VZCZCXRO4542
PP RUEHCN RUEHGH RUEHVC
DE RUEHHK #1692/01 1760713
ZNR UUUUU ZZH
P 250713Z JUN 07
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 2072
INFO RHEHNSC/NSC WASHDC PRIORITY
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 HONG KONG 001692 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EAP, EAP/CM 
NSC FOR DENNIS WILDER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR KIPR SENV CH HK
SUBJECT: U.S.-CHINA COMMISSION VISIT TO HONG KONG: AMCHAM 
AND ENVIRONMENTALISTS 
 
REF: A. HONG KONG 01689 
     ¶B. HONG KONG 01691 
 
¶1. (SBU) Summary: American Chamber of Commerce (AmCham) 
representatives discussed IPR issues in Hong Kong and 
mainland China with a visiting delegation from the U.S.-China 
Economic and Security Review Commission (USCC) on April 30. 
One AmCham representative observed that there was "very 
little legitimate (IPR) business" in the mainland, due to 
both weak enforcement of existing legal protections for IPR 
and continuing constraints on market access.  Despite some 
signs of progress on enforcement, market access has worsened. 
 The continuing inadequacy of mainland IPR protection, 
however, may be beneficial to Hong Kong, with an increasing 
number of U.S., Chinese, and other companies basing at least 
some of their operations in Hong Kong, which offers IPR 
protection and a level playing field.  The relocation of 
companies from Hong Kong to Shanghai and/or Beijing "has 
calmed down;" the movement continues in both directions, with 
Hong Kong's advantages for financial and arbitration services 
proving to be attractive to some mainland companies.  Media 
self-censorship in Hong Kong clearly occurs but is very 
difficult to prove.  Also on April 30, several environmental 
experts briefed the delegation on Hong Kong views toward 
climate change, air quality, urbanization, and water issues 
in both Hong Kong and the mainland.  End Summary. 
 
AmCham: IPR and Media Self-Censorship 
------------------------------------- 
 
¶2. (SBU) During an April 30 meeting with the USCC delegation, 
several AmCham representatives observed that there was "very 
little legitimate (IPR) business" in the mainland, due to 
both weak enforcement of existing legal protections for IPR 
and continuing constraints on market access.  That said, 
however, one member noted that there were some signs of 
progress in protection, perhaps due to a political decision 
that innovation and intellectual property were "good for 
China," although there was "still a long way to go" before 
the new political will to enforce protection filtered down. 
On market access, however, the same person observed that the 
situation had worsened; for example, the approval process for 
foreign movies remained "capricious," probably due to 
government market manipulation to protect the domestic film 
industry.  The same member said his firm also had problems 
with television program black-outs and animation products; 
for the latter, he said that "China hates to pay royalties," 
but domestic animation producers, while technically 
competent, lacked good stories due to political control of 
the content. 
 
¶3. (SBU) Another AmCham member noted that the continuing 
inadequacy of IPR protection on the mainland was beneficial 
to Hong Kong.  He said an increasing number of U.S., Chinese, 
and other companies were basing at least some of their 
operations in Hong Kong, in part because the HKSAR offered 
IPR protection and a level playing field.  He said even some 
Shenzhen companies had chosen to conduct some of their 
research and innovation in Hong Kong, rather than the 
mainland, for these reasons.  The same member observed that 
the shift of companies from Hong Kong to Shanghai and/or 
Beijing "has calmed down;" relocations still occur, but the 
movement is in both directions, with Hong Kong's advantages 
for financial and arbitration services proving to be 
attractive to some mainland companies. 
 
¶4. (SBU) Asked whether media self-censorship was increasing, 
one member observed that it clearly was occurring but also 
was very difficult to prove.  He said it was "generally 
expressed through the business side," i.e. through impacts on 
advertising contracts and revenue.  He said Hong Kong's most 
prominent pro-democracy paper, the "Apple Daily," had 
positioned itself as "anti-China" through its editorials and 
carved out a niche for itself, but ordinary Hong Kong people 
tended not to use it for reliable news coverage.  Several 
other papers, such as "Ming Pao" and the "Hong Kong Economic 
Journal," were viewed as independent and factual in their 
coverage of Hong Kong events. 
 
Environmental Issues 
-------------------- 
 
¶5. (SBU) During an April 30 lunch to discuss environmental 
issues, delegation members inquired about Hong Kong's efforts 
to address climate change.  CEO Christine Loh of Civic 
Exchange responded that some Chinese people in both Hong Kong 
and the mainland were aware of the climate change problem, 
 
HONG KONG 00001692  002 OF 002 
 
 
but that local air quality was a more immediate issue.  Both 
Loh and Professor Cho Nam Ng of the University of Hong Kong 
observed that cleaning up the manufacturing and 
transportation sectors would produce a short-term positive 
impact on air quality and a long-term impact on climate 
change.  Loh urged close involvement of the market in all air 
quality and climate change solutions. 
 
¶6. (SBU) Regarding urbanization, Loh observed that 
uncontrolled urban growth in the mainland was having a 
detrimental impact on the environment.  China was investing 
in roads, rather than public transportation, which forced 
more people to depend on cars.  Ng said Chinese cities in 
general were extremely polluted, but urban leaders were 
starting to realize the extent and costs of the problem.  As 
cities began to enforce environmental regulations, however, 
the major polluters simply moved to rural areas, where they 
began polluting again.  All three interlocutors agreed that 
China already had adequate environmental laws, but weak 
enforcement mechanisms.  They noted that local mayors on the 
mainland were evaluated based on economic growth, resulting 
in much competition among regional governments to attract 
investment and factories, with little regard to the 
environmental impact.  The central government conducted 
Environment Impact Assessments, which local governments 
tended to ignore. 
 
¶7. (SBU) According to the environmentalists, the lack of 
clean water in China has become a security issue because it 
is beginning to affect the country's economic development. 
The PRC faces three main water issues:  1) supply (in 
particular, shortage in the north); 2) lack of sewage 
treatment; and 3) cleaning of contaminated water.   Pollution 
of the Yangtze River has garnered international attention, 
and the Pearl River in Guangdong faces similar pollution 
problems, although not yet at Yangtze levels.  To increase 
the water supply, China must reduce consumption, increase the 
use of recycled water in manufacturing, and clean up 
contaminated bodies of water.  Some areas (the north, west, 
Shanghai, and Macau) have specific water supply problems that 
could slow regional growth. 
 
¶8. (SBU) The USCC delegation cleared this cable. 
Cunningham