VZCZCXRO0611
PP RUEHCN RUEHGH
DE RUEHGH #0030/01 0250034
ZNR UUUUU ZZH
P 250034Z JAN 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC PRIORITY 6627
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1655
INFO RUEHCN/AMCONSUL CHENGDU PRIORITY 1068
RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 1039
RUEHSH/AMCONSUL SHENYANG PRIORITY 1069
RUEHHK/AMCONSUL HONG KONG PRIORITY 1196
RUEHIN/AIT TAIPEI PRIORITY 0879
RUEHGH/AMCONSUL SHANGHAI 7158

UNCLAS SECTION 01 OF 05 SHANGHAI 000030 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR CA/VO AND CA/EX 
ALSO FOR EAP/CM 
BEIJING FOR DCM, CG, NIV 
 
E.O. 12958: N/A 
TAGS: CVIS CMGT CH
SUBJECT: UP, UP, AND AWAY:  SHANGHAI'S FY-07 VISA NUMBERS GO THROUGH 
THE ROOF 
 
SUMMARY 
------- 
 
¶1. (U) Consular officers in Shanghai adjudicated 16 percent more 
NIV applications in FY-07 than in FY-06.  This follows a 19 
percent increase in FY-06 over the FY-05 NIV workload, which in 
turn was up 20 percent over FY-04.  This cable not only reports 
the quantitative increases but also provides a qualitative 
overview of Shanghai's NIV applicant pool.  (Cable offering a 
more in-depth qualitative analysis will follow septel.)  Numbers 
from the first two months of FY-08 indicate that these trends 
will continue, giving Shanghai its fifth consecutive year of 
double-digit growth in NIV demand.  (END SUMMARY) 
 
SHANGHAI NIV WORKLOAD TRENDS 
---------------------------- 
 
¶2. (SBU) AmConGen Shanghai has experienced a steady increase in 
its NIV workload since the post-9/11 worldwide downturn in NIV 
demand in FY-02 and the impact of SARS across the Asia-Pacific 
region in FY-03.  Starting in FY-04 and continuing to the 
present day, Shanghai's year-on-year growth rate in NIV workload 
has been at least 10 percent.  FY-07 alone saw a 16 percent 
increase in overall visa demand over FY-06.  Recent yearly visa 
applicant figures for Shanghai are shown in the table below: 
 
     Year     Number of Applicants   Change in Volume 
     ----     --------------------   ---------------- 
     FY-01    101,216 
 
     FY-02     95,965                 - 5 percent 
     FY-03     80,079                - 17 percent 
     FY-04     87,921                  10 percent 
     FY-05    105,658                  20 percent 
     FY-06    125,907                  19 percent 
     FY-07    146,626                  16 percent 
 
Figures available for the first months of FY-08 indicate that 
this double-digit increase in visa demand will continue in 
Shanghai, with the October 2007 NIV workload up 21 percent over 
October 2006, and November 2007 NIV adjudications up 19 percent 
over November 2006. 
 
     Month     Number of Applicants   Change in Volume 
     -----     --------------------   ---------------- 
     Oct.06       9,316 
     Oct.07     11,268                21 percent 
     Nov.06      10,222 
     Nov.07      12,167              19 percent 
 
¶3. (SBU) The following statistics are selected from Shanghai's 
FY-07 applicant pool.  Standout categories among Shanghai's 
FY-07 NIV growth are J-1 applicants (27 percent) and 
petition-based applicants including H-1B and L-1 visas (36 
percent).  (NOTE:  The numbers in this cable were generated 
using the NIV consular application and at-post resources. 
Shanghai does not process immigrant visas -- all Chinese IV 
cases are processed at AmConGen Guangzhou.  END NOTE) 
 
B-1/B-2 Travelers 
----------------- 
 
¶4. (SBU) General business and tourism travel (B-1/B-2) continues 
to be Shanghai's primary visa category, representing 77 percent 
of the total applicant pool in FY-07.  As such, this category is 
the primary driver of FY-07 visa demand.  The demand for B-1/B-2 
visas in FY-07 increased by 16 percent over FY-06 numbers, 
mirroring the 16 percent increase in overall NIV demand over the 
same period. 
 
     Year     Number of B-1/B-2 Applicants   Change in Volume 
     ----     ----------------------------   ---------------- 
     FY-06     97,744 
     FY-07    113,446                        16 percent 
 
 
Student Applicants 
------------------ 
 
¶5. (SBU) Recently, the Institute of International Education 
(IIE) released its "Open Doors" report on international students 
in the United States.  The report shows that Chinese enrollment 
 
SHANGHAI 00000030  002 OF 005 
 
 
in U.S. tertiary institutions increased 8 percent over the past 
year, compared with an increase of 4 percent in general 
international student enrollment.  IIE reported that a record 
67,723 Chinese students are studying in the U.S., which 
represents 12 percent of the total 582,984 international student 
population (just 3,339 off the FY-03 all-time high of 586,323.) 
Of the total 67,723 Chinese students in the U.S., 15,027 (22 
percent) came through Shanghai's visa section in FY-07. 
Shanghai saw a 19 percent increase in student visa applicants, 
compared with the 8 percent increase in overall Chinese 
enrollment.  This is a reflection of the high standard of living 
in East China, with an increasing number of students able to 
qualify for visas and to afford study in the United States. 
 
