R 020850Z MAR 09
FM AMCONSUL SHANGHAI
TO SECSTATE WASHDC 7690
INFO AMEMBASSY BEIJING 
AMCONSUL CHENGDU 
AMCONSUL GUANGZHOU 
AMCONSUL HONG KONG 
NSC WASHINGTON DC
AMEMBASSY SEOUL 
AMCONSUL SHENYANG 
AIT TAIPEI 1574
AMEMBASSY TOKYO 
AMCONSUL SHANGHAI

C O N F I D E N T I A L SHANGHAI 000103 
 
 
STATE FOR EAP/CM, INR AND DRL 
NSC FOR LOI, KUCHTA-HELBLING 
 
E.O. 12958: DECL:  3/2/2034 
TAGS: PGOV ECON ELAB PHUM CH
SUBJECT: RURAL ANHUI: CALM ON THE SURFACE BUT SEA MONSTERS LURKING 
BELOW 
 
REF: A. (A) BEIJING 400 
     ¶B. (B) SHANGHAI 51 
 
CLASSIFIED BY: SIMON SCHUCHAT, DEPUTY PRINCIPAL OFFICER, U.S. 
CONSULATE SHANGHAI, U.S. DEPARTMENT OF STATE. 
REASON: 1.4 (b), (d) 
 
 
Summary 
------- 
 
¶1. (C) Rural Anhui Province has not yet faced new social 
instability problems as a result of China's economic downturn, 
but the province's ongoing dependence on migrant worker 
remittances for disposable income in the countryside leaves 
Anhui, particularly its northern region, vulnerable to social 
unrest if the economic downturn deepens.  A major source of 
migrant labor, Anhui does not have a comprehensive plan for 
reintegrating workers who lose their jobs in coastal factories, 
our interlocutors in Hefei and Fuyang said, and Central 
Government efforts to promote rural consumption in poor areas 
may backfire.  Farmers outside Fuyang said they still rely 
heavily on remittances from their sons and daughters to maintain 
their livelihoods.  Local governments in Anhui are increasingly 
wary of outbreaks of instability, as evidenced by a front page 
local newspaper article on February 25.  End Summary. 
 
Travel to Anhui Province 
------------------------ 
 
¶2. (C) DPO and PolOff traveled to Anhui Province February 24-27. 
 In Hefei, the provincial capital, DPO and PolOff met with 
provincial government officials and a rural expert at Anhui 
University.  On February 26, they traveled to Fuyang in the 
northern part of the province to visit a rural area and meet 
with local officials. 
 
Anhui Province's Migrants Looking for Work 
------------------------------------------ 
C) Rural Anhui Province remains stable even as many of the 
province's migrant workers are struggling to find new jobs in 
China's coastal areas following the Lunar New Year holiday (see 
reftels).  Anhui is a major sending area for migrant workers, 
said Lin Fei, a researcher at the Anhui Academy of Social 
Sciences (AASS), who estimated that approximately 11 million 
migrants (roughly one-sixth of Anhui's total population) are 
working outside the province with most workers employed in the 
Yangtze River Delta (YRD).  Migrant workers are "used to living 
in the city," Lin said, and many have faced difficulties 
readjusting to life in the countryside since being laid off by 
cost-cutting employers prior to the Lunar New Year. 
 
¶4. (C) Lu Liansheng, head of the rural development division at 
AASS, acknowledged that many of Anhui's migrants returned home 
early for the holiday in November and December.  He did not 
estimate how many of Anhui's migrants lost their jobs in late 
2008, but he said he is "not optimistic" that all of Anhui's 
migrants will be able to find jobs outside the province in the 
near-term.  Many migrants returned to the coast before the end 
of the holiday to try to "beat the rush," Lu observed.  Even 
then, it will still be "very difficult" for migrants who are 
looking for work.  Lu said local governments are encouraging 
migrants to return home to the countryside and set up small 
businesses because they have some money saved and "understand 
the market" in coastal areas, but there inevitably will be 
"successes and failures" for migrants turned entrepreneurs. 
 
