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RR RUEHCN RUEHVC
DE RUEHGH #0141/01 0660843
ZNY CCCCC ZZH
R 070843Z MAR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5598
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 5966

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000141 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL:  MANUAL REVIEW 
TAGS: PGOV PINR EINV ECON CH
SUBJECT: CONTACTS DISCUSS RECENT SHANGHAI PERSONNEL MOVES 
 
REF: SHANGHAI 106 
 
SHANGHAI 00000141  001.2 OF 003 
 
 
CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer, U.S. 
Consulate, Shanghai, Department of State. 
REASON: 1.4 (d) 
 
¶1.  (C) Summary:  According to one contact, more than half of 
Shanghai's vice mayors have been or are rumored to soon be 
removed and several high-level officials have been reshuffled in 
a bid to pave the way for an outsider to come to Shanghai in one 
of the top leadership positions.  At least one vice mayor, Yang 
Xiong, who was probably implicated in the Chen Liangyu scandal, 
was being protected by party elder Jiang Zemin because of Yang's 
business connections to Jiang's elder son.  A separate contact 
said that Huang Ju was considering divorcing his politically 
sensitive wife, suggesting--if true--that Huang's illness may 
have a political element to it.  While many contacts in Shanghai 
have been reluctant to speculate on where Han will end up once 
the dust settles, one contact, close to Han's family, claimed 
that the decision had been made and Han would be the new Party 
Secretary.  End summary. 
 
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-------------------------------- 
Vice Mayors Get the Shaft Gently 
-------------------------------- 
 
¶2.  (C) In recent months, Chinese and Hong Kong press reported 
that five of Shanghai's eight vice mayors had been or were being 
transferred to new positions, leaving two slots currently 
unfilled.  Executive Vice Mayor Feng Guoqin--who authored an 
op-ed piece on financial reform in the March 6 Asian Wall Street 
Journal--seems likely to move.  According to a February 27 
article in Hong Kong's South China Morning Post, Feng was moving 
off to head the Shanghai Chinese People's Political Consultative 
Conference (SCPPCC) replacing Jiang Yiren.  However, Shanghai 
YMCA Secretary General Wu Jianrong told FSN Political Assistant 
on February 26 that Feng would chair the Shanghai Municipal 
People's Congress (SMPC) replacing Gong Xueping.  No further 
information was available on what would happen to the incumbents 
in either position. 
 
¶3.  (SBU) According to a February 27 Xinhua report, Vice Mayor 
Yan Junqi has already moved on to Beijing as vice chairwoman of 
the China Association for Promoting Democracy.  Sina.com 
reported that vice mayors Zhou Yupeng and Liu Yungeng had been 
elected Vice Chairman of the SMPC on February 3.  The Shanghai 
Municipal People's Congress announced in October that former 
Secretary General Yang Dinghua had been promoted to Vice Mayor, 
 
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presumably filling the position vacated by Yang Xiaodu that same 
month.  Yang Xiaodu had transferred to the Shanghai Party 
Standing Committee and was concurrently Director of the United 
Front Work Department, according to an October Xinhua article. 
The six Shanghai vice mayors currently remaining in their 
positions are: Feng Guoqin (rumored to be departing); Yang 
Xiong; Zhou Taitong; Tang Dengjie; Hu Yanzhao; and Yang Dinghua. 
 
¶4.  (C) During a March 2 conversation, Tongji University 
Professor and CPPCC member Frank Peng said that all of these 
personnel moves were related to the Chen Liangyu scandal.  He 
explained that even though the removed vice mayors were staying 
in Shanghai, their transfers to the United Front, CPPCC or the 
SMPC stripped them of all real authority and were intended to 
put them in sinecures.  All of these vice mayors were involved 
to some degree in the Chen case.  Peng opined that there was 
probably not enough evidence of their malfeasance to indict them 
or that Beijing had decided to ameliorate the impact of the case 
on Shanghai's economic stability (Reftel) and opted to 
politically neuter them without subjecting the city to another 
round of arrests. 
 
-------------------------------------------- 
Musical Chairs Continues: Send in the Clowns 
-------------------------------------------- 
 
¶5.  (C) In addition to the vice mayors, several other high-level 
Shanghai posts have been reshuffled.  Former Shanghai 
Development Planning Director Li Liangyuan has backfilled the 
Secretary General slot vacated by Yang Dinghua.  Former Director 
 
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of Civil Affairs Xu Lin has moved laterally to fill the position 
of Shanghai Agriculture Committee Director vacated by Yuan 
Yixing.  (Note: No information was available on what had 
happened to Yuan.  End note.)  A relatively-unknown official 
named Wang Wei replaced Xu as Director of Civil Affairs. 
 
¶6.  (C) On March 2,  Chinese-language news outlets, including 
SHanghai's Wenhui Bao newspaper, reported that nine Party 
members involved in the pension scandal had been officially 
expelled from the CCP and removed from their government 
positions.  The nine included: 
 
- Labor and Social Security Bureau Director Zhu Junyi; 
 
SHANGHAI 00000141  002.2 OF 003 
 
 
 
- Baoshan District Mayor Qin Yu; 
 
- Municipal CCP Deputy Secretary General Sun Luyi; 
 
- Shanghai Electric Group Corporation Party Secretary Wang 
Chengming and Deputy Party Secretary Han Guozhang; 
 
- Shanghai State-Owned Assets Supervision and Administration 
Commission Deputy Director Wu Hongmei; 
 
- Shanghai Industrial Investment Group Company General Manager 
Wang Guoxiong; 
 
- Shanghai Labor and Social Security Bureau Fund Supervision and 
Management Section Chief Lu Qiwei; 
 
- Municipal Housing, Land, and Natural Resources Bureau Land 
Usage and Management Section Chief Zhu Wenjin. 
 
