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RR RUEHCN RUEHGH
DE RUEHGH #0220/01 1080300
ZNR UUUUU ZZH
R 180300Z APR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5702
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
INFO RUEHBJ/AMEMBASSY BEIJING 0969
RUEHGZ/AMCONSUL GUANGZHOU 0534
RUEHSH/AMCONSUL SHENYANG 0559
RUEHCN/AMCONSUL CHENGDU 0553
RUEHIN/AIT TAIPEI 0444
RUEHHK/AMCONSUL HONG KONG 0659
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHGP/AMEMBASSY SINGAPORE 0046
RUEHUL/AMEMBASSY SEOUL 0058
RUEHKO/AMEMBASSY TOKYO 0111
RUEHFT/AMCONSUL FRANKFURT 0001
RUEHGH/AMCONSUL SHANGHAI 6084

UNCLAS SECTION 01 OF 03 SHANGHAI 000220 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR AMB. HOLMER, WRIGHT, TSMITH, AND OASIA - DOHNER, 
HAARSAGER, CUSHMAN 
USDOC FOR ITA MAC DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR TONG 
 
E.O. 12958: N/A 
TAGS: EAIR ELTN ECPS ETRD OVIP CH
SUBJECT: DOT SECRETARY PETER'S APRIL 11-12 VISIT TO SHANGHAI 
 
REF: A) 4/12 TARNOWKA-STEINBERG EMAIL 
 
This cable is Sensitive But Unclassified (SBU) and for official 
use only.  Not for transmission outside USG channels. 
 
¶1. (U) Summary. During her April 11-12 visit to Shanghai, 
Transportation Secretary Mary Peters attended a signing ceremony 
for the creation of the United Parcel Service (UPS) 
International Air Hub at the Shanghai Pudong International 
Airport (PVG) (to be reported septel); expressed concerns of 
U.S. express delivery companies about new daytime trucking 
regulations in a meeting with local hosts from the Bureau of 
Communications and Construction; discussed transportation sector 
industry concerns at an AmCham-U.S. China Business Council 
roundtable; held press interviews with Western and Chinese 
business press; visited the UPS hub site and participated in a 
photo op featuring Oshkosh firefighting trucks used at PVG; and 
rode Shanghai's Maglev train.  Shanghai transportation officials 
assured the Secretary that they would take concerns of 
international express delivery companies into account in 
drafting the new regulations.  Roundtable participants engaged 
the Secretary on how the Strategic Economic Dialogue (SED) could 
be used to promote liberalization of China's transportation 
sector and create a better regulatory environment, and expressed 
concerns both about inadequate port capacity in Los Angeles/Long 
Beach, as well as at China's commodity ports.  The Wall Street 
Journal published an April 13 article about the Secretary's 
China trip priorities and there was considerable local press 
coverage of the UPS signing.  End summary. 
 
-------------------------------- 
AMCHAM-USCBC Business Roundtable 
-------------------------------- 
 
¶2. (SBU) At a lunch co-hosted by the American Chamber of 
Commerce in Shanghai(AmCham) and the United States-China 
Business Council (USCBC), the Secretary met with Shanghai-based 
representatives of U.S. companies involved in the  shipping; 
logistics, express delivery, rail, auto, truck and motorcycle 
sector in China, as well as two major users of U.S.-China cargo 
services, Cargill and Tysons.  The Secretary explained that, 
under the SED process, she would urge greater liberalization of 
China's transportation sector, particularly movement towards 
"open skies," to support the growing bilateral trade 
relationship.  She agreed that some of the cross-cutting 
regulatory issues raised by the companies also could be good 
topics for the SED forum, and, in response to their concerns, 
said DOT was working with California and other U.S. port 
authorities to improve U.S. port capacity and efficiency.  A 
more detailed summary of company concerns was provided in Ref A. 
 The major themes discussed are summarized below: 
 
- Increased Liberalization of Transportation Sector: All U.S. 
companies in China relied on Chinese transportation networks, 
and advocated increased liberalization of China's air 
passenger/cargo networks and road/rail networks.  This would 
support China's continued trade and economic development, 
facilitate travel to China for the 2008 Beijing Olympics and 
World Expo, and benefit the U.S. travel and hospitality industry 
as well as U.S. businesses operating in China. 
 
- Regulatory Environment: China's regulatory environment was 
characterized by a lack of transparency, inconsistent 
enforcement, and general unpredictability.  One area for 
improvement cited by several attendees was a desire to either 
persuade China to accept international standards or to simplify 
the approval process for its China Compulsory Certification 
(CCC) mark. 
 
- Port Infrastructure: In China, port capacity to handle 
container shipping had grown rapidly, but development of port 
capacity to handle China's massive imports of commodities had 
not kept pace.  Several U.S. company representatives expressed 
concern that U.S. ports, particularly LA/Long Beach, did not 
 
SHANGHAI 00000220  002 OF 003 
 
 
have the capacity to efficiently handle the increased volume of 
trade from China.  An additional concern was uncertainty about 
the status of the LA/Long Beach labor contracts that were due to 
expire in 2008, and a desire to avoid the slowdowns and work 
stoppages that occurred in 2002. 
 
