VZCZCXRO8071
RR RUEHGH RUEHVC
DE RUEHCN #0098/01 1290331
ZNY CCCCC ZZH
R 080331Z MAY 08
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2839
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3441

C O N F I D E N T I A L SECTION 01 OF 02 CHENGDU 000098 
 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: DECL:  5/8/2033 
TAGS: PGOV SENV PHUM ECON CH
SUBJECT: CHENGDU PETROCHINA PROJECT PROTEST 
 
REF: 06 CHENGDU 1161 
 
CHENGDU 00000098  001.2 OF 002 
 
 
CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate 
General, Chengdu. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary:  Summoned by anonymous text messages, a crowd of 
100 or more protestors gathered in Chengdu on May 4 to express 
their opposition to the construction of a large chemical plant 
north of the city.  The project in question is a USD 5.5 billion 
joint investment by PetroChina and the Sichuan Provincial 
Government.  Although the protest occurred next to Sichuan's 
largest university, the crowd was composed mainly of middle 
class urban residents who perceive a threat to property values 
and Chengdu's quality of life.  Long a focus of local 
controversy, the plant is apparently a "pet project" of Sichuan 
Vice Governor Huang Xiaoxiang.  A government official in the 
locality where the plant is being constructed complained to us 
land was requisitioned at a discounted price.  According to a 
Consulate contact, Chengdu-based human rights activist Chen 
Yunfei was involved in the protest and was briefly detained and 
questioned by security officials following its conclusion.  End 
Summary. 
 
¶2. (SBU) Beginning about 2:00 pm on a pleasantly warm Sunday 
afternoon of May 4, a group estimated to contain from 100 to 500 
people (depending on the source) gathered on a shady Chengdu 
street to protest against the construction of a large ethylene 
plant and oil refinery on the outskirts of the city.  Although 
none of the protestors carried signs or shouted slogans, many 
protestors wore surgical facemasks as a gesture of concern over 
possible future effects of the plant on air and water quality in 
the city.  The protestors walked up and down a stretch of road 
just outside the east gate of Sichuan University for about two 
hours, and although several dozen uniformed officers (and 
perhaps undercover officers as well) shadowed the marchers, the 
incident ended without official interference around 5:00 pm. 
 
THE PENGZHOU REFINERY 
------------------------ 
 
¶3. (SBU) The spark for the protest was news that PetroChina had 
begun the construction of its USD 5.5 billion ethylene plant and 
oil refinery in Longfeng Township, located in the county-level 
city of Pengzhou about 25 miles north of Chengdu.  By all 
accounts the plant is a large project.  PetroChina has announced 
that upon completion it will produce 800,000 metric tons of 
ethylene and 10 million metric tons of refined petroleum 
annually, with a projected annual sales volume of 50 billion RMB 
(USD 7.1 billion).  The plant will occupy 400 hectares (988 
acres) of what was previously prime farmland, and is slated for 
completion in 2010. 
 
¶4. (C) According to Sichuan Petrochemical Association Vice 
Chairman Zhang Ke, the project is funded by PetroChina (a 75 
percent share) and the Sichuan Provincial Government (25 
percent).  Well-connected Chinese-American contacts in the local 
business community have told us that the plant is also a "pet 
project" of Sichuan Vice Governor Huang Xiaoxiang.  On March 8, 
2007 PetroChina and provincial authorities hosted a signing 
ceremony in Beijing attended by Sichuan Governor Jiang Jufeng 
and Chengdu Party Secretary Li Chuncheng. 
 
¶5. (C) The plant has long been the focus of local controversy. 
Environmental activists have warned that the plant will foul 
Chengdu's air and water, and that transportation of its products 
on Sichuan's crowded highways will heighten the risk of a spill 
of hazardous materials.  One such critic is Chengdu Institute of 
Mountain Hazards and Environment (an office of the Chinese 
Academy of Science) Senior Researcher Chen Guojie (strictly 
protect), who has also been a vocal critic of the Three Gorges 
Dam project.  He told us in 2006 that the Pengzhou plant ranked 
as one of the most significant threats to Chengdu's environment 
(reftel). 
 
¶6. (C) An official in the Pengzhou government told us of his own 
dissatisfaction with the project, claiming that it posed a far 
greater threat to the environment of Pengzhou than it did to 
Chengdu.  He also alleged that, while Pengzhou had been 
compelled to provide the land for the land for the plant at the 
supposedly discounted price of 30,000 RMB (USD$4347) per mu 
(0.12 acres), almost all of the profit from project would flow 
to other governmental units -- the Central Government 
(presumably through PetroChina) as well as Sichuan and Chengdu. 
 
THE PROTESTORS 
------------------------ 
 
¶7. (C) On the morning of May 4, many Chengdu residents began 
 
CHENGDU 00000098  002.2 OF 002 
 
 
receiving text messages beginning with the words "Petrochemical 
Project Alert."  Those messages warned, "downtown Chengdu will 
be severely polluted" as a result of the construction of the 
plant, and urged recipients to gather in the area outside the 
Sichuan University gate to "express your anger."  According to 
local contacts, most of the marchers were Chengdu city 
residents, the majority of whom were middle to upper class, with 
a smattering of local human rights and environmental activists. 
Despite the location of the protest just outside Sichuan's 
largest university, there were apparently few if any students 
involved in the protest. 
 
¶8. (C) There are varying accounts of how the text message 
campaign started, but local contacts tell us that Chengdu-based 
human rights activist Chen Yunfei was involved.  Chen was 
purportedly responsible for the placement of an advertisement in 
a local paper last summer that memorialized the victims of the 
1989 Tiananmen massacre.  According to one contact, after the 
Sunday demonstration Chen was briefly detained by the Ministry 
of State Security and then released.  Other activists supposedly 
involved were Huang Xiaoming, Yang Yusheng, Wen Di, and Fan Xiao 
(the last two mentioned in media accounts as well). 
 
¶9. (SBU) Although authorities did nothing to stop the protest, 
the next day (May 5), the Chengdu Commercial News ran a 
front-page interview with PetroChina Deputy General Manager and 
Chief Engineer Zhang Dongping, in which Zhang defended the 
project as "safe and environmentally friendly."  The interview 
also noted that the project had received approval from the 
National Development and Reform Commission. 
 
COMMENT 
--------------- 
 
¶10. (C) With its largely middle class participants, the incident 
evokes two other recent protests in other cities in China, one 
in Shanghai against the extension of the Maglev, and the other 
in Xiamen against the construction of a chemical plant.  The 
Pengzhou project appears to threaten some of the "core values" 
that Chengdu residents (especially property owners) hold dear -- 
especially the city's relative lack of heavy industry and 
abundant water supplies.  These same "core values" have served 
to attract significant amounts of investment in the relatively 
"clean" high tech sector to the city (Intel is one prominent 
example), and we have been told by some local business contacts 
that they see the project as a potential threat to attracting 
future private investment.  Controversy over the project may run 
deep among the area's economic and political elites. 
BOUGHNER