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ZNR UUUUU ZZH
R 200655Z MAY 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7947
INFO RUEHBJ/AMEMBASSY BEIJING 2792
RUEHCN/AMCONSUL CHENGDU 1980
RUEHGZ/AMCONSUL GUANGZHOU 0437
RUEHHK/AMCONSUL HONG KONG 2149
RUEHSH/AMCONSUL SHENYANG 1971
RUEHIN/AIT TAIPEI 1768
RUEHGH/AMCONSUL SHANGHAI 8592

UNCLAS SECTION 01 OF 03 SHANGHAI 000226 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV ECON CH
SUBJECT: SCENESETTER FOR SPEAKER PELOSI'S VISIT TO SHANGHAI 
 
REF: BEIJING 1315 
 
(U) Sensitive but unclassified.  Not for dissemination outside 
USG channels; not for Internet distribution. 
 
Summary 
------- 
 
¶1.  (SBU) Madame Speaker, your visit to Shanghai will advance 
U.S.-China business relations, support energy and environment 
cooperation, and promote religious freedom.  You will arrive in 
Shanghai one year prior to the opening of the Shanghai 2010 
World Expo, the largest World Expo in history, but for which the 
United States Government (USG) has not been able to confirm 
participation because the required funding has not yet been 
pledged by private sources, as required by U.S. law.  An 
American absence at this massive event will create a perception 
of American weakness or disinterest in the region and could 
become an irritant in the bilateral relationship.  Shanghai, 
China's commercial capital and home to the world's busiest port, 
has over 5,500 U.S.-invested projects, including GM, Intel, GE, 
Kodak, and UPS, and you will have an opportunity to hear the 
concerns of the U.S. business community, which is dealing with 
the global financial crisis and China's own economic downturn. 
Air and water pollution remain key issues in Shanghai, and the 
Environmental Protection Agency (EPA) and other USG agencies 
frequently cooperate on energy and the environment with 
institutions in East China.  The Food and Drug Administration 
(FDA) also will begin staffing its new office in Shanghai just 
days after your visit.  The Shanghai Consular District is home 
to dynamic religious communities, and Shanghai Bishop Aloysius 
Jin Luxian remains active and has connections to both the 
Vatican and to leaders within the Chinese Catholic Church. 
Shanghai has taken steps to improve intellectual property rights 
(IPR) protection and governmental transparency, but the city 
still lacks strong grassroots NGOs to promote the development of 
civil society.  End Summary. 
 
Welcome to Shanghai 
------------------- 
 
¶2. (SBU) Madame Speaker, we at the Consulate General in Shanghai 
are pleased that you have included this commercially, 
politically and culturally important metropolis in your China 
itinerary.  The below information focuses on Shanghai-specific 
issues and serves to supplement information provided by Embassy 
Beijing (reftel). 
 
Shanghai: China's Commercial Capital 
------------------------------------ 
 
¶3. (SBU) Often called the "New York" of China, Shanghai is 
China's commercial capital and home to the world's busiest port. 
 Shanghai enjoyed double-digit GDP growth for the 16 consecutive 
years prior to 2008 but fell below 10 percent in 2008, and GDP 
growth in the first quarter of 2009 dropped dramatically to 3.1 
percent year-on-year.  Despite the downturn, Municipal 
Government officials expect growth to rebound during the second 
half of the year, and Shanghai's per capita GDP remains more 
than USD 11,600, 3-4 times the national average.  With its 
strategic location, highly skilled workforce and solid 
infrastructure, Shanghai is a magnet for foreign direct 
investment (FDI).  Foreign-invested companies account for half 
of Shanghai's trade and roughly 20 percent of employment. 
 
