VZCZCXRO9379
RR RUEHGH RUEHVC
DE RUEHCN #0129/01 1381026
ZNR UUUUU ZZH
R 181026Z MAY 07
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2501
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3025

UNCLAS SECTION 01 OF 02 CHENGDU 000129 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM AND EB 
NSC FOR CHRISTINA COLLINS 
 
E.O. 12958: N/A 
TAGS: ECON ELAB PGOV SOCI CH
SUBJECT: CHONGQING SCHOLARS DISCUSS CITY'S DEVELOPMENT CHALLENGES 
 
REF: A) 06 CHENGDU 1161; B) O6 CHENGDU 1022; C) 06 CHENGDU 1174; D) CHENGDU 36 
 
CHENGDU 00000129  001.2 OF 002 
 
 
¶1. (SBU) Summary.  In a day of meetings with Chongqing 
academics, Embassy Beijing Econ M/C and Congenoff heard about 
some of the city's most pressing issues: the aftereffects of 
Three Gorges Dam construction, industrial reform, the plight of 
farmers and migrant workers.  In addition, the city serves as a 
pilot for the concept of "urban-rural integration."  The depth 
of the city's problems seems to have attracted extensive 
official attention at least, although the gap between policy and 
practice remains as large as ever.  End summary. 
 
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THREE GORGES: BUILDING IT WAS JUST THE BEGINNING 
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¶2. (SBU) In an unusually frank presentation, Chongqing 
University Academic Commission Director Nei Hengshun (who said 
he had spent 16 years in Three Gorges-related research) 
described the social effects of Three Gorges Dam construction as 
"a long-term problem" that will take "many years to solve." 
Noting that many ancient cities had been flooded by the 
reservoir, he said that Chongqing was unprepared for the 
displacement of such a large number of poorly-educated farmers, 
and that the overall effect had been to increase even further 
China's rich-poor gap.  Said Nei, "If this problem (of displaced 
farmers) is not solved, it will affect social stability." 
 
¶3. (SBU) Although Nei stated at one point that the engineering 
behind the dam was the "pride of China," he went on to decry its 
effects on the environment.  According to Nei, the dam itself is 
located in an area of unique geography, with granite outcrops in 
an area largely composed of limestone.  While the granite has 
the effect of stabilizing the dam, the flooding of the reservoir 
in an area of highly porous soil will change water levels, and 
will ultimately result in an increase in landslides, he claimed. 
 Even more serious, he said, was the problem of "seasonal 
reversal":  before the dam was constructed, the area downstream 
from the dam was relatively dry in most seasons except for the 
periods of summer floods.  However, the construction of the dam 
will result in increases in water flows during the winter and 
decreases in the summer, leading not only to more summer 
droughts but also to profound changes in the ecology of the 
entire Yangtze River area. 
 
¶4. (SBU) Turning briefly to the subject of the South-to North 
Water Diversion Project, Nei said that construction of the 
western line had become "improbable" due in large part to the 
concerted opposition of Southwest China academics.  Nei 
mentioned in particular the book "Nine Questions Concerning the 
Western Line Project," which he said had attracted "strong 
attention" from the Central Government (ref A).  Asked about the 
possibility of a line linking the Yellow River with Tibetan 
water sources, Nei said that such a project was "impossible." 
 
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INDUSTRIAL REFORM STILL A WORK IN PROCESS 
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¶5. (SBU) For Chongqing University Sustainable Economic 
Development Research Institute (SEDRI) Director Chen Deming, the 
restructuring of Chongqing's industrial base has become an 
"unavoidable challenge."  Two of the most urgent priorities are 
(1) an increase in the production of motorcycles and automobiles 
(he cited the Changan-Ford joint venture specifically) as a 
stimulus to the development of other businesses in Chongqing, 
and (2) the movement of old-line industries such as iron and 
steel production from the city center to outlying areas, and the 
promotion of the chemical industry, aluminum production, 
clothing industry, light manufacturing, and high-tech firms as 
substitutes.  He cited the Chongqing Iron and Steel Company as 
exemplifying the city's antiquated and inefficient 
"production-based economy," and said that due to environmental 
protection concerns it would be moved to Changshou (about 80 
kilometers from downtown Chongqing).  Chen foresaw a gradual 
decline in the percent of the city's GDP coming from industrial 
production, and a concomitant rise in the service sector. 
 
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MIGRANT FARMERS AND URBAN-RURAL INTEGRATION 
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CHENGDU 00000129  002.2 OF 002 
 
 
¶6. (SBU) Chongqing Industrial and Business University President 
Wang Chongju outlined the city's strategy for "urban-rural 
integration," which he said was driven by Central Government 
directives.  Claiming that Chongqing's urbanization rate (the 
percentage of the population living in urban areas) was now 45 
percent, he saw the rate increasing to 55 percent over the next 
ten years, and eventually peaking at 60 percent. 
 
¶7. (SBU) The conceptual model used by Chongqing's planners is 
called "one circle and two wings."  The circle refers to those 
areas within a one-hour drive of the city's center, covering 23 
districts and counties, and accounting for 78 percent of 
Chongqing's GDP.  Wang foresaw per capita GDP in the "circle 
area" rising to USD 8000 by the year 2020. 
 
¶8. (SBU) The two wings are swaths of especially poor rural 
territory flanking the urban core.  The first "wing" consists of 
eight counties centered on Wanzhou in the Three Gorges Dam 
reservoir area.  The second "wing" is centered on Qianjiang in 
southeastern Chongqing, an area with heavy minority populations 
and per capita incomes only one-eighth to one-sixth of those in 
Chongqing's urban core.  The residents of those two "wings" will 
be urged to move to urban areas as part of the urban-rural 
integration process. 
 
¶9. (SBU) Another important part of urban-rural integration will 
be hukou reform, said Wang.  Claiming that rural hukous had 
already been abolished in some areas, Wang acknowledged in 
response to Econ M/C's question that many farmers and migrant 
workers still faced major challenges in obtaining social 
benefits such as education and medical care.  However, he 
claimed that the hukou problem was "less and less important," 
since school enrollment fees had decreased or been eliminated 
altogether and the health insurance system (especially the Rural 
Cooperative Medical System) had improved.  He said that the 
municipal government planned to offer more vocational training 
to migrant workers, and pointed to the construction and light 
processing industries as well as to the service sector 
(especially household servant and restaurant industries) as 
providing the bulk of employment opportunities. 
 
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COMMENT 
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¶10. (SBU) As Chongqing prepares to celebrate its tenth 
anniversary as a centrally-administered municipality, Central 
Government officials may see the city as something of a test bed 
for national economic and social strategies, as in the case of 
the "urban-rural integration" project.  After all, Chongqing is 
in many respects a microcosm of the myriad economic and social 
problems afflicting inland China (refs B-D):  during an 
after-dinner stroll around Chongqing's brightly-lit and 
attractive Jiefangbei area, Econ M/C and Congenoff were set upon 
by numerous beggars and pimps.  And just outside one shopping 
mall in the same area, police had massed in an apparent attempt 
to stave off unrest in connection with the eviction of a tenant 
(this was shortly after the resolution of the "Nail House" 
incident between a recalcitrant property holder and a 
construction firm).  How will the best efforts of policymakers 
and academics all turn out?  Watch this space. 
 
¶11. (U) This cable has been cleared by Embassy Beijing Economic 
Minister-Counselor. 
BOUGHNER