¶3. (SBU) In addition to the main themes, Ford China VP Keith 
Davey said that the U.S. automotive industry in China had four 
major concerns: (1) Protecting intellectual property rights 
(IPR); (2) Promoting Chinese government interest and awareness 
in energy sustainability and alternative/renewable fuels; (3) 
Advocating road and vehicle safety; and (4) Dealing with 
increased nationalism in China that made access more difficult 
for foreign companies. 
 
¶4. (SBU) FedEx China Region Senior VP Eddy Chan suggested that 
DOT pursue a U.S.-China land transportation forum for 
government-industry discussions modeled along the lines of the 
highly successful Aviation Cooperation Program (ACP). 
 
¶5. (SBU) Tyson Foods VP James Rice, as an AmCham Board member, 
discussed a recent AmCham survey about U.S.-aviation companies 
in Shanghai's concerns.  U.S. aviation-related companies in 
Shanghai sought: (1) more passenger flights between China and 
the U.S. to support business travel; (2) increased access to 
landing slots; 3) greater fairness and transparency in landing 
fees; and (4) fair pricing for jet fuel. 
 
--------------------------------------------- --------- 
Meeting with Bureau of Construction and Communications 
--------------------------------------------- --------- 
 
¶6. (SBU) During her April 11 meeting with Shanghai Bureau of 
Construction and Communications (BOCC) Deputy Director Shen 
Xiaoshu, Ministry of Communications (MOC) Department Head Ren 
Weiming, from Beijing, Shanghai Port Administration Deputy 
Director General Zhu Jianhua and BOCC Department Head Shi 
Zhengwei, the Secretary noted that her trip on the Maglev 
provided an excellent introduction to Shanghai's modern 
transportation system.  She said she had come to China to meet 
with senior Chinese officials to discuss areas of mutually 
beneficial cooperation in advance of the May SED.  Shanghai's 
ports and "tremendous cargo handling capacity" represented an 
important contribution to the bilateral trade relationship. 
U.S. terminal operators had shown great interest in and were 
being encouraged to participate in the construction and 
operation of Phase-3 of the port's development. 
 
¶7. (SBU) Deputy Director Shen said that Shanghai had embraced 
its role as an international shipping hub and transportation 
routes to the United States represented an important proportion 
of Shanghai's total trade.  There were more that 180 flights 
from Shanghai to the United States every month.  A record was 
set in October 2006, with 191 trips. Shanghai was busy preparing 
its infrastructure for the estimated 70-80 million visitors it 
expected would attend the 2010 World Expo.  This would mean more 
than 400,000 additional people per day traveling in the downtown 
area.  To meet these needs, Shanghai would expand its 145 
kilometer (95 mile) subway and light rail system to 400 
kilometers by 2010.  Shanghai planned to open 100 new subway 
stations and 100 kilometers (60 miles) of new track in 2007. 
 
¶8. (SBU) Secretary Peters said she understood concerns about 
congestion, but requested that the concerns of international 
express delivery companies be taken into account in the drafting 
of new Shanghai regulations on daytime access to downtown areas 
by trucks and cargo vans to ensure that Shanghai-based 
businesses received the express delivery services they needed. 
Deputy Director Shen assured the Secretary that Shanghai 
recognized that as an international logistics, shipping and 
financial center, it needed to be cognizant of the needs of 
international express delivery companies and the Shanghai 
government would "strongly support" such companies.  He said 
 
SHANGHAI 00000220  003 OF 003 
 
 
that BOCC Department Head Shi was the individual in charge of 
this planning.  Following the meeting, Shi told Pol/Econ Chief 
that his office had been in touch with the international express 
delivery companies already and would continue to consult with 
them as the draft regulations moved forward. 
 
----- 
Press 
----- 
 
¶9. (SBU) Among Secretary Peters' activities in Shanghai were two 
PAS-arranged media events, one with the Wall Street Journal and 
one a roundtable with representatives of four of China's most 
prominent business publications.  In the two interviews, 
Secretary Peters set the stage for her subsequent meetings with 
 
SIPDIS 
her Chinese government counterparts in Beijing by laying out the 
arguments for complete liberalization of aviation between the 
U.S. and China, saying that "the market, not governments, should 
decide who flies where and what the prices are."  The Wall 
Street Journal carried an article on the interview with 
Secretary Peters in its April 13 edition.  The April 16 issue of 
 
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China Business News (Government-owned business daily, circ 
400,000) published a half-page article entitled, "Expect Chinese 
Direct Flights to Anywhere in the U.S.," which focused on 
Secretary Peters' efforts to expand the scope of the 2004 Air 
 
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Services Agreement between the U.S. and China, the benefits of 
such liberalization, and U.S.-China cooperation in other 
transportation sectors, including vehicular safety. The 
Secretary's participation in the UPS hub announcement garnered 
 
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photographic coverage in the China Daily (English language, 
circ. 60,000), International Finance News (circ. 20,000) and the 
Shanghai Daily (English language, circ. 50,000).  Both the 
Shanghai Daily and the International Herald Tribune carried 
articles on the UPS hub. 
 
¶10. (U) The DOT delegation cleared on this cable. 
JARRETT