WASHINGTON DC

UNCLAS SECTION 01 OF 05 GUANGZHOU 010088 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE 
STATE PASS USTR 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV SOCI EINV ELAB CH
SUBJECT: An Overview of the Pearl River Delta: Hong Kong's 
Consul General Visits South China 
 
 
(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  PLEASE 
PROTECT ACCORDINGLY.  NOT FOR RELEASE OUTSIDE U.S. 
GOVERNMENT CHANNELS.  NOT FOR INTERNET PUBLICATION. 
 
¶1. (SBU) SUMMARY:  During a recent visit to Guangdong, Hong 
Kong Consul General Cunningham met with officials and 
business leaders to discuss the rapid economic growth of 
southern Guangdong and its consequences for Hong Kong 
industry and the region's environment.  The Consul General 
visited Guangzhou's new Baiyun Airport and Shenzhen's 
booming Yantian Port, both key links in the Pearl River 
Delta's connection to global trade and business.  Hong Kong 
and Chinese officials lamented the environmental 
consequences of the region's rapid economic growth, but 
Shenzhen officials said they plan to follow the central 
government's directives and develop a greener economic 
growth model.  Meanwhile, Hong Kong's top official in 
Guangdong, the Guangdong Amcham president, and a Duracell 
factory manager all cited serious energy shortages in the 
area, and the Yantian port director said Shenzhen's 
underdeveloped road and rail network is restricting the flow 
of goods further inland.  END SUMMARY. 
 
A Grudging Approval by MFA 
-------------------------- 
 
¶2. (SBU) The Guangzhou Consulate first requested government 
appointments for the Hong Kong group via the Guangdong 
Foreign Affairs Office (FAO) on March 2.  The FAO replied on 
March 6 that only the Ministry of Foreign Affairs (MFA) 
could approve the visit because officers from Consulate Hong 
Kong wished to perform duties outside of their consular 
district, citing Article 23 of the Consular Conventions 
between China and the United States.  On March 9, Consulate 
Hong Kong sent a diplomatic note to the Office of the MFA 
Commissioner in Hong Kong.  After more than a week with no 
decision, Embassy Beijing on March 17 contacted the MFA in 
Beijing to request a decision on the visit.  MFA did not 
approve the Monday, March 20 visit until approximately 7:30 
pm on Friday, March 17.  Despite the go-ahead, MFA denied 
requests to visit Shenzhen's Shekou Port and to meet with 
the Shenzhen Public Security Bureau's Economic Crimes 
Investigative Division to discuss intellectual property 
rights (IPR). 
 
Guangdong DRC:  Innovation Coming to a City Near You! 
--------------------------------------------- -------- 
 
¶3. (SBU) Guangzhou Consul General (CG) Dong, accompanied by 
CG Cunningham, met with Zhang Jun, Deputy Director General 
of the Guangdong Development and Reform Commission. 
CG Dong began by noting that the priority for Guangdong in 
the 11th 5-Year Plan is to build an "innovation society" and 
he asked how Guangdong will adjust its use of resources to 
achieve this goal.  Zhang acknowledged that in terms of R&D 
Guangdong has always lagged behind Beijing and East China, 
but he noted that Guangdong's patent applications last year 
ranked first in the country.  In 2002, Guangdong's R&D 
spending accounted for 0.8% of GDP, but the percentage has 
risen to 1.5% of GDP, showing, according to Zhang, the 
government's dedication to supporting innovation. 
 
¶4. (SBU) Zhang explained that because the energy supply is 
inadequate, Guangdong put forward the innovation concept to 
contend with this shortfall, but he admitted that the 
transformation will be slow.  Zhang explained that financial 
support for innovation should be increased through added 
funding for education at all levels and for science and 
technology research. He also said the science system should 
be improved and he suggested allowing university labs to 
play bigger roles.  Zhang pointed out that Guangdong 
companies Huawei and ZTE are already innovators and he noted 
that Guangzhou and Shenzhen are the province's innovation 
centers; he conceded, however, that the east and west areas 
of Guangdong are lacking in this area.  He suggested that 
the government coordinate with enterprises in those areas to 
support them and guide them to combine R&D efforts with 
market demand. 
 
 
GUANGZHOU 00010088  002 OF 005 
 
 
¶5. (SBU) In response to a question from CG Cunningham on the 
future of the Pan-PRD, Zhang said that the development of 
the Pan-PRD has been faster than expected and he predicted 
it will have a bright future.  (Note:  The Pan-PRD, also 
called "Nine Plus Two," is the nine provinces of Fujian, 
Guangdong, Guangxi, Guizhou, Hainan, Hunan, Jiangxi, 
Sichuan, and Yunnan, as well as the two special 
administrative regions of Hong Kong and Macau.  End Note.) 
Zhang noted Hong Kong's close connection with Guangdong -- 
and there are now 87,000 Hong Kong companies in Guangdong 
with investments of more than USD 100 billion -- but he 
opined that Hong Kong should build more connections with 
inland provinces.  He pointed out that through Pan-PRD 
cooperation, Hong Kong can contribute to the development of 
inland provinces, and in doing so(create mozd opportufhdi%s 
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