VZCZCXRO0967
RR RUEHCN RUEHVC
DE RUEHGH #7140/01 3550955
ZNY CCCCC ZZH
R 210955Z DEC 06
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5386
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 5717

C O N F I D E N T I A L SECTION 01 OF 05 SHANGHAI 007140 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B, INR/EAP, AND DRL 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE 
TREAS FOR OASIA - DOHNER/CUSHMAN 
USDOC FOR ITA/MAC - A/DAS MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL:  X1 MANUAL REVIEW 
TAGS: PGOV PINR EINV ECON CH
SUBJECT: WENLING PUSHING THE BOUNDARY OF POLITICAL REFORM 
 
REF: A) SHANGHAI 7139; B) SHANGHAI 6460; C) BEIJING 24346, SHANGHAI 7137 
 
SHANGHAI 00007140  001.2 OF 005 
 
 
CLASSIFIED BY: Veomayoury Baccam, Acting Policital/Economic 
Section Chief, U.S. Consulate, Shanghai, Department of State. 
 
REASON: 1.4 (b), (c), (d) 
 
 
 
¶1.  (C) Summary: Riding on the coattails of the successes with 
"democratic consultative meetings (minkenhui) and participatory 
democracy reforms in other townships, Wenling municipality in 
Zhejiang Province has moved forward and implemented further 
reforms in the township of Xinhe, which put the entire budget 
under scrutiny and, in a rare move, empowered the local 
legislature with real budgetary authority.  While this move 
toward "legislative democracy" had earned praise from some top 
leaders, efforts at strengthening legislative democracy through 
electoral reforms in Luoheng Township have stalled.  However, 
some of the organizers of the Luoheng reforms are working with 
officials in Yunnan Province's Honghe to implement similar 
reforms.  Support for these reforms has been mixed, with 
National People's Congress Chairman Wu Bangguo reportedly 
cracking down on budget reforms that strengthened legislative 
authority over the government.  Moreover, with a recent 
reshuffling of party leadership, some localities have grown at 
least temporarily skittish about pushing the envelope on 
political reform.  Nevertheless, reformers remained committed to 
moving democratic change forward in Wenling and elsewhere.  This 
is the second of two cables about political experimentation in 
Wenling.  The first addressed Wenling's experiments with 
consultative democracy.  End summary. 
 
¶2.  (C) Poloff traveled on October 6 to Wenling, an 
administrative region under Zhejiang Province's Taizhou City to 
meet with Chen Yiming, Head of the Wenling Municipal Propaganda 
Department's Theory Office, Deputy Director of the Wenling 
Municipal People's Democratic Consultation Work Office, and 
author of Wenling's political experimentation.  Poloff also met 
on June 21 and 22, October 25, and December 5 and 20 with 
Shanghai Municipal People's Congress researcher Zhou Meiyan; 
Beijing-based democracy advocate and World China Institute 
President Li Fan accompanied Zhou on June 22.  Both Zhou and Li 
have been advising Chen on his reform efforts and have been 
promoting Chen's experiments within Shanghai and national-level 
political circles.  Li and his China and the World Institute 
have received money through the Mission's small grant program to 
help fund the Wenling experiments.  Zhou also forwarded Poloff 
the summary of a May 13-14 2006 "Workshop on the Legislature, 
Budget Supervision, and Public Finance," hosted jointly by the 
China University of Politics and Law, Peking University, and 
Yale Law School that primarily discussed the Wenling experiments. 
 
--------------------------------------------- ---- 
Xinhe: The Next Stage in Democratic Budget Reform 
--------------------------------------------- ---- 
 
¶3.  (C) Chen said that with the successful implementation of the 
Zeguo budget reform experiment in 2005 (Ref A), he wanted to 
push the envelope further and had begun designing a modified 
version of budget review for Wenling's Xinhe Township with the 
cooperation of Xinhe Party Secretary Jin Liangmin.  Unlike 
Zeguo, where the minkenhui examined a small part of the budget, 
Chen put the entire budget under scrutiny in Xinhe.  The plan 
also sought to strengthen the role of the local People's 
Congress, vesting it with real power in relation to the 
government.  (Note: According to Zhou and other Chinese 
academics with whom Poloff has met, the legislatures, or 
People's Congresses, are not considered part of the government 
in the Chinese political system.  End note.) 
 
