VZCZCXRO8315
RR RUEHCN RUEHGH
DE RUEHGH #0177/01 0880258
ZNY CCCCC ZZH
R 290258Z MAR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5644
INFO RUEHBJ/AMEMBASSY BEIJING 0920
RUEHCN/AMCONSUL CHENGDU 0518
RUEHGZ/AMCONSUL GUANGZHOU 0501
RUEHHK/AMCONSUL HONG KONG 0624
RUEHSH/AMCONSUL SHENYANG 0526
RUEHIN/AIT TAIPEI 0425
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6019

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000177 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B AND INR/EAP 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE 
TREAS FOR OASIA - DOHNER/CUSHMAN 
USDOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL:  X1 MANUAL REVIEW 
TAGS: PGOV PINR EINV ECON CH
SUBJECT: LOCAL REACTIONS TO XI JINPING'S APPOINTMENT AS SHANGHAI 
PARTY SECRETARY 
 
REF: SHANGHAI 163 
 
CLASSIFIED BY: Kenneth Jarrett, Consul General,  , U.S. 
Consulate Shanghai. 
REASON: 1.4 (b), (d) 
 
 
 
¶1.  (C) Summary. The appointment of Xi Jingping as Party 
Secretary has been heralded in the Shanghai official media, but 
 
SIPDIS 
business and academic contacts are taking a "wait and see" 
attitude.  Official newspapers and internet postings have 
emphasized Xi's coastal experience and "rich social contacts." 
One government contact noted that Xi would find Shanghai a more 
challenging appointment than Zhejiang because the state sector 
remained large.  According to a few contacts, Xi was a 
compromise candidate who was politically reliable and set his 
priorities in accordance to Beijing.  Two contacts noted rumors 
that Shanghai Mayor Han Zheng would be replaced by Anhui 
Governor Guo Jinlong, with one contact stating that her Beijing 
sources believed there was a 50-60 percent chance that would 
happen.  According to one contact, Chen Liangyu was currently on 
a hunger strike to protest his "unfair" treatment.  Meanwhile, 
Huang Ju's health continued to deteriorate.  End summary. 
 
------------------------------- 
Xi's Last Hurrah, Li's Move up? 
------------------------------- 
 
¶2.  (C) In the past week, Congenoffs have polled several 
contacts in East China for views on the appointment of Xi 
Jinping as Party Secretary.  In separate meetings on March 28 
with Poloff, Bao Jian, a politics and law reporter with the 
People's Daily Shanghai Bureau and Tongji University Professor 
and Shanghai Chinese People's Political Consultative Conference 
(SCPPCC) member Frank Peng dismissed the idea that Xi owed his 
promotion to Zeng Qinghong.  Bao said Xi was politically 
reliable and bureaucratically able to carry out Beijing's 
wishes, but not terribly creative, making him acceptable to Hu 
Jintao.  Xi owed his promotion to his father's (Xi Zhongxun) 
prestige and not his personal ties to a particular faction.  She 
said that Xi was not "too conservative" and overall was not a 
bad choice for Party Secretary.  Peng concurred with the idea 
that Xi was a compromise candidate who was seen as 
non-threatening by all factions and that his promotion was 
largely given out of respect for Xi's father. 
 
¶3.  (C) Chairman of the Tianan Insurance Company Chen Pojian 
noted at a March 28 lunch hosted by the CG that Xi was appointed 
by Beijing, and would answer to Beijing.  He added that when Xi 
was Party Secretary in Zhejiang he set his priorities by 
listening to the Central government, in contrast to Chen Liangyu 
who based his priorities on his ambitions for Shanghai, which 
was to make Shanghai into another Hong Kong.  China already had 
a Hong Kong and does not need another one.  China, Chen said, 
needed Shanghai to be a part of China. 
 
¶4.  (C) At the March 28 CG-hosted lunch, Deputy Director-General 
of the Shanghai Municipal Financial Services Office Fang Xinghai 
said that Xi would find it more challenging to manage the 
economy in Shanghai.  Since the state sector remained 
substantial and the economy was already very developed.  Lifting 
Shanghai to the next level would not be easy.  In contrast, Fang 
said, most of Zhejiang's income and growth had been generated by 
private enterprises.  The fact that Xi's replacement, former 
Deputy Director of the CCP Organizational Department Zhao 
Hongzhu, had no economic experience whatsoever was an indication 
that the leadership felt that Zhejiang would continue to do well 
economically, no matter who was in charge.  Fang also noted that 
Xi would not be able to bring in his own lieutenants and would, 
therefore, have to adjust to the Shanghai machinery. 
 
