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O 131018Z MAR 07
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 5584
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C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001672 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/13/2032 
TAGS: PGOV ECON KCUL SOCI CH
SUBJECT: LI YUANCHAO DISCUSSES REFORM, PROPERTY LAW AT 
DINNER WITH AMBASSADOR 
 
REF: A. SHANGHAI 101 AND PREVIOUS 
 
     ¶B. 06 BEIJING 4689 
 
Classified By: Ambassador Clark T. Randt, Jr.  Reasons 1.4 (b/d). 
 
Summary 
------- 
 
¶1.  (C) Pressing ahead with political and economic 
reform poses the biggest challenge for Jiangsu, 
provincial Party Secretary Li Yuanchao said at a 
dinner hosted by the Ambassador March 8.  Interest 
groups that are unwilling to compromise, especially on 
issues such as health care, are slowing positive 
change.  The National People's Congress is sure to 
pass the draft private property law.  While its new 
property protections for individuals and enterprises 
could limit the provincial government's flexibility in 
initiating public works, the law is a step forward in 
safeguarding citizens' rights.  Jiangsu continues to 
move ahead with experiments in village and township 
elections, while its larger cities are increasingly 
turning to polling to gauge public sentiment about 
government performance, Li said.  The Ambassador and 
Li discussed health care reforms, protection of 
intellectual property rights, development of Jiangsu's 
rural areas and enhancing the province's academic 
exchanges with the United States.  End Summary. 
 
Who Moved Jiangsu's Cheese? 
--------------------------- 
 
¶2.  (C) For the third year in a row, Party Secretary 
Li took a break from his participation in the annual 
National People's Congress and Chinese People's 
Political Consultative Conference legislative sessions 
and accepted an invitation to dine with the 
Ambassador.  The dinner discussion was lively and 
upbeat.  Li remarked that the biggest challenge he 
faces in Jiangsu Province is pressing ahead with 
economic and political reforms, noting that a main 
hurdle is convincing various powerful interest groups 
to sacrifice a little for the larger public good. 
(Note: A rising political star within the Party 
system, Li has not vocally advocated democratic 
openness in China.  He has, however, overseen 
considerable experimentation with elections at the 
grass-roots level in Jiangsu.  End note.) 
 
¶3.  (C) The introduction of any quick political or 
economic change is bound to ruffle feathers, Li said. 
Referring to the bestselling inspirational book "Who 
Moved My Cheese," by Spencer Johnson, Li commented 
that "whatever reforms we pursue, someone will be 
unhappy."  To illustrate the point, Li related that in 
his own family, there are divisions over how to mend 
the health care system.  Li's nephew, who heads a 
medical research firm in Shanghai, believes the 
Chinese Government interferes too much in health care, 
particularly on the research and development side. 
His sister-in-law takes an opposing view, maintaining 
that the government should significantly ramp up its 
financial support for health care.  His younger 
brother, who has cancer and spends much time in 
hospitals, is deeply dissatisfied with the treatment 
he receives and believes "all medical personnel should 
be given the death penalty."  Such a lack of consensus 
in society at large is a primary part of what slows 
the process down, Li said. 
 
Property Law Will Certainly Pass 
-------------------------------- 
 
¶4.  (C) A major reform the NPC is considering this 
year is a draft law that would expand protection for 
private property.  Li said he attended the March 8 
session at which Wang Zhaoguo, an NPC Vice Chair and 
Politburo member, explained the draft law on property 
rights.  Describing the draft law as "of historic 
importance," Li said he is certain it will pass.  Its 
basic principle is to accord private individuals and 
enterprises some protection for their property.  For 
Jiangsu, the law will pose considerable challenges, 
especially because it will limit the provincial 
government's flexibility in how it manages land 
resources.  Under the current system, when authorities 
want to take land for public works, such as for 
building highways or power plants, they can issue 
binding orders requiring local residents to depart. 
The proposed property law, however, requires the 
consent of residents before any relocations can occur. 
 
BEIJING 00001672  002 OF 003 
 
 
 
¶5.  (C) Li said he supports the draft law because it 
enhances citizens' rights.  In most cases, officials 
and residents will be able to reach agreement on 
compensation and projects will proceed smoothly.  But 
how to handle situations where residents refuse to 
move will be a question mark. 
 
Voting and Polling 
------------------ 
 
¶6.  (C) Li remarked that despite his role as a top 
official, he believes the power of government should 
be answerable to a sound legal system.  In connection 
with this, democratic change in China can only come in 
the context of rule of law.  Jiangsu has experimented 
with village and township elections.  County-level 
balloting is a ways off because organizing a vote for 
millions of people is still logistically "too hard," 
Li contended.  At the same time, in the province's big 
cities, authorities are increasingly turning to 
polling as a way to gauge public sentiment about 
provision of government services.  In Nanjing and 
other metropolitan areas, cities conduct annual 
surveys of up to 10,000 residents.  Officials at 
government departments that receive low marks can be 
sacked or reprimanded.  Although a government agency 
conducts the polling, Li considers the results 
reliable because even that agency is a subject of 
survey questions and can also come in for harsh 
treatment from respondents. 
 
