VZCZCXRO1059
RR RUEHCN RUEHVC
DE RUEHGH #0298/01 2140930
ZNR UUUUU ZZH
R 010930Z AUG 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7024
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0343
RUCPDOC/USDOC WASHDC 0220
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7594

UNCLAS SECTION 01 OF 02 SHANGHAI 000298 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM AND EB 
STATE PASS USTR FOR STRATFORD/WINTER/ALTBACH/KATZ 
DOC FO ITA - DAS KASOFF, CMCQUEEN, ESZYMANSKI 
TREASURY FOR OASIA - DOHNER/HAARSAGER/CUSHMAN 
NSC FOR KURT TONG, JONATHAN SHRIER 
TREASURY FOR OASIA - CUSHMAN, WINSHIP 
 
E.O. 12958: N/A 
TAGS: PGOV EINV KIPR ELAB ETRD ENRG EWWT CH
SUBJECT: NANJING LEADERSHIP SEEKS CLOSER U.S. TIES 
 
SHANGHAI 00000298  001.2 OF 002 
 
 
(U) Sensitive but unclassified.  Not for dissemination 
outside USG channels; not for Internet distribution. 
 
¶1.   (SBU) Summary. During the Consul General's July 30 visit to 
Nanjing, Mayor Jiang Hongkun and Vice Mayor Jin Daoqiang pushed 
for an increased U.S. commercial and diplomatic presence in 
Nanjing.  A U.S. Consulate in Nanjing would be useful in 
deepening cultural and economic ties said Mayor Jiang. 
According to Vice Mayor Jin, although the weak U.S. economy has 
affected Nanjing's economy, the overall economy remains stable. 
Vice Mayor Jin emphasized that the Nanjing Government 
understands the importance of IPR protection, rule of law and 
good governance to maintaining a good business environment and 
is committed to making improvements in these areas.  Jin said 
the government is increasingly focused on three criteria when it 
evaluates local leaders: the state of the environment, people's 
livelihood, and grassroots assessments of performance.  End 
Summary. 
 
U.S. Companies Welcomed 
----------------------- 
 
¶2. (U) The Consul General paid a farewell call on Nanjing Mayor 
Jiang Hongkun on July 30.  Jiang thanked the Consul General for 
his efforts to bolster Nanjing's economic and cultural 
connections to the United States.  Commenting on his May trip to 
the United States, Jiang said he visited Seattle, Dallas, and 
sister city St. Louis.  He expressed a keen interest in 
establishing direct passenger and cargo flights from the United 
States to Nanjing, but realized that civair links are a matter 
handled by Beijing. 
 
U.S. Consulate in Nanjing Welcomed 
----------------------------------- 
 
¶3.  (U) Mayor Jiang urged that the USG establish a Consulate in 
Nanjing as soon as possible.  Nanjing has strong cultural and 
economic ties to the United States and a Consulate would help 
strengthen these ties.  The Consul General noted that the United 
States also wanted to strengthen ties with Nanjing, and toward 
that end, in March had established a Virtual Presence Post (VPP) 
in Nanjing.  During the subsequent lunch with Vice Mayor Jin, 
the CG provided examples of material on the VPP. 
 
Nanjing Feels U.S. Economic Pain 
-------------------------------- 
 
¶4.  (SBU) Following the meeting with Mayor Jiang, Vice Mayor Jin 
Daoqing hosted a lunch.  According to Jin, Nanjing's economy is 
suffering from the economic downturn in the United States. 
Exports to the United States were down 15 percent during the 
first half of 2008.  Before the downturn, Nanjing's exports to 
the United States had been increasing by 30 to 40 percent.  Jin 
complained that the RMB has appreciated too quickly and 
expressed relief over recent indications that the RMB's rise 
might slow down in the months to come. 
 
¶5.  (SBU) Vice Mayor Jin added, however, that Nanjing's economy 
remains stable and continues to grow, albeit at a slower pace. 
There has been no big increase in bankruptcies and unemployment, 
as officially defined, remains at four percent.  Businesses have 
been forced to be very flexible in order to cope with current 
economic conditions.  For example, companies have negotiated 
contracts that allow them some room for maneuver.  Some will fix 
prices to a certain exchange rate or renegotiate contracts. 
There has also been a shift to the euro for denominating 
contracts. 
 
Energy Shortages & Wen Jiabao Visit 
----------------------------------- 
 
¶6.  (SBU) Vice Mayor Jin said that Nanjing has recently suffered 
from energy shortages.  According to Jin, this is not due to a 
shortage of capacity.  The problem is an incoherent pricing 
mechanism.  For example, Jin noted the rising cost of coal but 
the relative low price for electricity.  Thus, some producers 
preferred to produce less energy since they could only produce 
at a loss.   Asked about the recent Jiangsu visit by Premier Wen 
Jiabao, Vice Mayor Jin offered few specifics.  In terms of 
Beijing's expectations, he said the Central Government's chief 
economic goals are to avoid overheating and inflation.  Given 
 
SHANGHAI 00000298  002.2 OF 002 
 
 
the global economic weakness, there was a push to increase 
domestic consumption. 
 
A Good Business Environment 
--------------------------- 
 
¶7.  (U) Vice Mayor Jin talked positively about U.S. companies, 
noting that many big U.S. firms such as AIG, Emerson, and 
McDonalds operated successfully in Nanjing.  The Nanjing 
Government understands the importance of developing a good 
business environment and has made efforts to strengthen IPR 
protection, improve rule of law and develop good governance.  He 
noted that Nanjing has its own IPR White Paper.  When asked 
about food and product safety, Vice Mayor Jin acknowledged 
recent problems in these areas, but said this was an inevitable 
part of a country's development.  The United States went through 
a similar stage thirty years ago, he said.  Nanjing would like 
to learn more about the U.S. experience as it works to fix 
problems in this area.  The city is committed to developing a 
good business environment and welcomes further cooperation from 
the United States in these areas. 
 
Assessing Nanjing's Leaders 
--------------------------- 
 
¶8.  (SBU) According to Vice Mayor Jin, Jiangsu province uses a 
battery of 28 criteria to assess local leaders.  In terms of 
general areas of emphasis, the three most critical overall areas 
are the state of the environment, people's livelihood, and 
grassroots assessments of local leaders.  Jin said the municipal 
government hires outside specialists to conduct polls, and 
indeed, a look at the Nanjing Municipal Government website had 
the results of a 2007 poll in which local citizens were asked to 
evaluate 30 government agencies. (See 
www.nj.gov.cn/other/test/dcwj/dcwj.htm.)  Vice Mayor Jin added 
that staff also provide input about the performance of their 
supervisors. 
JARRETT