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O 111247Z JAN 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3724
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
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INFO RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS E F T O SECTION 01 OF 03 BEIJING 000262 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE ALSO FOR OES/WATSON AND DEROSA-JOYNT 
STATE PASS CEQ CONNAUGHTON 
STATE PASS CEA FOR BLOCK, SLAUGHTER 
STATE PASS USTR FOR STRATFORD, ALTBACH, WINTERS, CELICO 
STATE PASS FEDERAL RESERVE BOARD FOR JOHNSON/SCHINDLER; SAN 
FRANCISCO FRB FOR CURRAN/LUNG; NEW YORK FRM FOR DAGES 
NSC FOR RHUNTER/JSCHRIER/KTONG 
TREASURY FOR OASIA/INA DOHNER/HAARSAGER/BAKER/CUSHMAN 
TREASURY FOR TAIYA SMITH 
DOE FOR INTERNATIONAL/PUMPHREY AND GEBERT 
EPA FOR INTERNATIONAL/AYRES, FIDLER, MCASKILL 
HHS FOR STEIGER, ELVANDER AND BHAT 
LABOR FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ECON EFIN SOCI SENV ENRG PREL CH
SUBJECT: SED SESSION TWO:  RURAL AND URBAN BALANCED 
DEVELOPMENT 
 
REF: BEIJING 259 
 
¶1. (SBU) In the December 14 Strategic Economic Dialogue (SED) 
luncheon session on rural and urban balanced development, 
Finance Minister Jin Renqing outlined a recurrent SED theme 
) how to raise the standard of living in China's countryside 
to narrow the rural-urban income gap.  Policies to achieve 
this include increasing public spending in rural areas 
(particularly on infrastructure and social services), 
reducing the tax burden on rural residents, improving the 
provision of public services and promoting a more market 
oriented agricultural policy.  End Summary. 
 
VICE PREMIER WU YI:  RURAL POLICY A TOP PRIORITY 
------------------------ 
 
¶2. (SBU) Vice Premier Wu Yi opened this session of the 
Strategic Economic Dialogue (SED) by stating that in order to 
understand China and the government's economic policy, it is 
necessary to understand China's countryside and the Central 
Government's commitment to establishing the "New Socialist 
Countryside."  Raising both agricultural productivity and 
rural incomes remains a top policy priority for the Central 
Government. 
 
SECRETARY LEAVITT:  UNDERSTANDING RURAL HEALTH CHALLENGES 
 
SIPDIS 
----------------------- 
 
¶3. (SBU) Secretary of Health and Human Services Michael 
Leavitt noted that his trip to Sichuan Province in 
southwestern China in the week preceding the SED had deepened 
his understanding of the health care challenges facing rural 
China, including the need for better transportation to 
hospitals.  Vice Premier Wu expressed her appreciation of 
Secretary Leavitt traveling to China's rural areas. 
 
SIPDIS 
 
MINISTER JIN:  ADVANCING RURAL DEVELOPMENT 
------------------------ 
 
¶4. (SBU) Jin Renqing, Minister of Finance, outlined the 
Central Government's five initiatives to reduce the income 
and social services gap between China's rural and urban 
communities (on average rural incomes are one third of urban 
incomes): 
 
(1) Increase public spending in rural areas; 
 
(2) Reduce the tax burden on farmers to increase rural 
incomes; 
 
(3) Improve living conditions by increasing expenditures on 
rural infrastructure; 
 
(4) Equalize the provision of and access to public services 
between rural and urban areas by canceling school tuition in 
the countryside and expanding rural health insurance; and 
 
(5) Promote a greater role for market forces in agriculture 
and strengthen democratic management of villages. 
 
THE ROLE OF THE PRIVATE SECTOR 
------------------------- 
 
¶5. (SBU) In response to Secretary of Commerce Carlos 
Gutierrez's question about the role of the private sector in 
absorbing migrant labor in the cities, Minister Jin said that 
with limited arable land, it is natural for farmers to 
migrate to urban areas.  Jin estimated that there are now 200 
million migrants in China.  The Central Government encourages 
 
BEIJING 00000262  002 OF 003 
 
 
migration, but there is a need to manage the flow in order to 
avoid slums in large cities, Jin said.  The private sector 
will play an important role by absorbing migrant labor, he 
added. 
 
THE ROLE OF PRIVATE OWNERSHIP OF LAND 
------------------------- 
 
¶6. (SBU) In response to a question from Assistant Secretary 
of State Daniel Sullivan on efforts to promote private 
property rights, Jin defended China's collective ownership 
model.  He did acknowledge, however, that if farmers migrate 
to cities, there should be laws in place to allow them to 
transfer their rural land to others. 
 
BUILDING:  ROADS AND CUTTING ELECTRICITY COSTS 
-------------------------- 
 
¶7. (SBU) Minister of Finance Jin stated that China has made 
significant progress in driving rural development by 
establishing a modern road network.  Chairman of the National 
Development Reform Commission (NDRC) Ma Kai noted that China 
has also expanded its power sector.  Moreover, the Central 
Government has reduced power tariffs for rural residents so 
that they are now charged the same rate as city dwellers. 
 
LUNCHEON SESSION PARTICIPANTS LIST 
-------------------------- 
 
¶8. (U) United States Delegation: 
 
--Henry Paulson, Secretary of Treasury 
--Clark T. Randt, Jr., United States Ambassador to China 
--Michael Leavitt, Secretary of Health and Human Services 
--Samuel Bodman, Secretary of Energy 
--Carlos Gutierrez, Secretary of Commerce 
--Elaine Chao, Secretary of Labor 
--Susan Schwab, United States Trade Representative 
--Stephen Johnson, Administrator of the Environmental 
            Protection Agency 
--Benjamin Bernanke, Chairman of the Federal Reserve 
 
--James Lambright, Chairman and President of Ex-Im Bank 
--Daniel Sullivan, Assistant Secretary, Department of State 
--Andrew Steinberg, Assistant Secretary, Department of 
Transportation 
--Matthew Slaughter, Member of the Council of Economic 
Advisors 
 
¶9. (U) Chinese Delegation: 
 
--Wu Yi, Vice Premier 
--Jin Renqing, Minister of Finance 
--Ma Kai, Chairman of National Development and Reform 
      Commission 
--Xu Guanhua, Minister of Science and Technology 
--Tian Chengping, Minister of Labor and Social Security 
--Liu Zhijun, Minister of Railways 
--Li Shenglin, Minister of Communications 
--Wang Xudong, Minister of Information and Industry 
--Bo Xilai, Minister of Commerce 
--Gao Qiang, Minster of Health 
--Zhou Xiaochuan, Governor of People's Bank of China 
--Li Changjiang, Administrator of General Administration of 
      Quality Supervision, Inspection, and Quarantine 
--Zhou Shengxian, Administrator of State Environmental 
      Protection Administration 
--Zhou Wenxhong, Chinese Ambassador to the United States 
--Xu Shaoshi, Deputy Secretary-General, State Council 
 
BEIJING 00000262  003 OF 003 
 
 
--Yang Jiechi, Senior Vice Minister, Ministry of Foreign 
Affairs 
--Zhang Xiaoqiang, Vice Chairman, National Development and 
Reform Commission 
--Li Yong, Vice Minister, Ministry of Finance 
--Yi Xiaozhun, Vice Minister, Ministry of Commerce 
--Hu Xiaolian, Vice Governor, People's Bank of China 
--Li Ruogu, Chairman of China Export-Import Bank 
SEDNEY