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C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000049 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL:  2/1/2033 
TAGS: PGOV PINR ECON CH
SUBJECT: SHANGHAI MAYOR HAN ZHENG GETS SECOND TERM 
 
 
CLASSIFIED BY: Kenneth Jarrett, Consul General, U.S. Consulate 
General Shanghai, Department of State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1.  (C) Summary: Despite earlier speculation that Mayor Han 
Zheng would be reassigned elsewhere, he was re-elected to a 
second five-year term at the end of Shanghai's Municipal 
People's Congress (MPC) on January 30.  Contacts are mixed as to 
whether Mayor Han will complete his term.  The MPC also 
appointed three new vice mayors. Five out of Shanghai's eight 
vice mayors are now recent appointees.  Meanwhile, the reviews 
on Party Secretary Yu Zhengsheng remain mixed.  One contact 
painted Yu as a reformer who is not afraid to criticize 
governmental departments or receive criticism.  Another thought 
that Yu lacked the sophistication to run a city such as 
Shanghai.  The Shanghai MPC and the Chinese People' Political 
Consultative Conference (CPPCC) meetings, which took place from 
January 23-31 emphasized Shanghai's development in support of 
national plans for the Yangtze River Delta.  The meetings also 
stressed the importance of transparency and vowed that the 
government would take measures to fight corruption.  Shanghai's 
handling of the opposition to the extension of the Magnetic 
Levitation (Maglev) train will be an important test case.  End 
Summary. 
 
--------------------------------- 
Mayor Han Zheng: Five More Years? 
--------------------------------- 
 
¶2.  (C) Contrary to speculation that Mayor Han Zheng would be 
moved out of Shanghai, he received another 5-year term on 
January 30.  During a discussion with Poloff on January 30, 
Carlyle Group's Yi Luo asserted that Han Zheng was retained as 
Mayor to provide continuity, since Party Secretary Yu Zhengsheng 
is still new to the Shanghai context and will need time to get 
up to speed.  Luo suggested that Yu probably saw working with 
Han as necessary at least for now.  Luo doubts that Han will 
move on to a position of any political significance once he 
leaves his current post.  Tongji University Professor Frank 
Peng, in a separate discussion on January 28, also expects that 
Han will not serve a full five-year term.  In a reminder that 
doubts about Han Zheng's role in the pension scandal still 
linger, Luo said the Party most likely has some incriminating 
information about Han but would have "lost too much face" if 
both Party Secretary Chen Liangyu and Mayor Han had been removed 
for the same scandal.   Han Zheng, however, does have his 
admirers. Shanghai MPC researcher Zhou Meiyan told us February 1 
that Han will stay on, saying that Han and Yu get along well. 
She added that during a recent meeting, Mayor Han was very 
relaxed and spoke passionately and spontaneously.  She took this 
as a sign that he is no longer worried about his future and 
would serve the full five years in Shanghai. 
 
--------------------- 
New Vice Mayors Named 
--------------------- 
 
¶3.  (C) Some speculate that Han Zheng may also be staying to 
smooth the transition at the vice-mayoral level.  Five of eight 
vice mayors have been appointed since December 2007, three of 
them on January 30.  According to Shanghai MPC Standing 
Committee Member Wang Guangchang in a conversation with the 
Consul General on January 29, the major turnover reflects the 
need to comply with central directives about the composition of 
vice mayors.  Beijing has instructed that vice mayors be 
younger, have functional expertise, include a woman and a 
non-CPC representative, and be limited to two terms.  Zhou also 
described the significant turnover in vice mayors as the result 
of these requirements. 
 
