VZCZCXRO9629
RR RUEHGH RUEHVC
DE RUEHCN #0290/01 3460908
ZNY CCCCC ZZH
R 120908Z DEC 07
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2691
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHCI/AMCONSUL CALCUTTA
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3257

C O N F I D E N T I A L SECTION 01 OF 05 CHENGDU 000290 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM, EAP/MLS, INR 
 
E.O. 12958: DECL:  12/12/2032 
TAGS: ETRD ECON PGOV SOCI SNAR CH
SUBJECT: ALONG THE CHINA-BURMA BORDER:  WWII, DRUGS, HIV, AND JADE 
 
REF: A) CHENGDU 124   B) 06 CHENGDU 1205 
 
CHENGDU 00000290  001.2 OF 005 
 
 
CLASSIFIED BY: James Boughner, Consul General, Chengdu, 
Department of State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary:  Common ethnic linkages, villages that hug or 
even straddle the border, a visa-free regime for local 
residents, spotty security controls, and corruption appear to 
facilitate a wide-open atmosphere in areas along China's border 
with Burma.  One stretch of road outside the Chinese port town 
of Ruili in Yunnan Province is controlled by a local gang that 
extorts money from passing motorists.  Illicit narcotics are 
readily available and inexpensive in Ruili and "underground" 
casinos still operate across the border in Burma.   The history 
of U.S. military assistance during World War II and shared 
combat experience, commemorated in a growing number of 
well-financed museums, generates pro-American sentiment. 
Although officially open to international visitors and a center 
for China's ever expanding transportation links with other 
countries in the region, southwest Yunnan is still viewed by 
Chinese authorities as a highly sensitive border area and a 
recent Congen visit was heavily restricted and controlled.  End 
Summary. 
 
¶2. (C) From December 3-6, CG, Congenoff, and LES Pol/Econ 
Assistant traveled to southwest China's Yunnan Province to look 
into cross-border trade issues with Burma and visit sites 
commemorating the role of the Flying Tigers and other U.S. 
military assistance during World War II.  Although our 
originally requested schedule was approved by the Yunnan Foreign 
Affairs Office (FAO), just prior to the trip the FAO 
significantly scaled back our itinerary without explanation and 
placed a number of restrictions on it.  Specifically, we were 
denied permission to rent a vehicle from a car agency (used by 
us with FAO approval on many previous occasions including a 
recent visit to the Vietnam and Laos borders (ref A)) to drive 
into Yunnan from the industrial city of Panzhihua in southern 
Sichuan Province.  The Yunnan FAO also insisted visits to the 
towns of Pianma (site of a recently-opened U.S. P-32 Fighter 
museum) and Leiyong (possible site of former graves of Flying 
Tigers personnel) were "inconvenient."  (Note:  Kunming Flying 
Tigers Association contacts - strictly protect -- recommended 
Leiyong to us, but also indicated to us  -- and showed us 
photographs -- that it currently hosts a Chinese air base.  End 
note). 
 
--------------------------------------------- -------------- 
----------- 
Tengchong:  Development of Strategic Transportation Hub 
--------------------------------------------- -------------- 
----------- 
 
¶3. (U) Flying into the city of Baoshan from the Yunnan 
provincial capital of Kunming, FAO personnel escorted us to 
Tengchong, a strategically located city along the former 
Stilwell Road and scene of heavy fighting during World War II. 
The 168-kilometer drive, only 15 kilometers of which is 
currently expressway, took about four hours and went through the 
2000-meter-high Gaoligong mountain pass.  According to the FAO, 
construction of a new expressway between Baoshan and Tengchong 
will begin soon, but is likely to take at least four years due 
to the difficult topography of the region and will require the 
building of what local officials claimed will be the tallest 
bridge in Asia. 
 
