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RR RUEHCN RUEHGH
DE RUEHGH #0374/01 2400903
ZNR UUUUU ZZH
R 280903Z AUG 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 8243
INFO RUEHBJ/AMEMBASSY BEIJING 3039
RUEHCN/AMCONSUL CHENGDU 2179
RUEHGZ/AMCONSUL GUANGZHOU 0637
RUEHHK/AMCONSUL HONG KONG 2344
RUEHSH/AMCONSUL SHENYANG 2170
RUEHIN/AIT TAIPEI 1973
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGV/USMISSION GENEVA 0057
RHEHAAA/NSC WASHINGTON DC
RUEHUL/AMEMBASSY SEOUL 0538
RUEHKO/AMEMBASSY TOKYO 0749
RUCPDOC/USDOC WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 0105
RUEHGH/AMCONSUL SHANGHAI 8894

UNCLAS SECTION 01 OF 03 SHANGHAI 000374 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM, DRL 
NSC FOR BUSBY 
STATE PASS USTR FOR STRATFORD/WINTER 
DOC FOR ITA/MAC 
TREASURY FOR OASIA - DOHNER/WINSHIP/YANG 
TREASURY FOR SED - LOEVINGER/OWENS/VAN HEUVELEN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ELAB PHUM CH
SUBJECT: NEW ZHEJIANG MIGRANT POLICY FOCUSES ON MAINTAINING 
"STABILITY" 
 
REF: A. (A) SHANGHAI 66 
     ¶B. (B) SHANGHAI 57 
     ¶C. (C) GUANGZHOU 510 
     ¶D. (D) GUANGZHOU 498 
 
(U) This message is sensitive but unclassified.  Not for 
distribution outside USG channels. 
 
 
 
¶1. (SBU) Summary: Zhejiang's new residency policy focuses on 
maintaining social stability in the midst of an economic 
downturn, as the Provincial Public Security Bureau aims to keep 
closer track of migrant workers in and out of one of China's 
wealthiest provinces.  The officials avoided specifically 
discussing migrants from Xinjiang, but they blamed migrant 
workers in general for being the primary source of crime and 
social instability.  End summary. 
 
 
 
Zhejiang Residency Policy: Less Reform Than Advertised 
 
--------------------------------------------- --------- 
 
 
 
¶2. (SBU) Caijing magazine, arguably China's most popular and 
provocative economic monthly, reported in May on Zhejiang 
Province's proposed plan to "abolish" its residency registration 
requirement for migrant workers from other provinces and allow 
them to obtain "permanent resident status."  Under the new 
regulations, according to the report, a person would qualify for 
"permanent residence" if he or she lived in Zhejiang for three 
consecutive years and had a stable job.  (Note: Zhejiang's 
official population is 52 million.  It is estimated, however, 
that between 10 and 12 million individuals living there are not 
permanent residents of the province, including 6.4 million 
migrant workers and 800,000 students.  End Note.) 
 
 
 
¶3. (SBU) Zhejiang government officials, however, provided a 
different explanation of the new law during meetings August 13 
in the provincial capital Hangzhou.  According to Provincial 
Labor and Social Security Bureau Deputy Division Director Cao 
Jianguo, the regulations, which were passed by the Provincial 
People's Congress in the spring and will be implemented in 
October, requires migrant workers to have a resident permit if 
they work in Zhejiang.  (Note: A resident permit is not the same 
as a local hukou registration.  Resident permits are for 
temporary residents and provide only limited access to social 
services.)  According to Zhejiang Provincial Development and 
Reform Commission (ZPDRC) Economic Reform Division Deputy 
Director Ye Ke, Zhejiang's new residency policy is in line with 
direction from Beijing to "improve the management of and service 
for migrant workers."  Migrants must apply for a resident permit 
within 30 days of moving to Zhejiang under the new regulations, 
Ye said. 
 