¶4.  (C) Yang Xiong, Tang Dengjie, and Hu Yanzhao will continue 
as vice mayors.  Yang Xiong will become the new Executive Vice 
Mayor. The three new vice mayors newly are Shen Xiaoming, Shen 
Jun, and Zhao Wen.  Shen Xiaoming was the Shanghai Education 
Commission Director; Shen Jun was the Shanghai MPC Deputy 
Secretary General; and Zhao Wen is a member of the non-CPC Jiu 
 
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San Society Shanghai branch. Zhou said that the choice of Zhao 
Wen was a surprise and that no one was sure why Yang Dinghua, 
who was appointed vice mayor in 2006, was replaced.  Ai Baojun 
and Tu Guangshao, who were appointed vice mayors in December 
2007, were re-elected at the MPC.  Both bring significant 
experience in business to the roster.  Ai comes from the 
 
SHANGHAI 00000049  002 OF 004 
 
 
Baosteel Shanghai office, while Tu is a former chairman of the 
Shanghai Stock Exchange.  Zhou asserted that Ai and Tu are 
viewed as being sent from Beijing, since Baosteel is a 
centrally-owned enterprise and Tu most recently served as 
vice-chairman of the China Securities Regulatory Commission in 
Beijing. 
 
---------------------------------------- 
Yu Zhengsheng: Initial Impressions Mixed 
---------------------------------------- 
 
¶5.  (C) Zhang Renren of Weyerhauser told Poloff on January 28 
that he was "not impressed" with Yu and was concerned about his 
handling of the protests against the Maglev.  Carlyle's Luo 
observed that Yu has not left much of an impression even after 
three months. Yu has had little visible impact so far, said Luo. 
 He believes Yu is treading carefully while getting the lay of 
the land in Shanghai, trying not to antagonize members of the 
Shanghai political establishment. Citing the son of an official 
in Beijing, Luo said that he doesn't expect anything significant 
from Yu for at least 12-18 months. 
 
¶6.  (C) Zhou was much more positive about Yu and said "many 
people" like him, particularly his willingness to criticize 
departments within the Shanghai government.  For example, Zhou 
says Yu recently criticized an unspecified government agency for 
not being transparent in its operation.  Zhou suggested that Yu 
would bring about more transparency to the Shanghai government. 
She noted that, upon his arrival, Yu was surprised at the lack 
of transparency in Shanghai's budget.  During Yu's tenure in 
Hubei, according to Zhou, he ensured that information about the 
government's budget was made available online. 
 
¶7.  (C) Zhang said that even if Beijing is hopeful that Yu can 
break the Shanghai gang, Shanghai is a "complex and important 
place" and that outsiders (alluding to Yu) lack the 
"sophistication" to run a city like Shanghai. 
 
---------- 
The Maglev 
---------- 
 
¶8.  (C) Many contacts see the Maglev protests as an important 
"test" case for the Shanghai Government.  Luo affirmed that the 
government is indeed keeping tabs on public opinion and taking 
it into account, for better or for worse.  On the thorny issue 
of the Maglev expansion, however, Luo and Zhang Renren of 
Weyerhauser both asserted that the Shanghai Municipal Government 
will likely proceed with the project to Hongqiao airport despite 
public opposition, though it may be more cautious in moving 
forward.  Zhang interpreted Yu Zhengsheng's statement on the 
early January protests to mean the government will wait out the 
protests but not change its policy. Zhang described the 
government's promises to listen carefully to suggestions as just 
"window dressing." 
 
¶9.  (C) According to Postal Bureau's Wang Guangchang, the Maglev 
issue was the subject of much discussion during the MPC, and no 
final decision has been made. At a press conference following 
the close of the MPC, Han Zheng told media on January 31 that 
the city plans to provide another opportunity for public input 
on the Maglev project.  Zhou Meiyan is optimistic that the 
government will take the public's views seriously and said that 
if it did not make any changes there would be negative 
consequences. 
 
--------------------------------------------- ------------ 
People's Congress Meeting: Emphasis on Central Government 
Initiatives 
--------------------------------------------- ------------ 
 
¶10.  (C) Indicating an effort to portray alignment with Beijing, 
the "two sessions" of the Shanghai MPC and the Shanghai CPPCC 
gave prominence to a number of central policies and initiatives, 
including the "scientific development concept" and "good and 
fast development."  Han Zheng's Government Work Report at the 
first session of the MPC emphasized the central leadership's 
"Four Leads" vision for Shanghai, in which the city is exhorted 
to "take the lead" in transforming its economic growth mode, 
enhance independent innovation, advance reform and opening-up, 
and build a "socialist harmonious society."  In line with this 
vision, the Government Work Report promised "clear results" in 
creating a conservation-oriented, environmentally friendly city 
as one of the government's key tasks for the next five years. 
 