U.S. Economic Presence in Shanghai 
---------------------------------- 
 
¶4. (SBU) Shanghai has over 5,500 U.S.-invested projects, 
including GM, Intel, GE, Kodak, and UPS.  A majority of 
investment is in manufacturing, but investments in service 
industries are growing rapidly.  U.S.-invested companies in 
Shanghai account for approximately one-eighth of the total of 
40,000 foreign invested companies in Shanghai.  Shanghai's 
American Chamber of Commerce (AmCham), with more than 1,500 
member companies about 3,500 individual members, and 50-60 new 
members a month, is Asia's largest AmCham.  More than 25,000 
Americans are long-term residents in the Shanghai Consular 
District (Shanghai and the provinces of Anhui, Jiangsu and 
Zhejiang), with up to 50,000 visiting at any time. 
 
Shanghai 2010 World Expo - Will the USA Miss It? 
--------------------------------------------- --- 
 
¶5. (SBU) In 2010, Shanghai will host the World Expo, a showcase 
for China's development second only to the Beijing Olympics. 
The Shanghai Expo, which will open on May 1, 2010, will be the 
largest World Expo in history.  The Expo will run through 
 
SHANGHAI 00000226  002 OF 003 
 
 
October 31, 2010 and Shanghai officials predict it will attract 
more than 70 million visitors, the vast majority from China.  To 
date, 190 countries and 48 international organizations have 
accepted invitations to participate in the Shanghai 2010 World 
Expo, the largest number in Expo history.  The theme of the 
Expo, "Better City - Better Life", signifies Shanghai's 
commitment to green urban development and status as a major 
economic and cultural center. 
 
¶6. (SBU) The United States Government (USG) has not been able to 
confirm participation in the Shanghai 2010 World Expo, however, 
because the required funding has not yet been pledged by private 
sources.  The State Department is prohibited by 1994 and 1999 
statutes from spending appropriated funds to support a national 
pavilion in the absence of a specific Congressional 
authorization.  Since 1994, non-governmental entities have been 
formed to design USA national pavilions at World Fairs/Expos and 
to raise 100 percent of the funding from the private sector.  In 
2000, the USA missed the Millenium Expo in Germany.  In 2005, 
the USA had a successful pavilion in Aichi, Japan, due primarily 
to the majority-funding support provided by Toyota's North 
American subsidiary. 
 
¶7. (SBU) Currently, the United States has communicated only its 
hopes to participate, contingent on private fundraising success. 
 The estimated total budget of the USA Pavilion is USD 61 
million, which includes all construction, staffing, operation, 
show presentations, and post-Expo building demolition and 
materials removal costs.  Fundraising to date for the planned 
USA National Pavilion has only raised a fraction of the USD 61 
million required, though several well-known companies have made 
modest commitments in recent days.  A number of American 
companies are involved in the Expo on their own, independent of 
a national pavilion.  Coca-Cola, General Motors-China, and 
possibly Best Buy will build their own corporate pavilions in a 
separate area of the Expo, entirely unrelated to the USA 
National Pavilion.  Cisco and IBM have become Senior Sponsors of 
the overall Expo.  The NBA and Anschutz Entertainment Group are 
helping to build the Expo's permanent Performing Arts Center on 
the Expo grounds. 
 
¶8. (SBU) Taking place within China for the first time, the 
Shanghai Expo is not a typical World Expo/Fair.  Its 
unprecedented size and public diplomacy value far surpass those 
of other Expos in recent decades.  Unlike the Olympics, which 
last just two weeks and allow the host country to showcase 
itself to a global audience, World Expos are six months long and 
allow the rest of the world to showcase themselves to the 
citizens of the host country.  For the United States, a USA 
National Pavilion at the Expo represents an outstanding public 
diplomacy opportunity to tell America's story directly to an 
expected 60 million Chinese visitors the way that we want it to 
be told.  Speculation that America will be one of only two 
countries that have diplomatic relations with China to miss the 
Expo (the other is Andorra) is already rampant in both Chinese 
and Western media and blogospheres.  Chinese observers are 
already making the unfortunate and inaccurate conclusion that 
the U.S. is in decline and "cannot afford a pavilion."  Others 
are interpreting a possible U.S. absence as a deliberate slap in 
China's face and warning it could damage U.S. commercial 
interests in China.  Looking further afield to China's 
neighbors, at a time when America is seeking to emphasize its 
strong interest in the region -- as evidenced by Secretary 
Clinton's choice of Asia as her first overseas trip -- a U.S. 
absence at the Expo will not go unnoticed. 
 