Health Care Dissatisfaction 
--------------------------- 
 
¶7.  (C) Poll results indicate that Jiangsu citizens 
are most unhappy about the health care sector and food 
safety issues, Li said.  But in Suqian, a northern 
Jiangsu industrial city, an experiment is underway in 
which the municipal government provides most basic 
health care coverage and the hospitals have been 
privatized.  Citizens are appreciably more satisfied 
with this system, Li stressed, adding that surveys 
show Suqian residents do not rank health care among 
their top three or four areas of discontent.  But the 
hospital privatization scheme has elicited harsh 
criticism from scholars and some officials who believe 
such market-based solutions are tantamount to the 
government's abandoning its responsibilty to the 
people.  Li enthusiastically agreed ith the 
Ambassador's observation that, in his personal view, 
China's Ministry of Health is focused less on the 
interests of citizens than on protecting the medical 
industry and drug companies, adding that this is 
precisely the key obstacle to health care reform. 
 
New Rules about Public Finances 
------------------------------- 
 
¶8.  (C) Li related that Jiangsu has instituted reforms 
in handling its public finances.  Whereas before 
localities could decide on their own how to allocate 
public funds, now provincial authorities preside over 
every detail of the process for all levels of 
government.  This centralized approach has the 
advantage of ensuring that the poorest regions get the 
money they need to address problems.  This is in line 
with Jiangsu's policy of promoting development in the 
countryside, Li said, asserting that if larger cities 
were left to pull the provincial purse strings, they 
would use money only for their own construction 
projects. 
 
Suzhou Catches Seoul 
-------------------- 
 
¶9.  (C) Asked about Premier Wen Jiabao's March 5 Work 
Report stressing the concept of building a "New 
Socialist Countryside," Li judged that the idea 
carries a different meaning in Jiangsu than in other 
provinces.  Without going into specifics, Li said 
Jiangsu has used it as a basis to address 
environmental issues and enhance protection of 
cultural heritage sites.  At the same time, cities 
remain the backbone of Jiangsu's economy.  Li lauded 
the humming development of Suzhou, Jiangsu's second 
city, where per capita GDP has reached USD 10,000, on 
a par with Seoul, he claimed.  "Suzhou should become 
China's Europe," he said.  Li underlined that he 
envisions a Jiangsu in which city dwellers and rural 
residents all belong to the middle class.  The aim is 
 
BEIJING 00001672  003 OF 003 
 
 
to spread the wealth from Jiangsu's developed south to 
its economically lagging north, Li said, adding that 
it may take as many as 10 to 20 years to do this. 
 
¶10.  (C) In response to the Ambassador's comments 
commending Jiangsu's efforts to combat Intellectual 
Property Rights infringements, Li readily agreed that 
protecting IPR is in his province's own interests. 
Jiangsu has a swiftly growing number of innovators in 
a variety of fields who need to be defended from 
piracy.  "We are committed to fighting against IPR 
violations," Li declared. 
 
More Exchanges, Upbeat on APP 
----------------------------- 
 
¶11.  (C) Li described his trip to the United States in 
May 2006 as a success.  His focus on the visit was to 
promote educational exchanges between Jiangsu and the 
United States.  He reported having productive 
conversations with education experts about 
establishing private primary and secondary schools in 
the Nanjing area whose aim would be to attract 
international students.  Lauding the 20th anniversary 
of Johns Hopkins' Nanjing Center, Li related that 
Nanjing University has signed agreements with six 
other American institutions, including the State 
University of New York.  The Ambassador pointed out 
that the State Department has tapped Nanjing as a 
location for one of the first four proposed American 
Presence Posts in China, which would certainly bolster 
the kinds of exchanges Li is seeking.  While our 
Government has authorized a budget, China's Foreign 
Ministry has still not approved the APP project, the 
Ambassador said.  Li said he hopes the APP in Nanjing 
can move forward. 
 
Nanjing Wants More Visitors 
--------------------------- 
 
¶12.  (C) Li extended an open invitation to Members of 
Congress to visit Nanjing.  When foreigners consider 
China, they immediately think of cities such as 
Beijing, Shanghai and Shenzhen.  Shanghai wants to be 
considered China's New York.  Beijing is the political 
center.  But Nanjing has "everything" a visiting 
politician could want in terms of having a productive 
visit.  "I will have one banquet for them and then we 
can go and see everything in Jiangsu," Li remarked. 
RANDT