¶5.  (C) While most people believed that Xi's appointment would 
come with a Politburo seat and, if he does well in Shanghai, he 
could expect to be elevated to a higher position in the future, 
some contacts had a contrary view.  Bao said it was not a done 
deal that Xi would receive a Politburo seat.  During a brief 
March 28 phone call, Nanjing University Professor Gu Su told 
 
SHANGHAI 00000177  002 OF 003 
 
 
Poloff that his contacts in Beijing had informed him the 
previous day that Xi's move to Shanghai was likely his last and 
that he would probably finish out his career in Shanghai.  His 
contacts informed him that Li Yuanchao's "chances are getting 
large," meaning that it was almost certain that Li would be 
heading to Beijing for an important post.  Bao had also heard 
that Li was heading for Beijing, with a possible promotion to 
the Politburo Standing Committee in the works. 
 
------------------------- 
"Public" Reaction Excited 
------------------------- 
 
¶6.  (U) A scan of recent press reporting and internet postings 
showed several themes emerging in what appears to be Beijing's 
official line regarding Xi.  A March 25 article in the PRC-owned 
Hong Kong newspaper Ta Kung Pao quoted Shanghai scholars who 
believed that Xi would follow the central government's 
decisions.  Three other articles in the March 25 Ta Kung Pao 
cited Xi's extensive experience with other "East China" 
provinces as having qualified him to work in Shanghai.  One 
report cited Taiwan businessmen who believed that Xi's coastal 
experience in Fujian and Zhejiang meant that Xi understood what 
Shanghai needed for development.  The same article cited other 
"Shanghai officials" as saying that Xi was open minded and not 
afraid to take risks.  In a separate article, an anonymous 
Shanghai official noted that Xi, a princeling, would help 
improve communications with the central government due to his 
"rich social contacts."  In another article, another Shanghai 
official claimed that the Chen Liangyu case demonstrated that it 
was not good to have an official who was born and raised in an 
area rise up to take the top post, and that it was wise to bring 
in Xi, whose outsider status would change the "group" politics 
left over from the Chen era. 
 
-------------------------- 
Han Zheng's Days Numbered? 
-------------------------- 
 
¶7.  (C) In a sign that perhaps the debate over the extent of the 
leadership changes is not over (reftel), one of the Ta Kung Pao 
articles cited an anonymous "Shanghai official" who said that it 
would be good if Han Zheng stayed on as Mayor to help maintain 
the city's stability.  The official said that Han would be able 
to help Xi build Shanghai's leadership group and help Xi 
acclimate to his new environs.  The official warned that if Han 
were removed as Mayor, it would have a significant impact on 
Shanghai.  Fang said that Han had been working hard to show he 
was doing a good job, to forestall a transfer.  Being Mayor of 
Shanghai was better than serving as governor in a remote corner 
of China. 
 
¶8.  (C) Bao said her sources in Beijing told her that there was 
a 50-60 percent chance that Han would be replaced by Anhui 
Governor Guo Jinlong.  Bao had interviewed Guo before and found 
him to have a dictatorial management style, uncreative, and 
generally a lackluster leader.  She believed that Guo's 
connections to someone at the top--possibly Hu Jintao--accounted 
for the possibility of a transfer.  Although she had no 
information that Guo himself was corrupt, Bao said she had 
discovered many of the vice governors and more especially the 
county and local leaders in Anhui to be particularly dirty.  She 
noted that the people in a Chinese government bureaucracy, 
typically, followed the style of whoever was at the top. 
 
¶9.  (C) Peng said he had also heard rumors that Han might be 
replaced by Guo.  He believed that Han would probably end up in 
Beijing as the head of the Environmental Protection Bureau. 
Peng said that Beijing was currently focused on tearing down the 
"feudal lord" concept among local leaders and trying to develop 
three "regional economic pillars" including the Yangtze River 
Delta, the Pearl River Delta, and the Bohai Crescent (including 
Dalian and Tianjin).  That was one reason that made both Xi and 
Jiangsu Party Secretary Li Yuanchao appropriate for the Shanghai 
Party Secretary job.  Peng said that the debate on bringing Guo 
to Shanghai reflected the growing importance the central 
government was placing on Anhui and its desire to include Anhui 
 
SHANGHAI 00000177  003 OF 003 
 
 
in the Yangtze River Delta economic region. 
 
------------- 
What of Chen? 
------------- 
 
¶10.  (C) Peng said Chen was currently on a hunger strike to 
protest what he considered was his "unfair" treatment.  Chen 
intended to kill himself.  However, the Chinese authorities 
would not allow Chen to starve to death prior to his trial but 
would force feed him if necessary. 
 
-------------------- 
Huang Ju's Swan Song 
-------------------- 
 
¶11.  (C) Peng noted as an aside that Huang Ju was going from bad 
to worse.  According to Peng, Huang attended the National 
People's Congress (NPC) meeting in early March in effect to say 
goodbye to his friends.  Peng had several friends who attended 
the Shanghai delegation meeting where Huang spoke.  These 
contacts informed him that both Huang and the delegates--many of 
whom owed their political careers to Huang--were moved to tears 
by Huang's words.  Peng assessed that Huang would either die or 
retire by this coming autumn's Party Congress, but either way, 
he would not have another chance to appear in public and had 
therefore insisted on attending at least the NPC opening 
ceremony. 
JARRETT