VZCZCXRO8893
RR RUEHCN
DE RUEHGH #0027/01 0270650
ZNR UUUUU ZZH
R 270650Z JAN 10
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 8507
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 2155
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHML/AMEMBASSY MANILA 0158
RUEHBS/USEU BRUSSELS 0036
RUEHPS/USMISSION OEDC PARIS FR
RUEHUL/AMEMBASSY SEOUL 0660
RUEHGP/AMEMBASSY SINGAPORE 0319
RUEHKO/AMEMBASSY TOKYO 0871
RUEHGH/AMCONSUL SHANGHAI 9174

UNCLAS SECTION 01 OF 03 SHANGHAI 000027 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM 
NSC FOR MEDEIROS, LOI, SHRIER 
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/KATZ/MAIN 
USDOC FOR ITA DAS KASOFF, MELCHER, SZYMANSKI, MAC/OCEA 
TREASURY FOR OASIA/INA -- DOHNER/HAARSAGER/WINSHIP 
TREASURY FOR IMFP -- SOBEL/CUSHMAN 
STATE PASS CEA FOR BLOCK 
STATE PASS CFTC FOR OIA/GORLICK 
MANILA FOR ADB USED 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EIND ETRD CH
SUBJECT: BOOMING JIANGSU PROVINCE WELCOMES CONSULATE OBSERVERS TO 
PEOPLE'S CONGRESS OPENING 
 
REF: A. 09 SHANGHAI 444 
     ¶B. 09 SHANGHAI 451 
 
SHANGHAI 00000027  001.2 OF 003 
 
 
¶1. (SBU) Summary: Jiangsu Governor Luo Zhijun pledged to 
"transform" the province's economy towards a greater emphasis on 
home-grown innovation and domestic consumption in the Jiangsu 
Provincial Government's 2010 Work Report delivered January 26. 
The provincial government will continue to address "livelihood 
problems" such as education and health care -- and is especially 
focused on rising housing prices -- but Luo offered few policy 
details. Governor Luo mentioned the Shanghai 2010 World Expo and 
Yangtze River Delta integration only once -- a somewhat 
surprising lack of emphasis given that Jiangsu borders Shanghai 
and the Expo is less than 100 days away. He also said little 
about Jiangsu's emerging civil society and growth of NGOs. 
CongenOffs' attendance at the opening of Jiangsu's annual 
legislative session generated considerable interest from 
provincial leaders and the media, as it was the first time in 
recent memory that foreigners had attended. End Summary. 
 
--------------------------------------------- ---------------- 
JIANGSU MAINTAINS DOUBLE DIGIT GROWTH DESPITE GLOBAL DOWNTURN 
--------------------------------------------- ---------------- 
 
¶2. (SBU) Governor Luo opened his 90-minute address by stating 
that 2009 was a "difficult year" for Jiangsu's export-driven 
economy. As one of China's wealthiest provinces located in the 
Yangtze River Delta region, Jiangsu struggled to cope with the 
global financial crisis during the previous year, Luo 
acknowledged. However, despite the challenges, Jiangsu's economy 
continued to grow, as GDP increased by 12.4 percent -- only 0.1 
percentage points slower than in 2008 and over two points higher 
than the target announced a year ago -- and fiscal revenue rose 
18.2 percent, 8 points higher than the 2009 revenue target of 10 
percent. At year's end, average urban per capita income stood at 
RMB 20,552 and rural per capita income eclipsed RMB 8000. 
 
¶3. (SBU) The Work Report highlighted the growing contribution of 
Jiangsu's poorer and less developed northern region (Subei) to 
the provincial economy, noting that the areas north of the 
Yangtze River accounted for 42.3 percent of provincial GDP in 
2009, an increase of 2.9 percent over the previous year. Much of 
the increase in both northern and southern Jiangsu was due to 
ongoing infrastructure projects, including new rails, roads, and 
development zones. According to Luo, development projects in 
Jiangsu (similar to the claim frequently made by Shanghai 
officials) increasingly are "high-tech" investments designed to 
minimize environmental pollution. 
 
¶4. (SBU) Despite its accomplishments during 2009, Jiangsu still 
faces five major challenges as 2010 opens, Luo said. According 
to the Work Report, the primary areas of concern are: (1) low 
levels of consumption, (2) an economic development strategy that 
is too resource-intensive, (3) low incomes in rural areas, (4) 
pressure on fiscal income due to the financial crisis, and (5) 
unemployment. In addition, Luo also cited inflation, food and 
drug safety, market supervision and product safety, livelihood 
problems, and safeguarding social stability as areas of ongoing 
concern. 
 