¶4. (U) Congen research of local open source information prior to 
our trip highlighted the important role Tengchong -- located 
just 200 kilometers away from Myitkyina in Burma and 602 
kilometers from Mine in India -- can play as China expands its 
international transportation link ups with both Southeast and 
Southwest Asia.  In October 2006, a new highway from Tengchong 
to the Burmese city of Banwa was completed and the 
Tengchong-Myitkyina Highway is expected to be completed soon 
once the 95-kilometer Burmese stretch is finished.  As 
construction of a highway is also reportedly underway between 
Mine and Myitkyina, within a few years it will at least be 
theoretically possible to drive from Kunming into India along a 
1200-kilometer expressway in just 10 hours. (Note:  see ref A 
for apparently conflicting views we heard from Yunnan officials 
on the practical feasibility of this and other routes during 
meetings in April.  End note).  In addition, the Chinese 
government has also already begun construction of a railway from 
Dali in Yunnan that will pass through Tengchong on the way to 
Myitkyina with the eventual goal of reaching India.  To cap it 
all off, a new airport in Tengchong, capable of handling Boeing 
737s and Airbus 320s, will be completed in late 2008 at a 
projected cost of RMB 433 million (roughly USD 60 million). 
 
CHENGDU 00000290  002.2 OF 005 
 
 
 
------------------------------- 
The Party Welcomes You 
------------------------------- 
 
¶5. (SBU) Tengchong Party Secretary Wang Caichun did his best to 
welcome what he claimed was the first visit to Tengchong by 
American diplomats since World War II.  Wang spoke effusively of 
American assistance to China during the war and noted his own 
father had worked as a cook for the U.S. military.   Wang also 
remarked he recently secured RMB 200 million (USD 28 million) to 
fund a new museum to commemorate the U.S.-China World War II 
alliance.  He stressed the importance of educating China's new 
generation about how the two countries worked together closely 
to defeat the Japanese.  Wang appeared to be genuinely moved 
when discussing the subject. 
 
¶6. (C) When asked about China-Burmese border trade, however, 
Wang quickly adopted the "Party Line."  Unlike some official and 
business interlocutors during our April visit to Yunnan (ref A), 
Wang went on at length about the "excellent security" of driving 
along roads in northern Burma, complimented the Burmese 
government for the "professionalism" of its border officials, 
and noted he himself had recently driven to Mine in India 
without any fear for his safety whatsoever.  Drug smuggling at 
the border is no longer an issue and Chinese and Burmese 
authorities have successfully eradicated all opium poppy 
cultivation in the area.  When CG quoted the old Chinese saying 
of "the mountains are high and the emperor is far away" to ask 
if local authorities did not sometimes have a little bit of de 
facto latitude in implementing central government policies, Wang 
quickly interjected that in Tengchong the "Party is fully in 
control of everything." 
 
¶7. (C) As unfortunately appears to happen all too often on 
visits to remote areas in our district, our host later tried to 
turn what would otherwise have been a possibly enjoyable banquet 
into a raucous bacchanalia.  To the noticeable discomfort of our 
FAO handlers, Wang became increasing inebriated and at one point 
even tried to hold CG's head down and pour a local variation of 
grain alcohol "bai jiu" down his throat.  Wang also made his 
young female assistants stand up and serenade his guests and 
offered to arrange a joint "hot springs event" after the 
banquet.  We diplomatically disentangled ourselves from the 
situation and bid an early good night to Wang. 
 
------------------------------- 
Commemorating the War 
------------------------------- 
 
¶8. (SBU) The national military cemetery in Tengchong contains 
the graves of over 9,000 troops of the Chinese Expeditionary 
Army and has two brand new museum structures.  A section of the 
cemetery also honors 19 American soldiers killed in a 1944 
battle -- their remains were returned to the U.S. following the 
war -- to retake Tengchong from the Japanese.  Somewhat 
surprisingly given Party Secretary Wang's plans to invest in a 
new war museum, just a few kilometers from the cemetery another 
brand new and lavishly furbished museum was just completed in 
the village of Heshun, that is being developed into a major 
tourist destination.  Over 10,000 of Heshun's 16,000 residents 
are returned overseas Chinese, mostly from Southeast Asia. The 
focus of Heshun's war museum is U.S.-Chinese cooperation, and 
pride of place is given to hundreds of military artifacts, 
including equipment, photographs, and even some personal effects 
(rings, etc.) of Chinese, American, and Japanese soldiers. 
 