Environmental and Health Cooperation in East China 
--------------------------------------------- ----- 
 
¶9. (SBU) As one of China's key areas of economic growth and 
development with a large, concentrated population, East China 
has a broad range of environmental and health issues.  Water and 
air pollution are the key environmental issues in East China. 
Authorities grapple with the need to mitigate industrial air and 
water pollution while maintaining sustained economic 
development.  Nearby Lake Tai, a source for drinking water, has 
had blue algae issues attributed to industrial waste and 
agricultural and residential pollution, causing the neighboring 
Jiangsu Provincial Government to adopt a series of stricter 
regulatory measures.  As the affluence of East China's populace 
has grown, so has its focus on environmental and quality of life 
issues. 
 
¶10. (SBU) The U.S. Environmental Protection Agency (EPA) 
recently extended its cooperation agreement with the Ministry of 
Environmental Protection and has many cooperative programs in 
the region on water and air pollution, waste treatment, and 
 
SHANGHAI 00000226  003 OF 003 
 
 
legal/regulatory frameworks.  EPA Region 9 (California) has a 
"sister" relationship with the East China Regional Supervision 
Center near Nanjing, which facilitates visits and information 
sharing between the two sides.  Research institutions in East 
China frequently host international conferences on a wide range 
of environmental issues, drawing U.S. visitors from EPA, HHS, 
NOAA, DOE, NSF, NIH, academia, and the private sector.  The Food 
and Drug Administration (FDA) is currently in the process of 
setting up a presence in Shanghai to work on medical device and 
pharmaceutical issues, and the first U.S.-direct hire for the 
FDA Shanghai office is expected to arrive at post at the end of 
May. 
 
Religious Freedom in Shanghai 
----------------------------- 
 
¶11. (SBU) The Shanghai Consular District is home to dynamic 
religious communities.  Consulate officers routinely meet with 
religious contacts to better understand current developments. 
The most prominent Catholic figure in the Consular District is 
92-year-old Shanghai Bishop Aloysius Jin Luxian.  Bishop Jin 
remains active and has connections to both the Vatican and to 
leaders within the Chinese Catholic Church.  His designated 
successor, Bishop Xing Wenzhi, received approval from both the 
Vatican and Beijing prior to his elevation to that position.  We 
are working with Xujiahui Church and the Shanghai Municipal 
People's Congress to arrange a meeting with Bishop Jin during 
your visit. 
 
¶12. (SBU) The official Protestant Church of China, CCC/TSPM, is 
headquartered in Shanghai.  Two of China's most active 
Protestant congregations are located in neighboring Zhejiang 
Province, where there are approximately 1.5 million Protestants 
according to Zhejiang CCC/TSPM officials.  (It remains difficult 
to estimate the actual number of Protestants in East China 
because official statistics do not include house church 
members.)  China's only "megachurch" -- with a capacity to hold 
6,350 parishioners -- is located in Hangzhou, Zhejiang's 
capital.  Nanjing in Jiangsu Province is home to the CCC/TSPM's 
seminary and to the Amity Bible Printing Press, the world's 
largest printer of Bibles. 
 
Shanghai Politics: Limited Reforms 
---------------------------------- 
 
¶13. (SBU) To attract investors and bolster economic development, 
Shanghai has taken measures to protect intellectual property 
rights (IPR) and improve governmental transparency.  The 
municipal government has an Open Government Information Act and 
publishes some of its draft laws on the Internet for public 
comment.  The Pudong New District in the eastern half of 
Shanghai is also experimenting with transparency and has put 
many of its regulations on the Internet.  In other spheres, 
however, such as media, religion, and NGO development, the 
Shanghai Government continues to be very cautious.   As in most 
cities in China, the media is tightly controlled and the 
Internet monitored.  Shanghai has very few grassroots NGOs, and 
most NGOs have a close relationship with the Government. 
SCHUCHAT