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RR RUEHAG RUEHCN RUEHDF RUEHGH RUEHIK RUEHLZ
DE RUEHGZ #0542/01 0970334
ZNR UUUUU ZZH
R 070334Z APR 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 3939
INFO RUEHOO/CHINA POSTS COLLECTIVE
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UNCLAS SECTION 01 OF 02 GUANGZHOU 010542 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB, R, EAP/CM, EAP/PD, DRL 
STATE PASS USTR 
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: ECON KIPR EINV PHUM KPAO PINR CH
SUBJECT: Short March:  Shantou Back in the Black 
 
REF: A) Guangzhou 10337, B) Guangzhou 10336 
 
(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:  Shantou officials say that the city's 
economy is back on track in a big way after negative growth 
in 2001 and slow growth in 2002.  Long known as a center of 
smuggling and piracy, city officials state that Shantou 
plans to realize its role as the key city of Eastern 
Guangdong with a modern port and transportation system to 
further accelerate economic growth.  The city's Development 
Reform Commission (DRC) has detailed plans for three 
economic belts to supplement Shantou's already well- 
developed porcelain, toys, knitwear, and underwear 
industries while improving public safety, instituting the 
"New Socialist Village," and improving the environment. 
End Summary. 
 
"Welcome to Beautiful Shantou" 
------------------------------ 
¶2.  (SBU) In the first stop of Consulate Guangzhou's "short 
march" to Eastern Guangdong in the early part of March 
(reftels), Shantou Mayor Huang Zhiguang and Vice Mayor 
Ouyang Zhihong proclaimed the recent turnaround success of 
the prefectural city.  They noted that this port city of 
4.58 million people was one of the original special 
economic zones introduced by Deng Xiaoping's 1981 reforms 
and constitutes the ocean gateway for Eastern Guangdong, 
Southwestern Fujian and Southeast Jiangxi as well as being 
a commercial, financial, transportation and information hub 
for the region.  They acknowledged the negative economic 
growth in 2001 and the slow growth in 2002, alluding to but 
not quite acknowledging that the city is notorious as a 
center for the production of counterfeit goods and went 
through a massive upheaval in 2001, because of the central 
government's crackdown on corruption and mismanagement by 
their predecessors.  In a province where most cities easily 
record over 10% economic growth every year, the mayor and 
vice mayor were happy to point out that in 2004 Shantou was 
back on pace with economic growth of 11.1% with figures for 
2005 economic growth probably at 11.3%. 
 
"Setting the Bar High" 
--------------------- 
¶3.  (SBU) Separately, Shantou Development and Reform 
Commission (DRC) Deputy Director Liao Xiaoping said his 
office spent over two years planning the city's 11th five- 
year plan, basing its plans on guidelines set by the 
national and provincial governments.  The central 
government wants Shantou to become an important coastal 
city in Southeastern China and plans for it to become a 
regional level city, and, in that vein, city leaders want 
Shantou to become a modern port city, which is wealthy, 
stable, and environmentally friendly.  Its 2005 GDP was RMB 
65.08 billion (US$ 8.135 billion), and its goal is RMB 78 
billion (US$ 9.75 billion) by 2010 and with a per capita 
GDP at that time of RMB 15,800 (US$ 1975). 
 
¶4.  (SBU) Different sectors of the Shantou economy have 
different goals.  Some have concrete goals, which they are 
required to meet, while others have only predictions of 
what they might accomplish.  One concrete goal is for the 
city to sustain an average annual economic growth of over 
10% for the next five years.  GDP per capita is also 
planned to double in the next five years.  Another binding 
target is that energy consumption per GDP unit must 
decrease by 5% in the same time period. 
 
¶5.  (SBU) The public sector also has binding goals.  The 
officials say that Shantou citizens are already well off, 
but that they can still be better off.  The DRC wants to 
develop a safer environment for its citizens with one 
binding target for the public sector being a decrease in 
traffic fatalities in the city.  City officials want more 
rural citizens to have access to the same level of health, 
safety, livelihood, and educational benefits that can be 
found in urban areas, per the central government's concept 
of the "New Socialist Village."   Environmental issues will 
 
GUANGZHOU 00010542  002 OF 002 
 
 
also be stressed. 
 
"How Is This Going to Work?" 
--------------------------- 
¶6.  (SBU) Shantou intends to further develop three economic 
belts in and around the city.  Each belt will specialize in 
different industries and sectors.  The first belt will run 
along the eastern coast and will be used for residential 
development.  The city plans to reclaim 19 square 
kilometers from the ocean and to build residential housing 
units there.  The second belt will center on the two ports 
and a tax bonded zone.  This belt will be 30 kilometers 
long and will be reserved for petrochemical plants.  The 
final belt will also be 30 kilometers long and will be 
inland.  The belt will be used for the development of high- 
tech agriculture and other related industries. 
 
¶7.  (SBU) The DRC is placing much emphasis on heavy 
machinery manufacturing in addition to Shantou's ports. 
City officials plan to promote manufacturing of machines to 
be used for medical equipment, food processing, and 
machines for light industry manufacturing.  On the high- 
tech side, the government will be focusing on electronic 
equipment and pharmaceuticals. 
 
¶8.  (SBU) In typical centrally planned economy fashion, the 
DRC has a list of over 190 projects available for 
investment.  These projects include infrastructure, 
industrial, and social development.  Traditionally, the 
biggest investors in the Shantou region have come from 
overseas Chinese with family ties to the area.  The city 
officials admit that as these family ties become more 
distant, it is becoming increasingly difficult to attract 
investment, but did not offer an alternative. 
 
Comment 
------- 
¶9.  (SBU) Despite its past history and identification as an 
IPR pirate, Shantou does seem to be poised for a 
resurgence, but many questions remain unanswered.  Despite 
having "binding" goals and predictions, the city's plan 
also takes the same smorgasbord, shotgun approach favored 
by many of its counterparts, seemingly seeking to develop 
every sort of industry instead of specializing in those 
that would complement the city's competitive advantages. 
Shantou also faces stiff competition from neighboring 
cities in Guangdong and Fujian provinces.  Xiamen in Fujian 
province already has well-developed port, electronics, and 
petrochemical industries, which far outshine those in 
Shantou.  Rather than seeking to develop a regional 
strength by cooperating with nearby Jieyang and Chaozhou, 
each city in the Chao-Shan area seems to be following a 
separate path to development.  Still, Shantou has clear 
strengths in porcelain, toys, knitwear, and underwear and 
is also working to upgrade its high tech sector.  It may be 
that in Guangdong's superheated economy, most cities can 
still come out smelling like a rose, and Shantou is likely 
to be one of them. 
 
¶10.  (SBU) The next messages in the "short march" series 
deal with two sides of Shantou -- one literally of 
transparency and light as we visited a pair of enterprises 
making specialty glass and ultrasound equipment using 
optical fiber, respectively, and literally of darkness as 
we talk with Shantou's rather weak IPR bureaucracy and a 
university student audience that seemingly would want an 
IPR free ride in order for China to get to global 
innovation levels. 
 
Dong