--------------------------------------------- ----- 
TRANSFORMATION IN 2010: INNOVATION AND CONSUMPTION 
--------------------------------------------- ----- 
 
¶5. (SBU) Much of the Jiangsu Provincial Work Report focused on 
"transforming the economic development model" by emphasizing 
home-grown innovation and domestic consumption in accordance 
with what Luo said would be a primary objective of the Central 
Government's 12th Five-Year Plan. According to the Work Report, 
Jiangsu's economic growth target in 2010 is a 10 percent 
increase in GDP, but unlike previous years, the increase would 
 
SHANGHAI 00000027  002.2 OF 003 
 
 
be driven by an estimated 17 percent in domestic consumption 
versus only 5 percent from exports (with FAI remaining steady at 
an annual increase of 18 percent). He added that the provincial 
government would encourage developing consumer credit in order 
to build a stronger "consumption environment." The automobile, 
tourism, and communications sectors would help drive consumer 
demand. 
 
¶6. (SBU) Luo said self-reliant innovation would be at the core 
of Jiangsu's "sound and fast economic development." The province 
also would need to develop its own intellectual property in 
order to improve its international competitiveness. Improving 
Jiangsu's human resource base would be necessary to support the 
provincial government's innovation goals, Luo said. 
 
--------------------------------------------- ------------------ 
TACKLING EVERYDAY PROBLEMS: HEALTH CARE, EDUCATION, AND HOUSING 
--------------------------------------------- ------------------ 
 
¶7. (SBU) As in the previous year, the Work Report focused 
attention on "livelihood problems" such as education and health 
care, but Luo offered few policy details. On infectious disease 
prevention, however, Luo twice mentioned H1N1 prevention as a 
priority for the provincial government. He also said the 
provincial government would increase its annual expenditure for 
the rural cooperative medical system (RCMS) to RMB 120 per 
person. He also stressed the importance of "improving the 
quality of education" in the province -- both at the high-end to 
contribute to home-grown innovation and at the low-end to help 
alleviate poverty in the countryside. 
 
¶8. (SBU) In particular, Luo focused on controlling spiraling 
housing prices while at the same time promoting the growth of a 
"healthy" real estate sector. Addressing housing problems in the 
Work Report's section on "sound and fast economic development" 
as the second priority behind only "promoting domestic 
consumption," Luo expressed the provincial government's 
continuing concern that rising housing prices are "quickly 
reaching a point beyond which average people will be unable to 
afford." 
 
--------------------------------------------- ------ 
NOT MUCH ON SHANGHAI EXPO OR BUILDING CIVIL SOCIETY 
--------------------------------------------- ------ 
 
¶9. (SBU) Somewhat surprisingly given Jiangsu's location adjacent 
to Shanghai, the Work Report referred only once to the upcoming 
Shanghai 2010 World Expo, which is set to open May 1. Luo said 
only that Jiangsu would "enthusiastically participate in and 
serve" the World Expo while working to improve Yangtze River 
Delta integration. It was the only mention of the Expo or YRD 
integration in the 27-page Work Report document. 
 
¶10. (SBU) The Work Report also said little about the province's 
emerging civil society and growth of NGOs. It did however 
highlight the provincial government's efforts at greater 
transparency, particularly in the area of inviting comments from 
the public on provincial and local government appointments. 
 
--------------------------------------------- --- 
CONSULATE BREAKS NEW GROUND WITH JIANGSU LEADERS 
--------------------------------------------- --- 
 
¶11. (SBU) Comment: We were pleased that the Jiangsu Provincial 
Foreign Affairs Office and Provincial People's Congress approved 
our request to attend this year's legislative session, which was 
the first time in recent memory that foreigners have been given 
permission to attend the "Two Meetings" in Jiangsu. Provincial 
Party Secretary Liang Baohua, who previously met Ambassador 
Huntsman in December and hosted a delegation from the state of 
 
SHANGHAI 00000027  003.2 OF 003 
 
 
New York in October, made a point of welcoming "representatives 
from foreign consulates" during his opening remarks on January 
¶26. CongenOffs' attendance also generated considerable local 
media attention and the Consulate's Deputy Principal Officer was 
mobbed by reporters from both print and television media after 
the opening session concluded. Several, mostly provincial, media 
outlets published articles touting the openness of the Jiangsu 
People's Congress. The Deputy Consul General was quoted praising 
Jiangsu's openness and transparency as well as the government's 
management of the economy in spite of global economic 
difficulties. End Comment. 
CAMP