VZCZCXRO7324
RR RUEHCN RUEHGH
DE RUEHGH #0642/01 2730333
ZNY SSSSS ZZH
R 300333Z SEP 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6315
INFO RUEHBJ/AMEMBASSY BEIJING 1449
RUEHCN/AMCONSUL CHENGDU 0910
RUEHSH/AMCONSUL SHENYANG 0911
RUEHGZ/AMCONSUL GUANGZHOU 0889
RUEHHK/AMCONSUL HONG KONG 1036
RUEHIN/AIT TAIPEI 0730
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6797

S E C R E T SECTION 01 OF 03 SHANGHAI 000642 
 
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, WRIGHT 
USDOC FOR ITA/MAC - A/DAS MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL: X1 MANUAL REVIEW 
TAGS: PGOV PINR ECON SOCI CH
SUBJECT: POLITBURO MEETS, PERSONNEL WRANGLING CONTINUES 
 
REF: A) SHANGHAI 662; B) CPP20070921701003 
 
SHANGHAI 00000642  001.2 OF 003 
 
 
CLASSIFIED BY: Simon Schuchat, Deputy Prinicpal Officer, U.S. 
Consulate , Shanghai . 
REASON: 1.4 (b), (d) 
 
 
 
¶1.  (S) Readouts from a recent Politburo meeting during the week 
of September 16 initially suggested that President Hu Jintao had 
sustained serious political losses in personnel maneuvering. 
However, more recent information suggests that Hu has since 
recovered at least some ground, although he may not be able to 
accomplish everything he wants to at the Party Congress.  While 
it appears likely that Vice President Zeng Qinghong will retire, 
and several of Hu's proteges are poised for Politburo or 
Politburo Standing Committee (PBSC) promotion, Hu will likely 
not be able to name his own successor.  Instead, two or three 
candidates will be vying for the spot, one of whom is not 
necessarily beholden to Hu.  The Politburo also determined that 
there will be an election of PBSC positions at the Congress with 
at least one more candidate than slots.  National People's 
Congress (NPC) Chairman Wu Bangguo has joined the list of PBSC 
members with cancer and is rumored to have recently been 
recuperating in Shanghai.  Meanwhile, Hu is continuing to 
undermine Jiang's influence, including going after at least two 
of his lovers.  End summary. 
 
--------------------------------------------- -------------- 
------ 
Secret Calls And Great Consternation: Hu Worse Off Than 
 
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Believed? 
--------------------------------------------- -------------- 
------ 
 
¶2.  (S) During a September 27 phone conversation, Carlyle Group 
chief China representative Luo Yi said that on the 26th, a 
"friend" had phoned him with the news that Zeng Qinghong will 
not be stepping down.  During the middle of the previous week, 
several "insiders" began calling him--starting at 
0700--distraught over the news that there would not actually be 
much change in the distribution between the Hu and Jiang 
factions.  The insiders informed Luo that Hu was unable to "get 
everything he wants."  (Note: Luo is friends with a number of 
the children of top leaders, including Hu Jintao's son.  End 
note.) 
 
¶3.  (S) During a September 28 discussion, Nanjing University 
Professor Gu Su explained that the final Politburo meeting prior 
to the Party Congress had been convened early in the week of 
September 16.  (Comment:  This is likely the meeting that 
prompted the phone calls to Luo.  End comment.)  However, Gu had 
also received information in the week of September 23 that 
suggests that behind the scenes negotiations have continued 
since the Politburo meeting and that Hu has subsequently fared 
better. 
 