¶9. (C) Given the destruction of Tengchong and brutality of 
Japanese troops toward the local population during the war, it 
is of course not surprising the exhibits at both the national 
cemetery and Heshun museum have a certain "edge."  At times, 
however, the exhibits seem to go a little bit overboard. 
Heshun, for example, has a display containing a war-era Japanese 
"vivisection table," which actually looks quite new, as well as 
a photograph of what it claims to be a Chinese baby "carved up 
for meat" by hungry Japanese soldiers.  A mound at the front of 
the national cemetery in Tengchong is crudely labeled in 
Chinese, "Jap Tomb," and contains the remains of Japanese 
officers who we were told proudly were placed there so as to be 
"ritually humiliated for eternity."  Both sites also 
conveniently steer clear of other aspects of Chinese history 
that local authorities would not wish to have highlighted, and 
no mention is made of the fact that Red Guards looted the 
national cemetery during the Cultural Revolution.  The Heshun 
museum director told us privately a local teacher whose exploits 
saving a downed American air crew during the war (commemorated 
in an exhibit) was executed in the early 1950's for having had 
overly close ties to the U.S. military. 
 
 
CHENGDU 00000290  003.2 OF 005 
 
 
------------------------------------------- 
Border Ties, Drugs, and HIV/AIDS 
------------------------------------------- 
 
¶10. (SBU) The following morning we were hosted by Ruili Deputy 
Mayor Wei Gang, an ethnic Dai, who was a far more forthcoming 
interlocutor than we had experienced in Tengchong.  Wei claimed 
Ruili, located in the far southwest of Yunnan's Dehong 
Prefecture and sharing a 114-kilometer long border and 28 
crossing points with Burma, is China's largest land port.  Ruili 
is an historic homeland and center of the Dai people who speak a 
dialect very similar to Thai.  About 60 percent of Ruili's 
official population of 160,000 consists of Dai and other 
minorities, and in addition the area hosts 40,000 migrants from 
other areas of China. 
 
¶11. (SBU) Ruili's biggest industry is sugar production, with 
tourism running second.  Another major source of employment is 
the jade trade with Burma and over 10,000 local residents are 
associated with the jade industry.  Wei characterized commercial 
traffic with Burma -- mostly agriculture according to Wei -- as 
"brisk" and said many people in Ruili maintain close family 
relations with their ethnic Dai cousins across the border. 
Ruili government web sites claim that Ruili's cross-border trade 
reached 2.8 billion RMB in 2006 (USD 374 million).  Both Chinese 
and Burmese with residency in the border region are issued 
passes which gives them visa access to both cross the border and 
work on the other side.  Burmese work in Ruili mostly as traders 
and laborers.  Chinese and Burmese-registered vehicles are also 
permitted to cross the border. 
 
¶12. (C) Wei observed that Burmese central government control 
over some border areas is weak, but remarked that the city of 
Mujie across from Ruili has a relatively strong Burmese official 
presence.  The Burmese government, however, does not maintain a 
consulate or any kind of representative office in Ruili.  Ruili 
officials have authority to handle routine border management, 
but must refer more important issues to Kunming.  Wei commented, 
however, that his Burmese counterparts in Mujie appear to be 
kept on a relatively short leash by their political masters to 
whom they refer even relatively minor questions.  There is no 
official Burmese-Chinese currency exchange in Ruili.  Rather, 
currency exchange is handled by small-scale traders who are 
allowed to operate openly and without heavy regulation.  The 
current rate is about 200 Burmese Kyat to the Renminbi and there 
was a brief speculative spike following political disturbances 
in Burma during September. 
 
¶13. (C) Wei agreed that drug smuggling in the area is a major 
issue.  According to Wei, security officials in Ruili are 
particularly concerned about the involvement of Muslims from 
northern Burma in the drug trade, but claimed they are probably 
not linked to Chinese Hui Muslims and there are in fact only 
about 100 Hui that reside in Ruili.  (Note: Wei was probably 
undercounting the number of Hui in Ruili, and there is at least 
one large mosque in the area.  End note). 
 
¶14. (SBU) Wei noted the spread of HIV/AIDS is an important local 
problem and commented that Ruili appreciates the assistance it 
receives from international NGO's.  Ruili authorities rely 
heavily on education in their fight against illicit narcotics 
use and HIV/AIDS.  Recognizing government propaganda might not 
always be the best medium to reach the masses, however, Wei 
noted that Ruili is trying to experiment in using local Buddhist 
monks to pass the word about the dangers of drug use and make 
use of the high level of respect they command within their local 
communities.  However, he claimed there are only 100 Buddhist 
monks resident in Ruili. 
 
