VZCZCXRO7056
PP RUEHGH RUEHVC
DE RUEHCN #0285/01 3380015
ZNR UUUUU ZZH
P 040015Z DEC 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC PRIORITY 3594
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 4305

UNCLAS SECTION 01 OF 03 CHENGDU 000285 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR ECON EINV ELTN SOCI CH
SUBJECT: GUIYANG HOPES ARE HIGH UNDER ENTHUSIASTIC LEADER; 
INFRASTRUCTURE BOOM COULD HELP ESCAPE FROM UNDERDEVELOPMENT 
 
REF: A) CHENGDU 237; B) CHENGDU 279; C) CHENGDU 277 
 
CHENGDU 00000285  001.2 OF 003 
 
 
¶1. (U) This cable contains sensitive but unclassified 
information - not for distribution on the internet. 
 
 
 
¶2. (SBU) Summary: Brimming with confidence, Guiyang Vice-Mayor 
Li Zhong told Consul General recently that his city -- long the 
isolated capital of one of China's poorest provinces -- would 
catch up with the rest of the PRC over the next decade.  Guiyang 
is now like two cities: one old and backward, hemmed in by 
mountains; the other new and modern, created on a huge, man-made 
plain.  Guiyang's GDP grew 12.6 percent in the first three 
quarters of 2009, well above the national average; Guizhou 
Province's GDP growth outpaced the national average in nine of 
the last 10 years.  The Vice Mayor's optimism was based on: 
 
-- Guizhou's rich mineral (and hydroelectric) resources; 
 
--Guiyang's location at a crossroads between east and west 
China, and between north China and Southeast Asia; and, 
 
-- preferential national policies including the Great Western 
Development Strategy and the on-going stimulus plan, which have 
led to a road/rail infrastructure boom, and will lead to airport 
improvements.  One negative for Guiyang is a weak university 
system. 
 
 
 
¶3. (SBU) We believe the Vice Mayor's optimism is well placed, at 
least in the longer term: once the on-going road/rail/air 
build-out is completed, Guiyang will be much better positioned 
to finally break its geographical isolation, and attract 
higher-tech domestic and foreign investment to its low-wage 
economy.  End Summary. 
 
 
 
Guiyang's Backwards Past and Hopeful Future 
 
------------------------------------------- 
 
 
 
¶4. (U) Guiyang is a city in transition, where its backwards past 
collides with its future aspirations.  Guiyang locals -- both in 
visa interviews in Chengdu, and on-the-ground in this provincial 
capital -- are often quick to disparage their hometown as poor 
and backwards relative to wealthier coastal cities, or even the 
southwestern cities of Kunming, Chongqing, and Chengdu.  In a 
province that is 92 percent mountainous, the reminders of 
Guizhou's difficult topography are everywhere.  The old part of 
town looks like a poor, mountainous, cramped, 700 year-old city 
with winding roads.  Decrepit tenements are carved awkwardly 
into Karst rock formations, while even the modern buildings that 
have sprout up are often adjacent, to dusty, run-down alleys. 
Yet this old part of Guiyang is also undergoing large-scale 
up-grading of its major traffic arteries -- leading one to 
cautious optimism that life will improve, while for now leading 
to some of Southwest China's worst traffic congestion.   (Note: 
As with many other Chinese cities, there is a car boom underway 
in Guiyang, with several hundred new cars registered daily.  End 
Note.) 
 
 
 
¶5. (U) Guiyang also has another, completely different face: 
modern and spacious, built on a man-made plateau 30 minutes from 
the old city.  The new part of town has row after row, complex 
after complex, of tall, modern apartment and office buildings. 
A real estate boom is on-going, our Foreign Affairs Office (FAO) 
handlers told us, with a rapid rise in prices.  Some of this 
boom (and speculation) is fueled by wealthy, out-of-province 
buyers, many of them older and retired or on the verge of it, 
who buy second (pied-a-terre) apartments so that they can enjoy 
the cool, pleasant summers in higher-altitude Guiyang.  The city 
hall complex, designed by an American architectural firm, was 
grassy, treed, and spacious -- quite a contrast to the huge 
concrete boxes in other cities.  Overall, we came away 
pleasantly surprised by Guiyang's potential, while also 
recognizing its persistent challenges. 
 
 
 
Guiyang's Vice Mayor: 
 
An Out-of-Province Party Apparatchik, But Still Impressive 
 
 
CHENGDU 00000285  002.2 OF 003 
 
 
--------------------------------------------- ------------- 
 
 
 
¶6. (SBU) Li, a native of China's northern Shanxi province, was 
infectious in his optimism about Guiyang's future and, speaking 
without notes, displayed an impressive understanding of the 
issues facing his adopted city.  Guiyang has 3.6 million people 
in its urban center, representing 64 percent of the overall 
population under the city's urban-rural administrative region. 
Through the first three quarters of 2009, Guiyang's total GDP 
reached 63.6 billion RMB, a 12.4 percent increase for the year. 
Li stated that, so far in 2009, the city had grown about two 
percentage points faster than Guizhou province, whose growth, in 
turn, was above the national average of 7.7 percent. 
 
 
 
¶7. (SBU) 53.5 billion RMB in fixed asset investment was made in 
Guiyang in the first three quarters of 2009 to stimulate the 
economy and revitalize infrastructure, Li said.  (Comment: Li's 
figures seem incongruous in that they imply that 84 percent of 
Guiyang's GDP in the first three quarters of 2009 were fixed 
asset investment.  This fixed asset figure may be calculated 
differently from in the U.S., perhaps reflecting fixed 
investment project started (but not completed) during this 
period.  Nevertheless, this huge figure -- and the bustle of 
construction cranes and road-building projects that we witnessed 
-- are suggestive that Guiyang, like many other cities in China, 
is in the midst of a stimulus-package-fueled infrastructure 
boom.   End Comment.) 
 