These cases had already been sent to the judicial department for 
prosecution.  Not on the list was Shanghai State-Owned Assets 
Supervision and Administration Commission Director Ling Baoheng, 
who had been named early on as having been implicated in the 
scandal.  According to an October 25, 2006 Xinhua article, Ling 
was "assisting" related departments with their investigations. 
 
¶7.  (C) Peng opined that all of these recent personnel moves 
showed that Shanghai was preparing for an outsider to come to 
Shanghai.  Peng said it was impossible to accurately speculate 
on what shape the Shanghai leadership would ultimately take, but 
he believed Han Zheng would remain on in one of the top 
positions after the Party Congress.  It would be too 
destabilizing to remove Han and Shanghai needed to have a local 
boy in at least one of the slots.  Peng did not see any of the 
rising Shanghai officials as potential candidates for either 
job.  Peng also noted that many people, including Jiangsu Party 
Secretary Li Yuanchao, had been offered the job but that they 
 
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had all turned it down.  He noted that the Organization 
Department did not have the authority to force people at Li's 
level to take jobs without their consent. 
 
¶8.  (C) In contrast, some "insiders" appeared confident that Han 
was in line for a promotion.  In late February, the neighbor of 
Han Zheng's mother told a Consulate spouse that things had been 
"all settled" and Han would be confirmed as Party Secretary. 
This neighbor had previously acted us on Han Zheng's mother's 
behalf for a visa to travel to the United States after Han's 
father died earlier last year. 
 
------------------------------------ 
Jiang Zemin Still Helps Where he Can 
------------------------------------ 
 
¶9.  (C) Peng said that Jiang Zemin was still exerting his 
influence in trying to actively protect two Shanghai officials 
involved in the Chen case.  The first was Shanghai Police Chief 
Wu Zhiming.  (Note: According to Peng, Wu is Jiang's nephew, but 
other sources describe him as the nephew of Jiang's wife.  End 
note.)  The other official was Vice Mayor Yang Xiong.  Yang was 
tied to Jiang's elder son, China Academy of Sciences Vice 
President Jiang Mianheng, through Shanghai United Investment 
(Shanghai Lianhe Touzi).  Their company had bankrolled major 
infrastructure development projects in and around Shanghai, such 
as the maglev train and the Yangshan port project.  It was not 
clear where Peng obtained this information, but Peng mentioned 
that his older son worked with Jiang Mianheng at Grace 
Semiconductors in Shanghai. 
 
------------------------------------ 
Huang Ju: Still Ill, Divorcing Wife? 
------------------------------------ 
 
¶10.  (C) Peng claimed that Huang Ju was sick and bedridden in a 
military hospital in Shanghai.  Peng dismissed rumors that this 
was a political illness, noting that Huang had already drawn up 
his will asking that his body be donated to science after his 
death.  Peng pointed out that this was the first time a request 
of that nature had ever been made by a senior leader.  During a 
subsequent March 5 meeting with the CG, Peng acknowledged that 
he had seen that Huang had attended the opening ceremony of the 
National People's Congress in Beijing, but that he looked 
unwell.  According to Peng, Huang was obviously ill, and was 
wearing makeup.  Peng speculated that Huang's attendance was not 
necessarily because Huang's health had improved, but was 
designed to maintain a facade of unity in the party. 
 
¶11.  (C) During a March 5 meeting, NGO Roots and Shoots Officer 
Director Zhong Zhengxi passed along rumors in the NGO community 
that Huang's wife, who headed the Shanghai Charity Foundation, 
 
SHANGHAI 00000141  003.2 OF 003 
 
 
had diverted many of the foundations funds into speculative real 
estate deals, which were, at least in part, linked to the Chen 
Liangyu case.  She said it was rumored that Huang was seeking a 
divorce from his wife to protect his political fortunes. 
(Comment: If such rumors are true, it would certainly bolster 
the notion that Huang's illness is more political these days and 
he is seeking an appropriate "cure."  This would not be the 
first time a Politburo member in trouble had sought to protect 
himself by publicly distancing himself from an errant spouse, as 
Jia Qinglin did in the wake of the Xiamen smuggling scandal. 
End comment.) 
 
-------------------- 
Hu-Zeng Relationship 
-------------------- 
 
¶12.  (C) Speaking on more national-level issues, Peng assessed 
that several elders were supporting Hu, including Zhu Rongji, Li 
Ruihuan, Qiao Shi, Wan Li, and Song Ping.  In contrast, Peng was 
hard-pressed to come up with a single elder supporting Zeng 
Qinghong.  Zeng's previous patron, Jiang Zemin, considered Zeng 
a traitor and was not inclined to provide assistance ever since 
Zeng helped Hu remove Jiang from the Central Military 
Commission.  Zeng's personal network or proteges and friends, 
however, was significant.  Citing recent reports of Zeng 
pressuring Hu to let him stay on in the Politburo Standing 
Committee after retirement age, Peng warned that Zeng would find 
it increasingly hard to balance his relationship with Hu. 
JARRETT