Rough Waters Ahead in Anhui? 
---------------------------- 
 
¶5. (C) Addressing social stability concerns will be a major 
challenge for Anhui, our interlocutors said.  Zhang Deyuan, the 
Deputy Director of the San Nong Institute at Anhui University, 
said on February 25 that social stability in Anhui's rural areas 
"looks calm on the surface, but there are sea monsters lurking 
below."  The Central Government's efforts to address rural 
development such as the State Council's 2009 Number One Policy 
Document -- which tackled rural issues for the sixth year in a 
row -- are insufficient, Zhang said.  In Anhui, the question of 
what returning migrants should do if they cannot find work in 
coastal areas is a serious problem, he said. 
 
¶6. (C) Zhang dismissed local policies to promote small business 
development, stating that rural small and medium sized 
enterprises (SMEs) are too inefficient.  He also refuted claims 
made by Anhui officials that the province's own industrial 
development could absorb excess labor, stating that several 
major factories in the province that recently closed.  There are 
stopgap measures for deploying excess labor (including one 
program to send 40,000 Anhui rural residents to Xinjiang 
Autonomous Region to work on an agricultural project), as well 
as short-term training opportunities, but there is no 
comprehensive plan for helping migrants find work, Zhang said. 
 
¶7. (C) Farmers have enough money saved to last for a few months, 
Zhang said, and Anhui likely will avoid social problems linked 
to migrant worker dissatisQ in the near-term.  Central 
Government plans to promote rural consumption, however, are 
misplaced, Zhang said, for if migrants do not have jobs, and 
therefore do not have disposable income, then it will be 
difficult for them to buy consumer goods.  Rural residents may 
have enough money saved to buy a refrigerator, or a TV, or even 
a car, but this consumption will not promote social stability, 
Zhang said.  Migrant workers who can find factory jobs in 
coastal areas most certainly will leave, Zhang said, as they do 
not want to remain in the countryside.  Local governments are 
now focusing their attention on stability and security instead 
of GDP growth, Zhang observed, adding that "the problem is that 
when things go bad in China, it happens quickly." 
 
Fuyang: Possible Problems on the Horizon 
---------------------------------------- 
 
¶8. (C) The biggest potential social stability problem in Anhui 
Province is in Fuyang, Zhang said, echoing the sentiments of 
several observers.  Fuyang's high population density, limited 
land, remote location (two and a half hours northwest of Hefei), 
and dependence on migrant remittances for its economy leave the 
area susceptible to social unrest.  At first glance, however, 
the city appears to be growing at a reasonable pace with a new 
development zone and new university campus.  Several nearby 
villages also are beneficiaries of a rural development project 
implemented by the U.S.-based NGO, Heifer International, to help 
farmers purchase livestock and sell the offspring for profit. 
 
¶9. (C) Despite economic gains from the project, however, farmers 
in Omiao Village in Fuyang's Yingzhou District, told DPO and 
PolOff that they remain dependent on non-farm income.  All of 
the farmers interviewed in the village said their children work 
in coastal areas (mostly in Shanghai), and their remittances 
home contribute well over half of the families' incomes.  One 
villager pointed proudly to the government-installed running 
water tap in his newly constructed house -- though it was 
remittances that paid for the house itself.  The rural landscape 
was dotted with China Mobile cell towers, but the roads were 
unpaved and thick with mud.  The farmers acknowledged that the 
Fuyang City Government has tried to facilitate investment in the 
city in order to provide more industrial and service sector jobs 
locally, but all of the farmers said their children would be 
unwilling to return to Fuyang to work.  One farmer told PolOff 
that his son was laid off from his job in a Shanghai packaging 
plant just before the Lunar New Year, but his employer had 
recently called in late February to summon him back to Shanghai 
to continue working. 
 
Local Governments Move to "Safeguard Stability" 
--------------------------------------------- -- 
 
¶10. (C) The Hefei Evening News (Hefei Wanbao) reported on 
February 25 that municipal leaders had met the previous day to 
discuss social stability under the framework of the Central 
Government's document on "Safeguarding Social Stability Work in 
2009."  According to the report, local leaders emphasized during 
the meeting that internal and external economic problems would 
likely lead to new pressures and challenges for social stability 
in the coming year, and local governments must pay close 
attention to social problems.  In Fuyang, Wang Bin, Director of 
the Municipal Development and Reform Commission, said on 
February 27 that Fuyang remains stable, but local government 
meetings that focus on safeguarding stability indicate that 
Anhui is going through "extraordinary times."  Wang expressed 
confidence that Anhui will remain stable so long as no one 
"stirs up trouble." 
 
 
CAMP