VZCZCXRO1923
RR RUEHCN RUEHVC
DE RUEHGH #0280/01 1310400
ZNY SSSSS ZZH
R 110400Z MAY 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5797
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6193

S E C R E T SECTION 01 OF 03 SHANGHAI 000280 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B AND INR/EAP 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE 
TREAS FOR OASIA - DOHNER/HAARSAGER/CUSHMAN 
TREAS FOR AMB. HOLMER, WRIGHT,TSMITH 
USDOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL:  X1 MR 
TAGS: PGOV PINR EINV ECON CH
SUBJECT: EAST CHINA CONTACTS ON RECENT LEADERSHIP DEVELOPMENTS 
 
REF: A) SHANGHAI 213; B) SHANGHAI 163; C) BEIJING 2965; D) BEIJING 2861; E) BEIJING 2857; F) BEIJING 2711 
 
SHANGHAI 00000280  001.2 OF 003 
 
 
CLASSIFIED BY: Mary Tarnowka, P/E Section Chief, 
Political/Economic Section, US Department of State. 
REASON: 1.4 (b), (c), (d) 
 
 
 
¶1.  (C) Summary.  Several East China contacts commented on 
recent leadership developments at both the national and local 
level.  Despite media rumors that Executive Vice Premier Huang 
Ju had died, one well-connected contact assured us that Huang 
was still alive although his health was failing.  Local contacts 
viewed the recent appointments of the new Foreign Minister and 
Minister of Science and Technology as fairly routine affairs, 
given that their predecessors had reached the mandatory 
retirement age of 65, but also as demonstration of President Hu 
Jintao's intent to consolidate power gradually and send a 
message about his priorities.  Our contacts also relayed rumors 
that the Politburo Standing Committee would shrink from nine 
members to seven, although one had heard that it would, in fact, 
expand to eleven members.  Closer to home, a contact with 
second-hand access said that Hu had been instrumental in Xi 
Jinping's promotion to Shanghai Party Secretary.  Meanwhile, 
rumors abounded that Shanghai Mayor Han Zheng would soon be 
removed.  End summary. 
 
--------------------------------------------- ------------------ 
Huang Ju: The Reports of My Death Have Been Greatly Exaggerated 
--------------------------------------------- ------------------ 
 
¶2.  (S) On May 10, Director of Ford Service Parts Purchasing 
Randy Creel told Pol/Econ Section Chief that he contacted his 
former assistant at Ford, who also happened to be Huang Ju's 
niece, to ask if the news reports about Huang's demise were 
true.  She informed him that Huang was still alive, although his 
situation was serious.  Huang was in the hospital and her 
parents had gone to Beijing to be with him during this difficult 
time.  During a May 10 discussion with Poloff, Tongji University 
Professor Frank Peng also denied rumors that Huang had passed 
away. 
 
------------------------------------------ 
Yang Jiechi and his friends in High Places 
------------------------------------------ 
 
¶3.  (C) Peng also commented that the appointment of new Foreign 
Minister Yang Jiechi--otherwise known as "Tiger Yang" for his 
aggressive negotiating style--was designed to be a signal of the 
high importance the Chinese government placed on U.S.-Sino 
relations.  Yang had served for many years as the Ambassador to 
the United States before moving to Beijing as Vice Foreign 
Minister.  His promotion to minister had been supported by State 
Councilor Tang Jiaxuan who held Yang in high regard.  Peng did 
not think the timing of Yang's promotion was odd, noting that 
the previous Minister, Li Zhaoxing, had recently reached the 
mandatory retirement age of 65.  Peng based his assessment on 
Yang's promotion on conversations he had with Yang's brother, 
Shanghai Institute for International Studies Vice President and 
Senior Fellow Yang Jiemian. 
 
------------------------------------------ 
Wan Gang: A Lone Voice in the Party Forest 
------------------------------------------ 
 
¶4.  (C) Peng also relayed his assessment of recently appointed 
Minister of Science and Technology (MOST) Wan Gang.  Peng has 
known Wan for several years through their association at Tongji 
University where Wan until transferred served as President. 
Peng believed Hu had selected Wan--the only non-party member 
minister-to portend his intent to undertake substantive 
political reforms.  As such, Peng assessed that Wan would have 
greater support from Hu Jintao and the Politburo than other MOST 
Ministers had enjoyed.  Peng believed that Wan's outsider status 
might actually strengthen his position vis a vis other 
ministries such as the National Development Reform Commission. 
As a symbol of political change, Hu could not afford for Wan to 
fail.  Peng noted that the Politburo had recently been stressing 
the primary importance of science and technology development to 
China's overall development strategy--another indication that 
the new MOST Minister would have more influence than his 
predecessors. 
 