¶15. (C) Informal conversations with locals indicated Ruili's 
economy had fallen off significantly in the last year; one 
restaurant owner blamed the decline on the closing of casinos 
across the border in Burma (see note below), which he claimed 
had brought a decrease in the number of free-spending Han 
tourists.  Others remarked on the obvious decline in the amount 
of sex-industry activity on Ruili's streets over the last year 
(although there was no shortage of massage parlors and karaoke 
lounges). 
 
----------------------------------- 
Jade:  Fujianese and Burmese 
----------------------------------- 
 
¶16. (SBU) After our meeting with Wei, our FAO handlers 
(apparently intent on keeping us busy), took us on a tour of 
Ruili's new officially-designated "Gem Street," where they tried 
to convince us to buy jade.  As most of the pieces presented by 
well-prepped shop owners for our inspection ranged in price 
between the equivalent of USD 10,000 to USD 100,000, we politely 
 
CHENGDU 00000290  004.2 OF 005 
 
 
declined to the noticeable disappointment of one FAO official 
who said she would receive a nice "souvenir" from the shop 
owners if we actually bought something. 
 
¶17. (SBU) This time-consuming process, however, did give us some 
interesting insights into the jade traffic.  Notably, all the 
shopkeepers we met were Fujianese who had moved to Ruili from 
China's east coast in the 1980s, and freely discussed how 
Fujianese maintain virtual control over the Ruili jade industry. 
 In front of our ever-vigilant FAO hosts, the shopkeepers 
stressed their jade jewelry originates from unfinished jade 
purchased legally by their families at the official jade auction 
held in Rangoon and later fashioned at family-controlled 
workshops in Ruili.  One storeowner commented most of her 
customers are wealthy Chinese from either Beijing or Shanghai. 
Another noted she has many customers from Burma, including 
government officials, because Burmese are "less skilled" than 
Chinese at working jade into finished jewelry.  While one of the 
Fujianese stressed the importance of Ruili as a jade center, she 
also observed that most jade purchased at the Rangoon auction by 
Chinese traders is fashioned in workshops in Guangzhou. 
 
¶18. (C) Not too far from the spic-and-span official "Gem 
Street," we spied a warren of older buildings and streets 
containing smaller jade establishments run mostly by Burmese. 
To the apparent consternation of our FAO colleagues, we made a 
beeline for it and were greeted by the numerous Burmese milling 
in the area.  One young Burmese man from Mandalay came up to 
shake CG's hand and after finding out where he was from said 
"USA - very good."  This elicited thumbs up signs from others in 
the crowd.  CG exchanged greetings in Arabic with several 
Burmese Muslims who told him they had come to Ruili to sell 
jade.  One FAO handler told CG it would be better to move on as 
neighboring construction made the area "unsafe." 
 
------------------------------------- 
Trying to Get the Real Scoop 
------------------------------------- 
 
¶19. (C) Taking advantage of a two-hour "rest break" in our 
schedule, we hired a taxi on the street and asked to go up a 
scenic tourist road along the border towards the village of 
Longdao.  Our driver turned out to be a migrant from Sichuan who 
was quite happy to share his thoughts on Ruili.  He noted drugs 
are widely available and cheap in the area, with the current 
price for a vial of injectable heroin going for about RMB 80 (a 
little over USD 10; he claimed one vial could be used for three 
or four injections).  The drug trade is controlled by local 
gangs.  As he talked, a large SUV with Chinese plates pulled out 
ahead of us from what appeared to be a dirt road our driver said 
led across the Burmese border just 30 meters away.  The driver 
added that, since China began pressuring the Burmese government 
a couple of years ago to shut down casinos in Mujie when Chinese 
officials and tourists were losing too much money there, 
"underground" casinos have sprung up across the border and are 
well-frequented by Chinese tourists.  He described the casinos 
as "dangerous places" where visitors were subject to robbery and 
extortion.  We declined his offer to take us to have a look. 
 