SHANGHAI 00000049  003 OF 004 
 
 
According to Zhou Meiyan, Han Zheng gave an unusual 
"supplemental" speech the day following the Government Work 
Report, the content of which mainly focused on environmental 
issues. 
 
---------------------------------------- 
Shanghai's Future as Economic Pacesetter 
---------------------------------------- 
 
¶11.  (U) "Independent innovation" was a central theme of the 
Report and media reporting on the two sessions.  As its first 
key task, the Government Work Report calls for laying the 
groundwork for Shanghai to become an international economic, 
financial, trade, and shipping center (the "Four Centers") by 
¶2020.  The Government Work Report emphasizes planning Shanghai's 
development in the context of national plans for the Yangtze 
River Delta, as well as the need for Shanghai to serve China as 
a whole.  Han Zheng cited a modest GDP growth rate target of 
10%, another sign of deference to central government policies. 
The English language Shanghai Daily on January 26 quoted Party 
Secretary Yu Zhengsheng as telling the CPPCC that "every 
 
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decision we make should take a nationwide perspective, even if 
the choice might push Shanghai to the edge of economic loss." 
Yu urged the city to "be willing to take risks" in areas such as 
high-tech research and development for the sake of the "whole of 
China." 
 
--------------------------------------------- ---- 
Transparency Push in Wake of Chen Liangyu Scandal 
--------------------------------------------- ---- 
 
¶12.  (U) The Government Work Report noted that the social 
security fund scandal involving former Party Secretary Chen 
Liangyu (whose name was explicitly mentioned) caused "enormous 
damage" and left Shanghai with "grave lessons to ponder."  The 
scandal "projected a very negative image of Shanghai's efforts 
for reform and development" and "exposed weaknesses, flaws, and 
loopholes" in Shanghai's "systems of governance and 
supervision." 
 
¶13.  (C) Drawing lessons from the scandal, the Government Work 
Report promised efforts to improve transparency, particularly in 
management of public finances.  Shanghai will make information 
about its budget available in the form of annual reports and 
will publish government procurement lists.  The city will also 
introduce third-party evaluation of government spending, in 
addition to review of departmental budgets and proceeds from 
land leases by the Municipal People's Congress.  The Report also 
promises "enhanced oversight" of social security fund management 
and "more rigorous auditing" and publication of audit results of 
key projects. Although last year's Work Report touched on these 
issues, this year's provided more details on Shanghai's efforts. 
 In addition, MPC researcher Zhou Meiyan highlighted this 
section, saying it had caught her attention. 
 
----------------------------------- 
Paying Attention to Public Opinion? 
----------------------------------- 
 
¶14.  (U) Accompanying the attention to economic development 
goals, the two sessions also focused on issues of more immediate 
impact on people's lives and ways to "ensure development 
benefits for all."  Raising incomes, job creation, expanding 
social security coverage, and providing affordable housing and 
access to public transportation were presented as some of the 
near term goals.  The Government Work Report noted that Shanghai 
hopes to cap registered urban unemployment at 4.3 percent, 
provide 100,000 new low-rent apartments and 300,000 affordable 
housing units, and increase education expenditure to 4 percent 
of GDP. 
 
¶15.  (U) A poll on the Jiefang Daily website during the two 
sessions asked what issues visitors to the site were following 
most closely. Housing (30 percent), social security (12 
percent), environment (9 percent), increasing incomes (9 
percent), and employment (8 percent) received the most votes. 
Improving the transportation system (7 percent) and ensuring 
food safety (6 percent) were also issues of some concern. 
 
¶16.  (U) The Government Work Report calls for "integrating" 
public participation and expert evaluation into government 
decision making, in order to "make sure that citizens are 
effectively involved" in the legislative process.  Public 
opinion surveys, public notification, and public hearings are 
 
SHANGHAI 00000049  004 OF 004 
 
 
identified as ways to involve the public.  The Report also calls 
for "rigorous review and evaluation by public opinion and by 
ordinary citizens" in evaluations of government performance. 
JARRETT