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DE RUEHGZ #4848/01 1380317
ZNR UUUUU ZZH
R 180317Z MAY 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 8177
INFO RUEHOO/CHINA POSTS COLLECTIVE
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UNCLAS SECTION 01 OF 03 GUANGZHOU 014848 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB, R, EAP/CM, EAP/PD, DRL 
STATE PASS USTR - STRATFORD, CELICO 
USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: ECON PGOV EWWT ETRD EINV CH
SUBJECT:  XIAMEN: CITY WITH A VISION 
 
REF:  A) Guangzhou 13562 B) Guangzhou 13384 C) Guangzhou 
13385 F) Guangzhou 14707 G) Guangzhou 14818 
 
¶1.  (U) Summary:   The city of Xiamen, Fujian Province's 
vibrant economic driver in the southern part of the 
province, continues to impress with both its current 
execution and future vision to be one of China's leading 
cities.  During an early April visit to the city, Xiamen 
Vice-Mayor Zhan Cangzhou detailed the city's plan to enhance 
its reputation as China's most livable and civilized city by 
expanding its high-tech manufacturing and service industry 
base.  The Xiamen International Port, led by Yao Zhang, 
corroborated this vision with plans for infrastructure 
growth, efficiency improvements, and safety and 
environmental concern as the port tries to move into the 
elite tier of international ports, following behind Shanghai 
and Shenzhen ports in a quest for mainland port supremacy. 
End Summary. 
 
The Vision Defined 
------------------ 
 
¶2.  (U) Xiamen Vice-Mayor Zhan Cangzhou met the Consul 
General at the Xiamen Mandarin Hotel to discuss the current 
and future state of the city of Xiamen.  Zhan stressed that 
Xiamen, although already nationally ranked as the second 
"most livable city" and the "most civilized city in the 
People's Republic of China" in separate domestic surveys, 
would not rest on its laurels.  Xiamen instead has a 
detailed plan to build on this sterling reputation and its 
already strong high-tech manufacturing base, currently 
represented by U.S. companies, Dell and Kodak as well as 
other foreign and domestic companies.  The key to this plan 
is to leverage the city's reputation of being a civilized 
and livable city to better attract additional 
environmentally friendly, high-tech manufacturing jobs and 
continue to build its growing service industry.  This desire 
is strongly motivated by city leadership wishes for Xiamen 
to maintain its uniqueness and avoid becoming yet another 
polluted, smoke stack filled Chinese metropolis. 
 
Gu Lang Yu - Part of the Xiamen Difference 
------------------------------------------ 
 
¶3.  (U) Earlier the same day, a short tour of Xiamen's best 
known attraction, Gu Lang Yu Island - the former enclave of 
foreigners in Xiamen, affirmed Xiamen's unique place among 
Chinese cities.  Upon exiting from the ferry, licensed tour 
guides meet visitors and politely ask if their services are 
needed.  Electric cars are also available to rent, as 
regular automobile traffic is not allowed on the island. 
The Xiamen government also provides an easily located 
tourist center just steps from the ferry pier that offers 
free maps, suggests walking tours for individuals, and 
provides a model of the island to help visitors orient 
themselves and easily find well preserved sites such as the 
former U.S. and other consulates and numerous grand restored 
homes of various European and Asian styles. 
 
A Port for the Future 
--------------------- 
 
¶4.  (U) Executive Director Fang Yao of the Xiamen 
International Port Company stressed that Xiamen's unique 
position as the only deep-water port between the Pearl and 
Yangtze River Deltas had already enabled the port to become 
the seventh largest in the PRC and the 24th busiest in the 
world.  With a current capacity of seven berths, the port is 
constructing three new berths that will come online between 
June and December of this year.  Negotiations are also 
ongoing with Maersk, a global Danish shipping company, to 
build an additional three berths.  The new berths, valued at 
over RMB 3 billion (USD 374 million), will be jointly owned 
and completed by the end of 2007.  New container control 
software purchased from the United States will also allow 
the port to increase throughput from its current rate of 28 
containers per hour to 32 containers per hour.  The 
completion of these six new berths and the throughput 
improvements will enable Xiamen International Port to almost 
triple its shipping volume from 2005 levels to over seven 
million twenty-foot equivalent units (TEU).  Additionally, 
the port is already handling many of the new super-sized 45- 
 
GUANGZHOU 00014848  002 OF 003 
 
 
and 48-foot containers, a step up from the still mainstream 
40-foot containers. 
 