 
 
Keeping Track of Migrants in a Tough Economy 
 
-------------------------------------------- 
 
 
 
¶4. (SBU) Zhejiang officials said the new policy would offer 
greater "stability" for families, as children of migrant workers 
with resident permits can study in local schools.  They also 
 
SHANGHAI 00000374  002 OF 003 
 
 
cited the benefits of remaining in the province for more than 
three years, which would qualify a worker for a "long-term" 
residency card and enhanced social service benefits.  According 
to Labor and Social Security Bureau official Cao, the primary 
impetus for the new residency permit structure, however, is the 
desire of the Public Security Bureau to obtain a better estimate 
on numbers of migrant workers moving in and out of the province. 
 
 
 
¶5. (SBU) Zhejiang's export-oriented small- and medium-sized 
enterprises (SMEs) have been hit hard by a drop in global demand 
(Refs A and B).  In a struggling economy, migration to and from 
Zheijang has been more unsettled.  When export-oriented 
businesses shut their doors in late 2008, approximately seven 
percent of Zhejiang's migrant workers returned home early 
according to a labor survey, said Cao.  Most of these migrants 
have since returned to find work in Zhejiang, he added. 
However, the labor situation is "complicated" because of a 
mismatch between company needs and laborers' skills, leaving 
some migrants without work and some industries (particularly in 
southwestern Zhejiang's Wenzhou Municipality) short of skilled 
labor.  The bright side, Cao asserted, is Zhejiang has generated 
400,000 new jobs in the first half of 2009, ahead of the 2008 
pace when 600,000 were created during the entire year. 
 
 
 
Economy: Not Out of the Woods Yet 
 
--------------------------------- 
 
 
 
¶6. (SBU) Despite the improved job figures, provincial officials 
warned the economy still faces "uncertainty," a theme echoed by 
Premier Wen Jiabao when he visited Zhejiang August 22-24. 
Zhejiang, as one of China's wealthiest provinces, has received 
little support from the Central Government's stimulus package. 
The province's electronics industry is in particularly bad 
shape, warned Huang Dong, an official at the ZPDRC. 
State-controlled media gave extensive coverage to Premier Wen's 
three-day inspection tour when he visited SMEs in Wenzhou and 
Lishui to offer encouragement. 
 
 
 
¶7. (SBU) Officials were heartened by 2nd quarter statistics.  In 
particular, fixed-asset investment increased by 14 percent in 
the first half of 2009.  Despite good news in the short term, an 
indicator of the long-term challenge ahead, however, is the 
province's aim to restructure its economy to emphasize services, 
which currently account for only 40 percent of the province's 
output, Huang said.  He stressed Zhejiang needs to increase its 
investments in transportation, logistics, and finance, as well 
as consumer services in restaurants, hotels, and tourism. 
 
 
 
Blaming the Bad Elements 
 
------------------------ 
 
 
 
¶8. (SBU) Continued concern about the economy -- and its impact 
on social stability -- was the impetus for the new residency 
law, officials said.  Cao Jianguo said the top priority of the 
Labor and Social Security Bureau is to prevent layoffs. 
Companies are not permitted to shut their doors or lay off 
 
SHANGHAI 00000374  003 OF 003 
 
 
workers in large numbers.  Cao said companies could offer 
additional leave or training programs in order to keep employees 
on the rolls and maintain social stability. 
 
 
 
¶9. (SBU) Requiring migrants to register for resident permits 
will help maintain stability, the officials said.  They avoided 
specifically discussing migrants from Xinjiang or the recent 
unrest in Guangdong Province (Refs C and D), but they blamed 
migrant workers in general for being the primary source of crime 
and social instability.  Ye Ke from the ZPDRC claimed 84 percent 
of criminals in Zhejiang are migrant workers.  Eliminating the 
hukou residency registration requirement in the near-term would 
be impossible, Ye said.  In fact, the new residency policy 
reflects a need for more stringent requirements in the midst of 
an economic downturn. 
 
 
 
Comment 
 
------- 
 
 
 
¶10. (SBU) Although initially pitched to the media as a means to 
better serve the migrant worker population in Zhejiang, the 
province's new residency regulations are more focused on 
"managing" migrants in order to maintain social stability. 
Zhejiang provincial officials were open and frank when 
discussing the regulations and the provincial government's 
motivations for implementing them.  Post will continue to 
monitor revisions to labor regulations in East China and their 
implications for migrants and impacts on labor mobility. 
 
 
 
CAMP