¶4.  (S) According to Gu, Hu had been toying with the idea of 
retaining Zeng, noting that Zeng is, at times, a helpful person 
to have.  However, there was a great deal of opposition to the 
idea.  Many provincial leaders are upset over Zeng's perceived 
policy favoritism towards Shanghai, and many party elders 
believe him to be "too ambitious."  As of the week of September 
23, the word is that the "seven-up, eight-down rule" will be 
enforced across the board without exception and Zeng will 
retire.  Gu also pointed out that Zeng's protege Wang Gang was 
replaced on September 19 as head of the Party's General Office 
by long-time Hu protege Ling Jihua.  (Comment: It is possible 
that Hu intended his supposed support for Zeng's retention to 
incite a strong reaction from within the party calling for Zeng 
to resign, ensuring Hu would not have to take the responsibility 
for Zeng's ouster.  End comment.) 
 
¶5.  (S) Moreover, Gu said that at the Politburo meeting, the 
decision was finalized that there will be only seven positions 
on the PBSC.  Hu proposed that there be eight candidates for the 
seven slots.  Zeng initially opposed the plan, but Hu overruled 
him.  Consequently, there will be an "election" of sorts for the 
PBSC slots, with the loser being relegated back to a Politburo 
 
SHANGHAI 00000642  002.2 OF 003 
 
 
seat.  Gu said that the procedure would not be made public for 
fear of causing the loser to lose face. 
 
--------------------------------------------- - 
Multiple Candidates for Top Party Post in 2012 
--------------------------------------------- - 
 
¶6.  (S) In what might be perceived as a Hu loss, Gu noted that 
it was also decided at the Politburo meeting that Hu would not 
be able to name his successor.  Instead, two, possibly three 
candidates for the job will be selected at the Party Congress 
who will then compete over the next five years for the position. 
 Liaoning Party Secretary Li Keqiang and Shanghai Party 
Secretary Xi Jinping will both likely be moving to the PBSC as 
 
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Hu's successor candidates.  This was decided after public 
opinion polling conducted at the behest of the PBSC found Xi to 
be one of China's most popular leaders and several people within 
the party expressed unease with Li's factional biases. 
 
¶7.  (S) Although a princeling, Xi is not viewed by people within 
the top levels of the party as much a part of the "princeling 
party" faction as was Zeng Qinghong, nor is he seen as being 
tied into the Communist Youth League Faction or other factions. 
Li Keqiang--Hu's personal choice as successor--on the other 
hand, is clearly seen as a factional candidate and does not have 
the same popularity as Xi.  A possible third candidate, Jiangsu 
Party Secretary Li Yuanchao, also a Hu protege and a popular 
leader, may also enter the fray.  Li's greatest strength would 
be his ties to the PLA leadership (see septel).  Xi's popularity 
within the Party was demonstrated during the Politburo election 
in March 2007 to determine the new Shanghai Party Secretary.  Gu 
said that Xi had received 16 votes while candidates Li Yuanchao 
and United Front Work Department head Liu Yandong had only 
received 3-4 votes apiece.  (Comment:  Having multiple 
candidates to succeed Hu could also be spun as a move toward 
greater intra-party democracy, rather than simply Hu's failure 
to name his own successor.  End comment.) 
 
--------------------------------------------- ----- 
Wu Bangguo: Recovering in Shanghai, May Not Return 
--------------------------------------------- ----- 
 
¶8.  (S) Gu was intrigued when Poloff mentioned a press report 
(Ref B) claiming that in addition to former Shanghai Party 
Secretary Chen Liangyu and deceased Vice Premier Huang Ju, a 
 
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third individual who was "recuperating in Shanghai" were all 
implicated in the Shanghai pension fund scandal.  Gu immediately 
piped up that the individual in question is probably NPC 
Chairman Wu Bangguo.  Wu had been out of the press for 20 days 
prior to a recent meeting with a Russian parliamentary head. 
Moreover, Gu has heard rumors that Wu had recently returned to 
Shanghai for surgery related to cancer.  Wu, Gu assessed, is 
probably implicated in the Chen Liangyu case.  Gu has very 
recently heard rumors that Wu will be retiring at the Party 
Congress. 
 