Infrastructure is Key to Continued Success 
------------------------------------------ 
 
¶5.  (U) Infrastructure is critical for Xiamen International 
Port success as well.  New freeways and railways are crucial 
to bringing export and import cargo to the port.  Xiamen 
government and port officials are lobbying for an increased 
number and improved freeways to Jiangxi and Hunan provinces. 
This additional infrastructure will allow Xiamen 
International Port to ship products from the PRC's interior 
cities, themselves beneficiaries of migrating factory 
production from the relatively higher labor cost areas of 
Guangdong province, that are currently only connected to 
Shenzhen or Shanghai.  A new railway from Shenzhen to Xiamen 
is already planned for completion by 2011 and construction 
will start by the end of this year.  Products from southern 
and eastern Guangdong province will then have the option to 
ship out of Xiamen.  With handling fees that are 60% lower 
than Shanghai and 50% of Shenzhen, Yao is certain that 
manufacturers will find this new option attractive.  To help 
convince producers of the Xiamen International Port's 
merits, the company has even gone so far as to set up branch 
offices in many cities in Fujian and Jiangxi provinces to 
market its services. 
 
Location, Location, Location 
---------------------------- 
 
¶6.  (U) Xiamen's proximity to Taiwan is one of its biggest 
strengths and opportunities for growth.  If and when the 
"three big links" (da san tong) between Taiwan and mainland 
China are approved and implemented, Yao believes that the 
bulk of Taiwan cargo will flow through Xiamen International 
Port.  Much of this traffic is already going from Xiamen to 
Gaoxiong (Kaohsiung), Taiwan, but is delayed as the 
paperwork must currently travel through Hong Kong.  The 
heavy investment from Taiwanese businesses in Fujian-located 
industry further drives Taiwan-bound exports through this, 
Fujian's largest port, accounting for more than 50% of all 
cargo now handled, according to Mr. Yao.  With such a 
positive growth outlook and expansion backed up by 16% GDP 
growth for the city of Xiamen and 12% growth for Fujian 
Province in 2005, Xiamen International Port Company 
successfully went public, listing on the Hong Kong Stock 
Exchange on December 19, in part to fund its aggressive 
expansion plans. 
 
Port Security a Priority 
------------------------ 
 
¶7.  (U) A tour of the port facilities after the meeting 
demonstrated Xiamen Ports' commitment to security, though 
the last major incident of alien smuggling via container 
reportedly originated from Xiamen Port.  Among the first 
things noticed on entry were security checkpoints and 
cameras that recorded all incoming vehicles.  As 18% of all 
cargo exported from Xiamen arrives in the United States and 
the past usage of containers and ships for alien smuggling 
from China, security at the port is or paramount concern. 
Yao highlighted that Xiamen International Port meets safety 
measures as agreed to in the 1974 International Convention 
for the Safety of Life at Sea (SOLAS).  The United States 
Coast Guard performed a port security and safety inspection 
in 2005 as well.  The port has recently added more 
illumination and increased monitoring by persons and systems 
to help safeguard boats from access by non-employees. 
Waterside security is provided by the Ministry of Public 
Security as well as by port security.  Yao said that 
environmental protection is of major concern to Xiamen and 
the port runs frequent water quality tests to monitor 
pollution.  Furthermore, the port has its own centralized 
wastewater treatment facilities.  Finally, the excellent 
condition of the port was noticeable from extremely well- 
maintained tugboats, equipment in good condition, solid 
organization of its containers, to machines that 
automatically applied a sanitizing wash to all vehicles and 
 
GUANGZHOU 00014848  003 OF 003 
 
 
containers leaving the port by road. 
 
Comment: When Can We Move There? 
-------------------------------- 
 
¶8.  (U) Xiamen is an impressive city.  Visiting delegations 
and Consulate officers all agree Xiamen is a very liveable 
place.  Unlike some of the other cities visited during the 
short and long marches to northeast Guangdong and southern 
Fujian Provinces, Xiamen is blessed with a combination of 
geographical and leadership advantages.  Building on its 
already strong base, Xiamen, also host to the annual China 
International Fair for Investment and Trade, will continue 
to develop its strengths and reach out to inland provinces 
with an eye to join the world's top 20 megaports.  End 
comment. 
 
¶9.  (U) Officials visited in Xiamen include: 
Zhan Changzhou Vice Mayor 
Sun Yun        Director, Political Institute under Taiwan 
               Research Institute (TRI), Xiamen University 
Zhang Wensheng Deputy Director, Political Institute under 
               TRI, Xiamen University 
Shi Zhengfang  Deputy Director, Economic Research Institute 
               under TRI, Xiamen University 
Chen Kongli    Prof, TRI, Xiamen University 
Fang Yao       GM, Xiamen International Port Co. Ltd 
Hong Lijuan    Board Secretary, Xiamen International Port 
               Co. Ltd 
Miu Luping     Chief Economist, Xiamen International Port 
               Co. Ltd 
Chen Aijing    Director, Foreign Affairs Office (FAO), 
Xiamen Government 
 
 
DONG