¶20. (C) Following a swing through the "One Village, Two 
Countries" tourist site (a small village bisected by the 
Chinese-Burmese border and appearing devoid of anything other 
than the most basic security controls), our driver stopped 
abruptly to talk to a group of four young men playing cards 
alongside the road.  Getting back in the cab a few minutes 
later, he explained he had had to pay a small bribe (RMB 30, or 
roughly USD 4) to a local gang that controls vehicular traffic 
to Longdao and does not allow taxis to engage in two-way trade 
back and forth from Ruili without first paying a fee.  We saw 
other taxis returning empty from Longdao stop and be inspected 
by the young men.  This "inspection check point" was located 
right between two relatively large Chinese People's Armed Police 
(PAP) facilities just a few kilometers away.  When we drove 
again with the FAO down the same stretch of road later in the 
day, the "inspection point" was not visible and the men appeared 
to have returned to nearby villages. 
 
-------------------------------------------- 
Jiegao Border Trade Economic Zone 
--------------------------------------------- - 
 
¶21. (C) During an official FAO tour of Jiegao, a border zone 
that links Ruili to the Burmese town of Mujie, we were not 
permitted to see the gate through which vehicular traffic takes 
place and cargo is inspected.  The Jiegao People's Armed Police 
(PAP) officer on duty, however, did walk us through the gate 
that handles pedestrian traffic.  He told us daily traffic 
through the gate includes about 16,000 Burmese entering China 
and 5,000 Chinese going the other way.  Although literally right 
 
CHENGDU 00000290  005.2 OF 005 
 
 
at the border demarcation line, we did not see any Burmese 
customs or inspection officials.  The FAO and PAP appeared less 
than pleased when their group photo taking session with us was 
interrupted by colorfully-attired Burmese transvestites who 
wanted to join in.  Apparently, the Burmese earn money from 
Chinese tourists by posing with them for photographs.  Congenoff 
later saw in Ruili advertisements posted in Chinese for "Ladyboy 
Shows" in Burma. 
 
----------- 
Wanding 
----------- 
 
¶22. (SBU) En route the next day for departure at the airport in 
Mangshi, we stopped by the border crossing point at the small 
town of Wanding (population about 6,000) located 24 kilometers 
from Ruili.  The only cross-border traffic visible was a beat-up 
sedan with Burmese plates and a man carrying a sack of produce 
entering China.  The Wanding River (which forms the border 
there) appeared to be only a few feet deep and five or six feet 
across at most.  A local government official told CG that only a 
few hundred people cross the bridge each day.  When asked by CG 
why Ruili's border trade was so much more dynamic, the man 
laughed and replied, "Here in Wanding we enforce government 
regulations and collect taxes."  From the expressions on their 
faces, his comment appeared to give our hovering FAO escorts yet 
another opportunity to be "not amused." 
 
------------- 
Comments 
------------- 
 
¶23. (C) Our tight Yunnan FAO escort throughout the trip appeared 
to be in sharp contrast with the much more flexible treatment 
given to Congen personnel during a visit to the area in 2006 to 
look into anti-trafficking issues (ref B).  It is possible this 
was due to the reported increase in the flow of drugs across 
China's total 2,200-kilometer long border with Burma.  In 
comments reported in an October 2007 edition of "Yunnan Legal 
News," the deputy director of the Yunnan Higher People's Court 
noted:  "Yunnan's drug trafficking is still very serious; more 
traffickers from abroad and other provinces are committing 
crimes in Yunnan; the number of ice-drug (methamphetamine) users 
has greatly increased; and more armed drug trafficking has 
occurred." 
 
¶24. (C) Despite the restrictions they tried to impose this time, 
however, our FAO officials appeared amiable enough and gave the 
impression that our handling was "just business, not personal." 
Neither of the two Kunming FAO officials who traveled with us 
throughout were Han Chinese.  One was Dai and was an expert on 
Laos who had served several years at the Chinese Embassy in 
Vientiane.  The other was of the Bai minority people.  Both 
indicated they were Buddhists and took time to perform religious 
devotions at a Buddhist temple we visited outside of Ruili 
(although the Bai official later claimed that as a Party member 
she recognized any form of religion as backward superstition, 
and spoke proudly of having been "sinicized").  In addition to a 
large seated Buddha, the temple displayed pictures of both 
Chairman Mao and the King of Thailand. 
BOUGHNER