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DE RUEHCN #0158/01 2000254
ZNY CCCCC ZZH
R 180254Z JUL 08
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2886
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3513

C O N F I D E N T I A L SECTION 01 OF 02 CHENGDU 000158 
 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: DECL:  7/18/2033 
TAGS: ECON ELTN PGOV CH
SUBJECT: CHENGDU TRANSPORTATION EXPERT CRITICAL OF NEW INFRASTRUCTURE 
PLANS 
 
REF: 06 CHENGDU 1016 
 
CHENGDU 00000158  001.2 OF 002 
 
 
CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate 
General, Chengdu. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary:  According to a former long-time transportation 
advisor to Chengdu party secretaries, it is highly unlikely the 
city will be able to recoup the costs of either a new light rail 
line to Dujiangyan, still scheduled to begin construction in 
late 2008 despite the recent earthquake, or a new municipal 
subway system already underway.  Our contact referred to the USD 
200 million Dujiangyan rail project as a "white elephant," 
commented that some post-earthquake resettlement plans involving 
rural households might be ill conceived, and criticized current 
government approval processes and mind-sets in which leaders 
solicit but consistently ignore expert advice.   End Summary. 
 
¶2.  (C) During a recent meeting with Congenoff, Xinnan Jiaotong 
University Professor Gao Shilian (strictly protect), a 
transportation advisor to several Chengdu party secretaries over 
a period of twelve years, criticized the planned 58-kilometer 
high-speed light rail line from Chengdu to Dujiangyan scheduled 
to begin construction in November 2008.  Gao is the brother of 
Henan Province HIV/AIDS campaigner and government critic Dr. Gao 
Yaojie. 
 
"White Elephant" High Speed Line 
----------------------------------- 
 
¶3. (C) Not mincing any words, Gao noted the Chengdu - Dujiangyan 
rail line makes "zero" economic sense.  The line is too short, 
the route is poorly planned with an intermediate stop, and 
potential passengers are too few given that there is already a 
new highway linking Dujiangyan to Chengdu.  (Note:  the USD 200 
million project is expected to take two years to complete; 
trains on the line will travel at speeds of 120 kilometers per 
hour. end note).  Gao predicts the rail line will not be able to 
repay the interest on necessary loans.  Typically these projects 
are done with one-third appropriation and two-thirds loans. 
Costs will rise even further after ten years when important 
pieces of equipment will need to be replaced. 
 
¶4. (C) According to Gao, the light rail project was originally 
proposed ten years ago to the central government.  The proposal, 
however, coincidentally reached then-Premier Zhu Rongji's office 
about the same time as another initiative to help impoverished 
Sichuan peasants.  Premier Zhu's response was to reject the rail 
line and take money proposed for the rail line to increase 
funding for assistance to Sichuan peasants. 
 
New Subway System 
---------------------- 
 
¶5. (C) As Chengdu's former chief transportation advisor, Gao 
still gets weekly internal updates on municipal transportation 
developments.  Digging has been completed on Chengdu's first 
subway line, running north-south along Renmin Lu (the city's 
main boulevard).  Equipment is now being installed in the line. 
Digging has also begun on the second line, which will run 
east-west, crossing the first line at the Tianfu Square near the 
Mao statue overlooking the downtown city center.  Gao remarked 
that, as the municipal government long ago transferred land 
along the route of the subway lines to developers, it could be 
difficult for the project itself to generate sufficient revenue 
for the city to recoup the overall cost. 
 
"Scientific Development?"  The Leader Still Decides Important 
Matters 
--------------------------------------------- -------------- 
------------- 
 
¶6.  (C) Gao commented that, despite talk in government circles 
about "scientific development" (a Hu Jintao slogan), in reality 
decisions are made by leaders alone, with little attention paid 
to advice from advisors.  Gao complained that several former 
students he trained over the decades, including at the doctorate 
level, have reached high positions of authority in the local 
Party and government.  When they meet, however, their 
conversations are always limited to pleasantries and not to 
substantive matters.  The officials know they cannot make 
decisions based solely on expert advice and he knows that they 
can't.  Instead, they talk about other subjects. 
 
Prefab Housing in Dujiangyan 
------------------------------ 
 
¶7. (C) Citing as another example of problematic government 
 
CHENGDU 00000158  002.2 OF 002 
 
 
decision-making processes, Gao recounted a discussion he 
recently had with a farmer from Dujiangyan.  Following the 
earthquake, the farmer was given as temporary housing a 
prefabricated shelter set up on a flat area in the city.  The 
shelter, however, was over an hour away from his fields.  After 
staying in the prefab briefly, he closed it and went back to his 
damaged house.  The farmer stressed to Gao that his house in the 
countryside and the houses of many farmers could be repaired if 
funding would be made available.  Temporary houses in the city 
are of little use to farmers as they are, "too small for raising 
chickens and too big for raising pigs."  According to Gao, the 
placement of some prefabricated houses in Dujiangyan may have 
been ill considered. 
 
Comments 
----------- 
 
¶8. (C) Gao's criticisms track with what we hear from other local 
interlocutors about the persistence of "Party think" and 
continued follow-the-leader mentality in government structures. 
Some of Gao's concerns relate directly to public finance.  How 
is the construction of major public projects financed, and what 
will be the consequences down the road if they do not prove 
economically viable?  A scholar at the Sichuan Academy of 
Sciences commented to us several months ago that Chengdu gets 
30% of its revenue from land deals with developers. Given 
ambitious development plans outlined in the January 2008 Chengdu 
City Work report, which include not only the two initial lines 
of the subway system and a rail network expansion of which the 
Chengdu-Dujiangyan line is just one part, but also a second 
airport for Chengdu, the problem of paying for the rapid growth 
of infrastructure may become more pressing.  Not discussed by 
Gao is the possible role played by corruption in determining 
which development projects and land transfer deals are approved 
(see reftel). 
BOUGHNER