¶4.  (C) On March 6, 2006, Xinhe Township held a minkenhui with 
190 self-selected volunteer representatives.  Participants were 
divided into three groups focused on industry, agriculture, and 
social development.  The groups examined the township's detailed 
draft budget.  Chen said any resident was welcome to attend and, 
at present, there were no restrictions on the number of 
volunteer representatives who could be involved.  All government 
leaders and bureau heads, however, were required to attend and 
answer any questions the participants had. 
 
¶5.  (C) All suggestions and questions about the budget were 
recorded and then discussed at a Joint Conference (lianxi hui) 
attended by the government officials, relevant People's Congress 
committees, and the party's Economic Small Group.  The Joint 
 
SHANGHAI 00007140  002.2 OF 005 
 
 
Conference decided which suggestions were reasonable and could 
be adopted, which were unreasonable, and which dealt with 
restricted issues and were off limits.  Of the 50 suggestions 
put forward by the minkenhui, the Joint Conference adopted 20 
recommendations into its draft, impacting 6 million RMB of the 
town's 98 million RMB budget. 
 
¶6.  (C) On March 7, the Joint Conference presented its draft 
budget based on the minkenhui suggestions to the entire body of 
the People's Congress--98 members--plus any interested observers 
from among the public (Note: There were 110 observers who 
attended in 2006.  End note.).  After the initial meeting, the 
People's Congress divided into five groups, based on the 
representatives' geographical districts, each with a group 
leader who recorded the group's ideas about the draft budget. 
The People's Congress then reconvened to listen to the group 
leaders' presentations.  Observers were not allowed to speak at 
the meetings, but were able to lobby the representatives on the 
margins.  If the representatives liked their suggestions, then 
they could bring them before the body or the committee.  The 
People's Congress then sent a draft revised budget back to the 
government who examined it in a second Joint Conference. 
 
¶7.  (C) After discussing the People's Congress recommendations, 
the Joint Conference redrafted the budget and sent it back to 
the People's Congress on March 8 where the entire body listened 
to the proposed budget and offered suggestions before breaking 
again into the five district groups.  The People's Congress then 
reconvened to approve the draft.  At this point, if they were 
still unable to agree on the budget, People's Congress 
representatives could introduce amendments for consideration. 
Chen said that if five representatives put forward a 
recommendation, it was voted on by the People's Congress.  If 
more than half of the members voted for it, the amendment was 
adopted.  After the People's Congress approved the budget and 
any amendments, it was then binding on the government.  In 2006, 
representatives successfully introduced eight amendments, of 
which two were ultimately adopted. 
 
¶8.  (C) At the May workshop, Xinhe People's Congress Deputy 
Director Lou Jianrong added that the People's Congress also 
established a permanent "financial inspection team" that had the 
right to inquire about, inspect, and hear the government 
financial report and to participate in the government budgeting 
for the next quarter.  At the same meeting, Xinhe Deputy Mayor 
Jin Liangmin noted that the reforms had limited the power of 
government and party leaders to determine fund allocation, while 
strengthening the local People's Congress.  Jin said that this, 
in turn, had raised the credibility of the government in the 
eyes of the people. 
 
¶9.  (C) Chen stressed that this type of budget oversight by the 
legislature was highly unusual in China in that a People's 
Congress was able to exercise its constitutional veto authority 
over the government.  Although, Chen said, the People's Congress 
was not a truly representative elected body, it was a step in 
the right direction of introducing independent oversight of 
governmental decision-making.  Moreover, the minkenhui and 
observer/lobbyist elements provided a way for the people's 
voices to be heard throughout the process. 
 
---------------------------- 
Top Leaders Mixed on Support 
---------------------------- 
 
¶10.  (C) Chen said that it was easier for a small municipality 
like Wenling to implement political reform than a large city 
like Shanghai because it attracted less attention.  This meant 
that reforms could be fully established and produce positive 
results that were difficult to argue with before someone up the 
chain had the chance to veto it.  He noted that the type of 
budget reforms he was implementing in Wenling that empowered the 
People's Congresses were in line with many National People's 
Congress (NPC) representatives' desires to increase their 
overall authority and oversight.  In fact, Zhou had passed Chen 
a draft budget reform law for Shanghai that looked strikingly 
similar to the Xinhe model.  Chen stressed that he was not 
engaging in anything illegal, but that he was, in fact, trying 
to turn the People's Congresses into what they were described as 
on paper. 
 