---------------------- 
Top-level Replacements 
---------------------- 
 
¶9.  (S) Gu said that at the Party Congress, Xi Jinping will 
replace Zeng Qinghong on the PBSC as Vice President with 
oversight of the Organization Department.  Li Keqiang, initially 
Hu's choice to replace Zeng, will now be filling in Huang Ju's 
slot as Executive Vice Premier.  The top two contenders to 
replace Central Discipline Inspection Commission (CDIC) Chairman 
Wu Guanzheng are his deputy He Kang, and Public Security 
Minister Zhou Yongkang.  Hu is supporting He Kang's bid for the 
position and he does not like Zhou, considering him to be too 
close to Zeng.  Initially, Hu had hoped to promote National 
People's Congress Vice Chairman Wang Zhaoguo to the CDIC slot, 
but could not get any traction within the leadership for the 
move. 
 
¶10.  (S) On the Politburo (or potentially the PBSC), Li Yuanchao 
is the frontrunner to replace He Guoqiang as head of the 
Organization Department, although it is not certain He will 
vacate the job.  Gu said that the Politburo will have at least 
 
SHANGHAI 00000642  003.2 OF 003 
 
 
one female representative and that Hu is currently promoting 
Qinghai Governor Song Xiuyan as his primary choice.  Hu is also 
favorably disposed toward Liu Yandong, but prefers Song since 
she is in her late 40s (Liu is in her early 60s).  Gu thinks it 
is possible that both women could be elected. 
 
¶11.  (S) Minister of Commerce Bo Xilai and Guangdong Party 
Secretary Zhang Dejiang are the leading candidates to take up 
 
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the other two vice premier slots.  The slot would also entail a 
Politburo promotion for Bo.  Bo's prospects from there are 
clouded, however, since he is widely unpopular with party elders 
who despise his father and view the young Bo as too ambitious. 
Several years ago, Bo had ordered the arrest of a Hong Kong 
journalist who worked for the sensationalist newspaper "Kaifang" 
in Liaoning for publishing articles that linked Bo to corruption 
scandals.  The journalist had been sentenced to eight years in 
prison, but about six months after Bo left Liaoning for Beijing, 
the journalist was released one year early for "good behavior." 
Gu opined that someone or some people in the central leadership 
sought to remind people that Bo may have problems in his past. 
This may also have been a reminder to Bo that his 
power--especially his power to hush criticism of himself--is 
limited. 
 
--------------------------- 
Jiang's Vestiges Going Away 
--------------------------- 
 
¶12.  (S) Gu said that former President Jiang Zemin's influence 
within the Party continues to decline and would likely be 
reduced to almost nothing after the Party Congress.  Aside from 
Zeng retiring and Huang Ju dying, PBSC member and propaganda 
chief Li Changchun would retire, despite only being in his early 
60s.  Li's main problems are his connections to organized crime 
in Henan and Liaoning (see Septel).  Li is suffering from 
stomach cancer, Gu said, and will use that as an excuse to step 
down.  (Note: In Ref A, Luo Yi stated Li was diagnosed with 
liver cancer.  End note.)  Gu said people were commenting that 
it is "sad" that Jiang's proteges all seem to have corruption 
problems and are seeming to all also develop cancer. 
 
----------------------- 
Jiang's Ladies Laid Low 
----------------------- 
 
¶13.  (S) According to Gu, several of former President Jiang's 
female friends have found themselves in trouble, further 
evidence that his influence is declining.  For instance, 
Shenzhen Party Secretary and long-time Jiang consort Huang 
Liman's network is being undercut.  Two of her proteges, 
Shenzhen Deputy Party Secretary Li Yizhen and the Shenzhen 
Education Bureau Director, were recently arrested on charges of 
corruption.  Also, State Councillor Chen Zhili, a former Jiang 
dance partner and romantic interest, is set to retire at the 
Party Congress.  Chen, who oversees the State Council education 
portfolio, has come under heavy fire recently over her policies 
on education and her handling of the university system.JARRETT