     Year     Number of F-1 Applicants   Change in Volume 
     ----     -----------------------    ---------------- 
     FY-06    12,642 
     FY-07    15,027                     19 percent 
 
Generally speaking, Shanghai's student applicants fall into two 
distinct categories.  One group is comprised of excellent 
students with outstanding standardized test (frequently perfect 
quantitative scores) and generous scholarships to well-known 
schools.  The other group contains students without English 
skills who have been admitted without test scores to relatively 
small, lesser known (at least to Chinese applicants) schools. 
There is a large void between these two groups -- an absence of 
applicants headed to mid-sized regional and state schools. 
 
 
Exchange and Visitor Applicants 
------------------------------- 
 
¶6. (SBU) In FY-07, exchange and visiting scholar applicants 
seeking J-1 visas increased by 27 percent, a much greater 
percentage than the increase in the general visa pool. 
 
     Year     Number of J-1 Applicants   Change in Volume 
     ----     ------------------------   ---------------- 
     FY-06    4,222 
     FY-07    5,373                      27 percent 
 
 
FY-02 Comparisons 
----------------- 
 
¶7. (SBU) FY-02 is generally considered a watershed year for 
student and academic exchange visa applications.  Due to 
post-9/11 safety fears and post-9/11 tightening of visa 
security, starting in FY-02 international students began to go 
someplace other than the U.S. to study -- Canada, Australia, 
U.K., etc.  For Shanghai in FY-07, F and J applicant volume has 
not only returned to, but far surpassed pre-9/11, FY-01 levels. 
 
 
     Year     Number of F-1 Applicants   Change in Volume 
     ----     ------------------------   ---------------- 
     FY-01     9,581 
     FY-07    15,027                     57 percent 
 
     Year     Number of J-1 Applicants   Change in Volume 
     ----     ------------------------   ---------------- 
     FY-01    2,742 
     FY-07    5,373                      96 percent 
 
 
Third Country Nationals 
----------------------- 
 
¶8. (SBU) As China's economic center, Shanghai has an 
ever-increasing expatriate community.  This fact is reflected by 
the increase in Shanghai's third country national (TNC) visa 
applicants, which grew 19 percent in FY-07. 
 
     Year     Number of TNC Applicants   Change in Volume 
     ----     ------------------------   ---------------- 
     FY-06    1,928 
     FY-07    2,300                      19 percent 
 
 
Petition Travelers 
------------------ 
 
SHANGHAI 00000030  003 OF 005 
 
 
 
¶9. (SBU) Petition-based applications (H, L, M, O, and P 
categories) grew more than any other visa category in FY-07.  In 
particular, Shanghai saw a significant increase in the number of 
highly skilled Chinese workers (H-1B) and Chinese managers 
(L-1), with a total increase in petition-based travelers of 36 
percent. 
 
     Year     Petition-Based Applicants   Change in Volume 
     ----     -------------------------   ---------------- 
     FY-06    6,359 
     FY-07    8,652                       36 percent 
 
 
MANTIS Program 
-------------- 
 
¶10. (SBU) Despite an increase in overall applicant volume 
(especially J-1 visiting scholars), Shanghai's special advisory 
opinion (SAO) MANTIS volume decreased by 5 percent during FY-07. 
 In response to this decrease, Shanghai consular management 
queried SAO coordinators in Washington who replied that 
Shanghai's current SAO volume is appropriate.  This implies that 
in the past Shanghai ConOffs had erred on the side of caution in 
their decisions to submit SAO requests and require MANTIS 
clearances. 
 
     Year     Number of Applicants   Change in Volume 
     ----     --------------------   ---------------- 
     FY-06    6,882 
     FY-07    6,639                  - 5 percent 
 
 
FAO Applicants 
-------------- 
 
¶11. (SBU) Chinese applicants carry one of four kinds of passport: 
diplomatic, service, public affairs, or private.  Diplomatic, 
service, and public affairs passports are collectively referred 
to as "official" passports and are issued to members of 
governmental organs or employees of state-owned enterprises on 
official travel.  Applications from these passport holders are 
submitted through the provincial Foreign Affairs Offices (FAO), 
which ensure that the applicants generally have verified 
employment and are traveling for official purposes.  Whereas in 
Beijing FAO passports constitute a quarter of the workload, 
Shanghai's FAO applicants represent only 15 percent of the visa 
pool.  Although the number of "official" applicants increased 
only slightly (2 percent) in FY-07, FAO applicants continue to 
be "high maintenance" applicants -- frequently requesting 
expedited services and routinely expecting preferential 
treatment. 
 