¶5.  (C) Wan had told Peng that during the Spring Festival in 
 
SHANGHAI 00000280  002.2 OF 003 
 
 
2006, because of his expertise in the automotive sector, he had 
been called on to personally brief the entire Politburo Standing 
Committee (PBSC) on science and technology development.  Wan 
believed that this briefing had caught the attention of Hu 
Jintao and others on the PBSC and that was why he had been 
selected for his current position.  Wan was not closely tied to 
any particular leader or faction, although he had been 
personally nominated by President Hu.  Peng noted that as with 
the Foreign Minister, the timing of Wan's promotion was not out 
of the ordinary, given that his predecessor had also recently 
reached the mandatory retirement age.  Another local observer of 
political developments, Weyerhauser China General Manager Zhang 
Renren had a somewhat different take in May 9 conversations with 
the Consul General and Pol/Econ Chief.  He thought the 
ministerial changes reflected Hu Jintao's desire to consolidate 
power gradually as opportunities were presented and to portend 
his priorities -- the importance of the U.S.-China relationship; 
science and innovation; and a bit more movement on political 
reforms. 
 
-------------------------- 
Assimilating Seven of Nine 
-------------------------- 
 
¶6.  (S) During an April 26 conversation with Pol/Econ Chief, The 
Carlyle Group Chief China Representative Luo Yi also reported 
the latest scuttlebutt on top-level personnel changes that he 
had heard from a close friend of Hu Jintao's son, Hu Haifeng. 
According to Luo, his source said that the current plan was to 
reduce the PBSC from nine back to its pre-16th Party Congress 
level of seven.  Five of the current PBSC members would be 
leaving, including: Chinese People's Political Consultative 
Conference (CPPCC) Chairman Jia Qinglin, Executive Vice Premier 
Huang Ju, Central Discipline Inspection Commission Chairman Wu 
Guanzheng, Luo Gan, and either Vice President Zeng Qinghong or 
propaganda czar Li Changchun. 
 
¶7.  (S) Luo argued that if Hu was able to force Zeng out, it 
would allow Hu to solidify his powerbase, giving him four of the 
seven votes on the PBSC.  Luo said that if Zeng were forced out, 
it be under the "Seven Up, Eight Down Rule" that had been 
implemented to oust former CPPCC Chairman and PBSC member Li 
Ruihuan.  (Comment: The "rule" was that if a person was 67 at 
the time of the Congress they could remain on the PBSC, while if 
they were 68, they needed to step aside to make way for younger 
leaders.  The "rule" had been created by former President Jiang 
Zemin to oust his rival, Li Ruihuan.  Prior to the 16th Party 
Congress, the "standard" retirement age had been 70.  End 
comment.) 
 
¶8.  (S) Luo had heard from his contact that people slated for 
promotion to the PBSC were United Front Work Department Head Liu 
Yandong, Liaoning Party Secretary Li Keqiang, and National 
People's Congress Executive Vice Chairman Wang Zhaoguo.  Li was 
to be designated as Hu's successor.  At age 51, Li Keqiang held 
an age advantage over Jiangsu Party Secretary Li Yuanchao (age 
57), who had also been under consideration to take over as Hu's 
successor.  Wang, who served in the Communist Youth League for 
many years and was formerly Hu Jintao's and Premier Wen Jiabao's 
boss in the 1980s, had fallen from grace in the aftermath of the 
1989 Tiananmen Massacre because of his close ties to former 
Party Secretaries Hu Yaobang and Zhao Ziyang. 
 
¶9.  (C) Peng had also heard rumors that the PBSC would be 
reduced from nine to seven.  He believed that Jia, Huang, and 
Luo were definitely retiring.  He said Zeng's prospects, 
however, were still up in the air.  Peng opined that Zeng would 
not be happy with taking up Jia's slot in the CPPCC, noting that 
it was not a position of any real power.  (Note: Peng himself 
serves on the Shanghai Municipal CPPCC.  End note.)  Wang 
Zhaoguo had been a contender for a PBSC slot; however, Peng 
believed that recently surfacing rumors of Wang's philandering 
might damage his chances of promotion.  Peng corroborated Luo's 
statement that Wang had been both Hu's and Wen's boss during the 
late 1980s.  Peng did not believe Liu Yandong would make it to 
the PBSC, but would likely have a seat on the Politburo.  Peng's 
odds-on favorites for PBSC promotion were Li Keqiang and Li 
Yuanchao. 
 