¶11.  (C) Chen said that the Central Party School was supportive 
of Wenling's initiatives and that (CPS) Vice President Li Junru 
was focused on the experiments.  During a March or April meeting 
 
SHANGHAI 00007140  003.2 OF 005 
 
 
at People's University in Beijing, Li said that Wenling was 
China's most successful, most worthy of study and 
implementation, and best model of consultative democracy in 
China.  Chen argued that Li wanted to move beyond participatory 
democracy and harbored a secret admiration for U.S.-style 
democracy (Ref B).  Given his position as a high-level party 
leader, however, Li was unable to voice his opinions.  Li could, 
however, give tacit support.  Chen noted, for instance, that he 
was able to publish an article in the CPS "Xuexi Shibao" on 
Xinhe's reforms. 
 
¶12.  (C) Li Fan argued during a June 22 meeting with Poloff that 
the experiments going on in Wenling showed that Zhejiang Party 
Secretary and princeling Xi Jinping was not as conservative as 
 
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some paint him, but was actually reform minded.  Li--himself 
also a princeling--speculated that Xi could be elevated to the 
Politburo Standing Committee in 2007.  Chen, however, was less 
convinced of Xi's reform orientation.  He said that he had 
conducted his experiments without informing the provincial 
authorities.  By the time word reached Xi, the experiments had 
already proven successful and Xi had little alternative but to 
put his stamp of approval on them. 
 
¶13.  (C) Li Fan also noted that there were a number of budget 
reforms happening around the country, although not everyone was 
happy with them.  For instance, Guangdong Party Secretary and 
Politburo member Zhang Dejiang was upbraided by NPC Chairman Wu 
Bangguo for allowing unspecified budget reform experimentation 
to take place in Guangdong.  Ironically, according to Li, Wu was 
not interested in reforms that strengthened the legislative 
branch at the expense of the government or party.  Tangentially, 
Li explained, this showed that Jiang Zemin's protigis were not a 
cohesive group.  According to Li, Zhang had been promoted by 
Jiang but was not necessarily Jiang's man, nor did he always 
mesh well with members of the "Shanghai Clique." 
 
¶14.  (C) Bio comment: According to a press report, Li's father 
was an advisor to former Premier Zhou Enlai.  Li, born in 1949, 
attended school with Chairman Mao Zedong's daughter and during 
famine years enjoyed out-of-season oranges that his father would 
bring home from official meetings.  Li also helped form a 
princeling Red Guard unit during the Cultural Revolution 
(1966-76) with fellow princeling and later Tiananmen democracy 
activist Wei Jingsheng.  According to Zhou, who works closely 
with Li, Li has avoided arrest and excessive political 
persecution while actively promoting political reform because 
his father is still alive.  She also confirmed Li's 
participation with Wei in the Red Guard unit.  Zhou worried that 
Li might not be able to continue his work much longer since his 
father was very ill and would likely die soon.  End comment. 
 
--------------------------------------------- -------------- 
Luoheng: Towards Legislative Democracy With Fits and Starts 
--------------------------------------------- -------------- 
 
¶15.  (C) Chen said that he was using the successes of the 
Songmen and Zeguo experiments in "consultative democracy" to 
spur and support "parliamentary democracy," or the use of an 
elected legislature to provide a check on the government. 
However, both Chen and Zhou said that all of these reforms fell 
short of real "parliamentary democracy" since the legislative 
representatives in China had not been chosen by a democratic 
process.  At the May conference, Li Fan argued that in order to 
truly reinvigorate the role of the People's Congress, elections 
needed to be "properly opened" so the delegates were truly 
representative of their constituencies.  In the meantime, it was 
important to teach existing People's Congress representatives 
about regulations and procedures--what is clearly stipulated in 
the law but not practiced--so that they could be more effective 
organizations and better assert their influence. Zhou said that 
she, Li, and Zhongshan University Professor Ma Jun had been 
involved in training the Xinhe legislature and others on their 
constitutional authorities. 
 