     Year     Number of FAO Applicants   Change in Volume 
     ----     ------------------------   ---------------- 
     FY-06    21,399 
     FY-07    21,724                     2 percent 
 
 
AMCHAM Program 
-------------- 
 
¶12. (SBU) Shanghai is home to Asia's largest American Chamber of 
Commerce (AmCham).  U.S. invested companies in Shanghai account 
for approximately one-eighth of the total of 40,000 foreign 
invested companies in Shanghai, amounting to USD 11.2 billion 
worth of investment as of August 2007.  Shanghai's AmCham boasts 
more than 1,500 member companies, 3,600 members, and about 80 
new members a month.  To facilitate business with the U.S., 
Shanghai offers a special visa appointment process that 
expedites visa interviews for member companies of AmCham's 
Corporate Visa Program (CVP).  Participation in Shanghai 
AmCham's CVP program is on the rise, growing 23 percent in 
FY-07. 
 
     Year     Number of CVP Applicants      Change in Volume 
     ----     ------------------------      ---------------- 
     FY-06     9,450 
     FY-07    11,605                        23 percent 
 
Despite a 23 percent increase in visa volume, NIV refusals for 
CVP applicants dropped dramatically in FY-07.  This would seem 
 
SHANGHAI 00000030  004 OF 005 
 
 
to indicate that Shanghai is becoming more accommodating to 
business travelers to the United States 
 
     Year     Number of AmCham Refusals   Change in Volume 
     ----     -------------------------   ---------------- 
     FY-06    232 
     FY-07    141                         - 40 percent 
 
 
Visa refusals 
------------- 
 
¶13. (SBU) Visa officers are not just bullish about AmCham 
applicants.  There is a perception among Shanghai visa officers 
that the quality of applicants in the East China region is 
generally improving.  The FY-07 drop in refusal rates bears this 
out.  As can be seen in the table below, both the raw refusal 
rate and the adjusted refusal rate (taking into account refusals 
subsequently overcome or waived) fell significantly from FY-06 
figures: 
 
  Year   Refusals   Raw Refusal Rate    Adjusted Refusal Rate 
  ----   --------   ----------------    --------------------- 
  FY-06  33,506     36 percent          21 percent 
  FY-07  29,826     26 percent          14 percent 
 
The decrease in refusals appears to have accelerated recently, 
as demonstrated by a comparison between October 2006 and October 
2007, with a year-on-year decrease from 30 percent to 16 
percent. 
 
     Month     Number of Refusals   Raw Refusal Rate 
     -----     ------------------   ---------------- 
     Oct. 06    2,168              30 percent 
     Oct. 07   1,532                16 percent 
 
Many factors likely contribute to this decrease in refusal 
rates, but it would seem that the simplest explanation is that 
Shanghai's applicants are significantly better than many other 
regions in China, and are getting better all the time.  TDY 
exchanges bear this out.  In FY-07, Shanghai participated in 
several NIV officer exchanges with Guangzhou, Hong Kong, Taipei, 
Beijing, Shenyang, and other posts.  Line officers say that 
TDY-ing out of Shanghai, and receiving TDY-ers from other areas 
in the region allows them to more accurately evaluate Shanghai's 
visa applicant pool.  When push comes to shove, applicants from 
Shanghai are more likely to return (and overcome 214(b)) because 
they see greater opportunities in Shanghai than they might have 
in the United States. 
 
 
Fraud Workload 
-------------- 
 
¶14. (SBU) Aware of a decreasing refusal rate, Shanghai has been 
extra-cautious to ferret out fraud and discourage 
out-of-district applicants who "visa shop" at higher issuance 
posts.  Although the number of refusals went down, the number of 
fraud investigations in Shanghai increased by 75 percent. 
 
     Year     Fraud Investigations   Percent Increase 
     ----     --------------------   ---------------- 
     FY-06    425 
     FY-07    745                    75 percent 
 
Despite a decrease in refusals, Shanghai's consular district 
remains very economically diverse, with many impoverished 
regions.  Eastern China's economic wave has left many people 
behind.  There are several well-known high fraud areas, and 
document fraud is rampant, especially in and around the 
production "boomtown" of Wenzhou.  As with most of China, 
family-based fraud is also an ongoing concern. 
 
Visa Reciprocity 
---------------- 
 
¶15. (SBU) Shanghai routinely issues 12-month, multiple-entry 
visas to Chinese nationals applying in the B-1/B-2 category.  By 
comparison, China normally issues Americans tourists a 1-month, 
single-entry visa.  China-wide numbers for calendar year 2006 
showed that 18 percent of B-1/B-2 applicants had been issued a 
visa in the previous 24 months, and that 28 percent had been 
 
SHANGHAI 00000030  005 OF 005 
 
 
issued a visa in the previous 60 months.  Based on these 
numbers, a significant increase in visa validity reciprocity 
would decrease B-1/B-2 demand (the primary visa category) by 
almost 40 percent.  The current limited visa reciprocity not 
only ensures that Shanghai's visa demand will continue to 
outstrip its resources, but it also means Shanghai's applicant 
pool will see double-digit growth in FY-08, FY-09, and beyond. 
JARRETT