¶10.  (C) Zhang, however, had heard rumors that the PBSC was not 
shrinking, but rather expanding and would increase to 11 people. 
 Zeng, Zhang said, was definitely going to stay on, according to 
the rumors he had heard.  He could not recall who else was 
 
SHANGHAI 00000280  003.2 OF 003 
 
 
slated to be in the expanded PBSC. 
 
------------------------ 
Xi Jinping Tight with Hu 
------------------------ 
 
¶11.  (S) During an April 17 meeting, Shanghai People's Congress 
researcher Zhou Meiyan said that President Hu Jintao had called 
the shots on the transfer of Xi Jinping from Zhejiang to be the 
Shanghai Party Secretary.  Zhou had heard this from 
Beijing-based democracy advocate and long-time Embassy contact 
Li Fan.  Zhou explained that Li was a princeling whose father 
was Li Qinghua, the former Ambassador to East Germany and India 
and later the head of CCTV.  Zhou said that Li Fan was friends 
with Xi and had gained the information from his first-hand 
dealings with Xi.  Zhou said that according to Li, Xi Jinping's 
father, Xi Zhongxun, had been instrumental in elevating Hu 
Jintao to the PBSC and that Hu was now returning the favor to 
the Xi family.  Zhou believed it was certain that Xi was slated 
for a Politburo slot and would likely advance to the PBSC in 
¶2012. 
 
¶12.  (S) Zhou said that Li also informed her of a name list 
maintained by the Central Organization Department for the 
families of top Chinese leaders.  Each family was allowed to 
have one of its children placed on the list for eventual 
promotion to leading roles within the party.  According to Li, 
Xi's brother-in-law (the husband of Xi's elder sister) was also 
a princeling and had been on the list as well.  However, with 
Xi's promotion, his brother-in-law was now barred from further 
promotion.  (Note: Zhou was unable to remember the name of Xi's 
brother-in-law.  End note.) 
 
------------------------- 
A New Life for Han Zheng? 
------------------------- 
 
¶13.  (C) Zhou said that the scuttlebutt among Shanghai officials 
was that Han Zheng was slated to be transferred out of Shanghai. 
 Although it was unclear when, Zhou speculated that it would 
happen prior to the 17th Party Congress this fall.  Zhou had not 
heard who might replace him, although other Shanghai contacts 
previously reported that it might be Anhui Party Secretary Guo 
Jinlong (Ref B). 
 
¶14.  (C) Carlyle's Luo Yi also said Han was definitely leaving. 
He speculated that Xi would not have agreed to take the job 
without an agreement to force Han out.  Luo did not think Han 
would be removed on corruption charges, but rather thought that 
Han might just be moved to a "dark hole" somewhere in the 
central government--perhaps as Party historian, Luo 
joked--retaining his current rank.  Luo thought that Han would 
definitely be replaced by an outsider since Xi would not trust 
anyone within the current Shanghai government.  Weyerhauser's 
Zhang said that although he had not heard any recent rumors of 
Han's imminent demise, he expected him to be gone by this 
autumn.  Many of the Shanghai bureau-level directors he knew had 
told him that Han had seemed less happy and less engaged in 
recent weeks. 
 
¶15.  (C) During a May 7 meeting with the Consul General, South 
Korean Consul General Yang Kim said there was an ongoing 
corruption investigation--separate from the pension fund 
scandal--that might implicate Han and hurt his future prospects. 
 Kim's grandfather, something of a national hero, was a Korean 
nationalist living in Shanghai who had advocated for Korea's 
independence from the Japanese during the 1940s.  South Koreans 
visiting Shanghai frequently paid their respects at his 
grandfather's former residence and often gave donations for the 
upkeep of the home.  Based on the number of visitors, and a 
guestimate of USD 100 per person for a typical donation, Kim 
speculated that those donations totaled more than USD 8 million 
annually and went into a black hole in the Shanghai government 
budget.  On a smaller scale, visitors to Shanghai's Lu Xun Park 
were also required to pay a 15 RMB fee if they wished to visit a 
small section of the park that featured a monument to a famous 
historical South Korean figure.  Kim estimated there were about 
200,000 such South Korean visitors annually.  Visitors were 
given a book mark but no receipt for their funds.  The South 
Korean Consulate had offered on several occasions to take over 
the management of both sites, but the Shanghai government had 
declined. 
JARRETT