 
 
Can Guiyang Catch Up? 
 
--------------------- 
 
 
 
¶8. (SBU) Is Li right about Guiyang catching up?  One thing for 
sure is that the city started from a low base.  Guiyang is still 
significantly poorer than most provincial capitals, with urban 
per capita income of only 11,000 RMB, and rural per capita 
income of 4,033 RMB.  While Guizhou province outpaced the 
national GDP growth rate nine of the last ten years, the gap in 
absolute inequality between Guizhou and the coastal provinces 
continued to grow wider over the past decade.  Li acknowledged 
this gap, but expressed confidence that during the next decade, 
Guiyang (and Guizhou) would be able to catch up with wealthier 
cities and provinces.  His optimism was based on: 
 
 
 
a. Preferential National Policies: Guizhou continues to benefit 
from China's "Great Western Development Strategy" which funnels 
resources into improved infrastructure, ecological protection, 
and commerce.  Guizhou, which only represents three percent of 
China's population, also received a disproportionate four 
percent of the central government's recent economic stimulus 
package. (Note and Comment: Premier Wen Jiabao said October 16 
in Chengdu that Beijing planned to increase fiscal transfers and 
preferential tax and other policies in a new 10-year western 
China development plan starting January 1, 2010 (ref A).  This 
bodes well for beneficiary cities and provinces such as Guiyang 
and Guizhou.   End Note and Comment.) 
 
 
 
b. Rich Natural Resources: With over 240 different types of 
mineral deposits, Guizhou is one of China's richest provinces in 
mineral resources -- wealth that benefits its provincial 
capital.  Coal and phosphorous are especially important; for 
example, Guizhou has the largest phosphorus mine in Asia.  (See 
also ref B, which discusses Guizhou's huge hydroelectric 
potential.) 
 
 
 
c. Infrastructure: Guizhou has made huge improvements to its 
infrastructure over the past 10 years, which much more on the 
way.  87 counties in Guizhou will be connected with expressways, 
most that link up with Guiyang, which will aid their nascent 
tourism industry.  Beijing recently approved the construction of 
a new Guiyang Airport, which will bring in 3.7 billion RMB in 
investment to create Guizhou's first truly international airport. 
 
 
 
 
CHENGDU 00000285  003.2 OF 003 
 
 
d. Good Location: Guiyang (and Guizhou) are at a geographic 
crossroads connecting east and west China, as well as northern 
China with Southeast Asia.  Officials hope to capitalize on the 
city's (and province's) geographic position through improved 
infrastructure. 
 
 
 
New Development Zones Bring Hope of Higher Tech in Future 
 
--------------------------------------------- ------------ 
 
 
 
¶9. (SBU) Two new national-level development zones also underlie 
Li's hopes for a modern (and ecologically-friendly) city: the 
Guiyang High-Tech Zone and the Guiyang Economic Development 
Zone.  The former primarily emphasizes high-tech companies, 
while the latter emphasizes manufacturing and industry.  There 
are currently 57 high-tech companies operating in the High-Tech 
Zone, none of them large and famous, including several from the 
UK, Singapore, and Taiwan.  Many of these "high-tech" companies 
are in the pharmaceutical sector, including producers of 
traditional Chinese medicines.  Guiyang is home to over 70 
pharmaceutical factories, Li explained, but they lack the 
necessary technology and management skill to compete in foreign 
markets. 
 
 
 
¶10. (SBU) Guiyang officials hope to leverage these economic 
zones to attract more foreign investment in the future, 
particularly in the area of technology.  Li pointed out that 
more and more companies are migrating from China's eastern 
provinces further inland to the western provinces including 
Guizhou.  He made an interesting aside, stating that projects in 
heavy-polluting sectors are "not welcome" in Guiyang due to its 
"Ecologically Civilized City" initiative (ref C).  (Comment: The 
fact that Li was unable to cite any well known multinationals as 
having located manufacturing or R&D facilities in these 
high-tech zones suggests that they have not been very 
successful.  However, we believe that once the on-going 
road/rail build-out is completed, Guiyang and Guizhou will be 
much better positioned to attract high-tech foreign investment 
to its low-wage economy.  End Comment.) 
 
 
 
One Drag on Economy: Weak University System 
 
------------------------------------------- 
 
 
 
¶11. (SBU) One weak point of Guiyang (and Guizhou) is the poor 
quality of its relatively small network of universities. 
Guiyang only has 12 colleges and universities, Li lamented, and 
none is considered a "National Key University" (Comment: "Guojia 
Zhongdian Daxue" is a now defunct term which used to refer to 
prestigious universities that received direct support from the 
central government.  In this context, Li likely meant that 
Guizhou lacks any universities directly managed by the Chinese 
Ministry of Education.  End Comment.) 
 
 
 
¶12. (SBU) Li said that Guiyang was trying to upgrade its 
higher-educational system.   Guizhou University recently became 
a top-100 university in the rigid Chinese ranking system.  Five 
years ago, no colleges or universities were under the management 
of the Guiyang city government, but now the city government 
manages Guiyang University and Guiyang Technical College. 
Guiyang needs more support from Beijing on higher-education, 
however, to help it catch up. 
BROWN