¶16.  (C) Chen explained that he was currently working with Zhou 
and Li on electoral reforms in the nearby town of Luoheng, which 
is also under Wenling.  Zhou said that Chen had worked out with 
the Luoheng Party Secretary that the party would control the 
selection of no more than half of the candidates on the ballot, 
as compared to the current practice of the party filling 
virtually the whole slate.  As part of this, Chen was also 
pushing the use of preliminary elections to narrow down the 
numbers of preliminary candidates, as opposed to relying on 
party-controlled "voter small groups" (Ref C).  (Note: Chinese 
 
SHANGHAI 00007140  004.2 OF 005 
 
 
law dictates that there be 33 percent to 50 percent more 
candidates than the number of slots being voted on.  End note.) 
Moreover, Chen had garnered the Luoheng Party Secretary's 
consent to allow for campaigning in the form of open, 
non-scripted debates this election.  Eventually, Zhou said, Chen 
planned to push for allowing both party and non-party candidates 
access to television, newspaper, and other forms of propaganda 
traditionally open only to party candidates. 
 
¶17.  (C) Chen planned to combine election reforms with 
Xinhe-style budget reforms to achieve a true "parliamentary 
democracy."  Zhou said that it would be possible under such a 
system to have truly competitive elections and a People's 
Congress that was divorced from Party control overseeing the 
Party-appointed government.  Chen said that, holding true to his 
modus operandi, he was not telling his superiors about his 
efforts until he had successfully implemented them.  He stressed 
that such reforms were, in actuality, simply implementation of 
existing law and that his supervisors would have no legal basis 
to oppose him, even if they found out.  While in theory, these 
reforms were innocuous, in practice, such reforms would be 
unprecedented, according to Zhou.  Both Zhou and Li had traveled 
to Luoheng to provide training to all interested candidates and 
the current People's Congress. 
 
¶18.  (C) In December, Zhou told Poloff that the Luoheng 
experiment had been put on hold.  She explained that over the 
past few months, all of the township party secretaries in 
Wenling had been reshuffled in the run up to the People's 
Congress elections.  The Luoheng People's Congress was still on 
board with the election reforms but the new party secretary 
thought the issue was too controversial and did not want to rock 
the boat so soon into his tenure.  As an aside, Zhou noted that 
party leaders were often transferred prior to People's Congress 
elections as part of Beijing's effort to keep local party bosses 
from becoming too strong.  Zhou said that Chen would try again 
in another five years when the elections rolled around.  The new 
Luoheng party secretary was still willing to work on budget 
reform, however, which was seen as safer since it had already 
been approved by the Provincial government. 
 
¶19.  (C) Zhou assessed that despite these setbacks, reforms 
would continue to move forward in Wenling.  She noted that the 
current reform experiments were too entrenched and popular with 
the people for new party bosses to try and roll back.  Nor was 
there a good justification for them to do so.  Moreover, Chen 
was popular with the Wenling party leaders.  His efforts had 
garnered significant positive international attention and earned 
the city praise from all levels of the Chinese government. 
Ironically for Chen, but fortunately for Wenling and China, 
Chen's success had not earned him any promotions, since his 
bosses were anxious to keep him in place for the time being to 
continue his work. 
 
-------------- 
Eyes on Yunnan 
-------------- 
 
¶20.  (C) Zhou said that while electoral reforms had stalled in 
Xinhe, they were moving forward and on track in Yunnan's Honghe 
township, part of a minority-controlled district.  Zhou said 
that she and Li had been working to train and, eventually, 
implement the same reforms there that they had been working on 
in Luoheng.  She said that unlike Wenling, when she visited 
Honghe in September, party leaders were excited to move forward 
with these reforms when they held their elections next year.  As 
a hedge against local leadership transfers, Zhou said they had 
been working with many of the neighboring areas and party 
officials to build a base of support for these programs that 
would hopefully be sufficient to overcome any hesitancy from a 
new incoming party secretary. 
 
----------------------------- 
Comment: Hints of Real Change 
----------------------------- 
 
¶21.  (C) In a country where political pageantry is paraded as 
democracy, and scholars and officials vehemently argue that the 
people neither want nor need real authority over the government, 
it is refreshing to find people of influence committed to real 
reform and genuine democratization.  While Beijing is currently 
on board with the Wenling experiments, as Chen and others like 
him push the boundaries, Beijing's tolerance for political 
reform and willingness to share power--even at the local 
 
SHANGHAI 00007140  005.2 OF 005 
 
 
level--may ultimately be tested.  End comment. 
JARRETT