VZCZCXRO3180
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0830/01 0882326
ZNR UUUUU ZZH
P 292326Z MAR 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 3160
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHOO/CHINA POSTS COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 BEIJING 000830 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TRA/AN ROBL AND LIMAYE-DAVIS 
STATE FOR EEB/TRA/OTP MOORE AND WALKLET-TIGHE 
STATE FOR EAP/CM FLATT, HABJAN, THOMAS 
DEPT OF TRANSPORTATION FOR OSEC SUSAN MCDERMOTT, 
NICOLE PORTER, ZAHID KHAWAJA 
DEPT OF TRANSPORTATION FOR KEITH GLATZ 
FAA FOR ROBYN CICERO 
DEPT OF COMMERCE FOR ITA ALEXIS HAAKENSEN 
 
E.O. 12958:  N/A 
TAGS: EAIR EWWT ELTN ECPS CH
SUBJECT:  CHINA'S TRANSPORT MINISTRY REORGANIZED: NO 
BIG CHANGE FOR CAAC 
 
REF: (A) BEIJING 585; (B) BEIJING 795 
 
This cable is Sensitive But Unclassified (SBU) and for 
official use only.  Not for transmission outside USG 
channels. 
 
¶1. (U) SUMMARY:  China's State Council formally approved 
the reorganization of the Ministry of Transport (MOT) on 
March 16th.  This is the first major organizational 
change since the MOT was created as a super-ministry in 
March, 2008, combining the former Ministry of 
Communications (MOC), the Civil Aviation Authority of 
China (CAAC), and the State Postal Bureau (SPB).  At 
MOT's inception, organization and personnel changes were 
ordered frozen for a one-year period, and the powerful 
Ministry of Railways remained independent.  Major 
outcomes of the reorganization include creation of two 
new Departments and increased visibility for logistics 
under MOT's purview.  While the Civil Aviation Authority 
of China (CAAC) has been downgraded, it remains largely 
intact with Administrator Li Jiaxiang retaining Minister- 
level status.  The powerful Ministry of Railways remains 
independent but may be pulled into MOT next year.  As a 
result of the reorganization, MOT may increase its 
Director General level positions by 30 percent.  We 
expect good bilateral cooperation to continue.  END 
SUMMARY. 
 
MOT TAKES THE LEAD ON MULTI-MODAL TRANSPORT, LOGISTICS 
--------------------------------------------- --------- 
 
¶2. (U) Under the new structure, MOT will have 12 
functional departments or bureaus, plus a Party Committee 
and a Retired Personnel Bureau.  Major changes include 
the establishment of two new departments: a Department of 
Transport and a Department of Safety Supervision.   The 
new Department of Transport will be responsible for 
multi-modal transportation, covering water, roads and 
aviation and will have office responsible for Urban Mass- 
Transit and a Taxi Industry Management.  It will also 
cover the logistics industry, one of ten key industries 
to receive government support under the stimulus plan 
(reftel A).  MOT's new Department of Safety Supervision 
will include an Emergency Handling Office. 
 
¶3. (U) The plan also includes some minor changes in 
nomenclature, functions and organizational structure. 
The current Department of Highways and the Department of 
Water Transport will be renamed as the Highway Bureau and 
the Water Transport Bureau, indicating greater 
independence.  These two bureaus will focus on 
infrastructure construction for highways and water 
transport.  The Department of Reform and Legislation will 
be renamed the Department of Policy Research.  The Hong 
Kong and Macao Office will be added to the Department of 
International Affairs.  As a result of these changes at 
MOT, the number of Director General-level positions is 
expected to increase by 30 percent. 
 
CAAC DOWNGRADED, BUT LARGELY INTACT 
----------------------------------- 
 
¶4. (U) The reorganization also included changes at CAAC, 
which remained largely intact although the one-year grace 
period had expired.  CAAC itself has been downgraded to 
Vice-Ministry level organization.  Only one division of 
CAAC, the multi-modal transport function of the 
Department of Comprehensive Planning, will be moved to 
MOT.  All other departments in the CAAC will maintain the 
same organization and function. 
 
WILL THE MINISTRY OF RAILWAYS JOIN MOT IN 2010? 
--------------------------------------------- -- 
 
¶5. (SBU) A MOT contact told EconOff that Minister of 
Transport Li Shenglin mentioned during internal 
discussions that the stand-alone Ministry of Railways 
(MOR) would be integrated into MOT by 2010, an action 
that would boost MOT's resources and influence.  MOR is 
 
BEIJING 00000830  002 OF 002 
 
 
nicknamed "lao da" or "eldest son," to indicate its 
special, protected status.  The ministry's considerable 
political pull and the central government's substantial 
emphasis on rail infrastructure in its stimulus plan have 
enabled MOR to increase its investment budget for 2009 by 
80 percent, to USD 88 billion. 
 
WHAT DOES IT ALL MEAN? 
---------------------- 
 
¶6. (SBU) COMMENT.  Although MOT clearly gained clout in 
the reorganization, many industry and government contacts 
see the changes as a small victory for the independence 
of CAAC, which remained largely intact.  The demotion of 
CAAC to a vice-ministry level organization means little 
to its operational staff.  But it was unwelcome for 
political appointees at the vice-administrator level, and 
aviation industry contacts anticipate some struggles 
ahead.  Observers say Administrator Li Jiaxiang joined 
CAAC after the creation of the super-ministry, and would 
not have done so if CAAC's anticipated demotion was an 
issue.  (Note:  Administrator Li himself retains minister 
status and the compensation and benefits associated.) 
For the most part, we do not expect the organizational 
changes to affect cooperation with the U.S. Department of 
Transportation or FAA.  But so long as CAAC Administrator 
Li, who has strong views about foreign dominance of the 
air cargo sector, remains in power, we anticipate more 
issues related to interpretation of the U.S.-China Air 
Traffic Agreement (reftel B).  END COMMENT. 
 
PICCUTA