(C) GETTING RICH IN ZHENGZHOU: CPPCC MEMBER ON

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 023905

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E.O. 12958: DECL: 11/20/2016
TAGS: ECON EINV ETRD ELAB PGOV CH
SUBJECT: (C) GETTING RICH IN ZHENGZHOU: CPPCC MEMBER ON
REAL ESTATE, UNITED STATES-CHINA RELATIONS, AND THE RURAL
ECONOMY

Classified By: (C) CLASSIFIED BY MINISTER COUNSELOR FOR ECONOMIC AFFAIR
S ROBERT LUKE; REASON 1.4 (B) AND (D).

SUMMARY
--------------


1. (C) A member of the National Committee of the 10th Chinese
People's Political Consultative Conference, who is also one
of China's wealthiest businessmen, shared his personal
perspective on economic development in Zhengzhou, Henan
Province during Econoff's recent visit to the city. He noted
that Zhengzhou's real estate market is growing at a
blistering pace, but the only concerns for overheating in the
sector are those projects supported by local government
officials for political gain. Rural development remains
critically important, he said. On United States-China
relations, he hopes there will be more bilateral engagement
in Henan Province. (Note: Zhengzhou is a target APP city.
End Note.) End Summary.

TRAVEL TO HENAN
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2. (C) Econoff, Econ Assistant, and Conoff traveled to
Zhengzhou, Henan Province, November 6-8. Econoff met with
Wang Chaobin, a wealthy businessman and member of the Chinese
People's Political Consultative Conference (CPPCC),and
visited one of Wang's business developments, the Zhonglu
Wuliu Square, on the evening of November 6.

GETTING RICH IS GLORIOUS IN ZHENGZHOU
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3. (C) Wang Chaobin, age 50, is one of Henan Province's ten
wealthiest individuals and is ranked 286th on the Forbes list
of China's 400 richest entrepreneurs with a net worth of USD
133 million. Wang, who also owns property in Long Island,
New York, hosted President Clinton during a visit to
Zhengzhou in 2005, and his son recently graduated from Emory
University in Atlanta. Wang is a local real estate magnate,
serving as Chairman of the Board of Henan Taixin Estate
Company, which was established in 1990, and his latest
venture, the Henan Zhonglu Wuliu Square, grossed RMB 5.2
billion (USD 650 million) in sales of brand-name consumer
products in 2004. The Square, located in Zhengzhou at a busy
transportation junction, includes a 108,000 square meter
display center.

REAL ESTATE IN CHINA'S WILD, WILD CENTRAL REGION
-------------- ---


4. (C) Wang stated that Zhengzhou's rapid development
provides significant opportunities for real estate
development. Local real estate companies such as Taixin have
an advantage in Henan over foreign companies or firms from
Eastern China due to the nature of political and economic
connections in the real estate industry, he said. Currently,
Taixin is partnering with some American companies and is in
the process of negotiating several deals ranging from USD
10-15 million each. With regard to the Central Government's
concerns about overheating in the real estate sector, Wang's
son George said that there are few problems with occupancy as
long as real estate firms in Zhengzhou build "reasonable
developments at reasonable prices."


5. (C) Wang Chaobin stated, however, that the city's
Zhengdong New District, a USD 35 billion investment noted in
a September 2006 Wall Street Journal article, is a completely
unreasonable development, built at a scale that makes little
economic sense and serves only to fuel local politicians'
ambitions. Wang confirmed that Beijing reprimanded several
provincial and municipal officials, including Henan Province
Party Secretary Xu Guangchun and Zhengzhou Mayor Zhao
Jiancai, for moving forward with projects in the Zhengdong
New District that exceed the investment scope thus far
approved by the Central Government. (Note: The reprimands
were covered in Beijing, including on the front page of the
Beijing News. End Note.) In Wang's view, the reprimands
will do little good, however, as Beijing has few answers to
China's three major local governance problems: corruption,
taking bribes, and local officials looking for promotions.

BEIJING 00023905 002 OF 002



UNITED STATES-CHINA COOPERATION IN HENAN PROVINCE
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6. (C) With Central China rising, Wang said he hopes Henan
Province, China's most populous province with 97 million
residents, can have closer engagement with the United States.
Wang stated that he loves the United States and maintains
close ties with the United States and thought it was
important for his son to receive an American education.
(Note: George Wang is a green card holder who speaks fluent
English and has lived most of his life in the United States.
End Note.)


7. (C) Wang said his first loyalty, however, is to China, and
as a member of the CPPCC, he is sensitive that there may be
political difficulties posed by stronger United States-China
relations. Given the political realities in Henan Province,
Wang believes the Embassy can help promote closer cooperation
with the province but he cautioned that cooperation likely
will not be too close in the near-term. Wang encouraged
American diplomats and other official USG visitors to
continue in the meantime to visit Zhengzhou frequently and
engage with provincial government officials on economic
issues.

AS GOES THE RURAL ECONOMY, SO GOES HENAN
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8. (C) Despite rapid growth in Henan's major cities (see
septel),the province remains primarily agricultural, and
Wang said he is concerned about the plight of the rural poor.
As a member of the National Committee of the 10th CPPCC,
Wang received national attention for proposing to Premier Wen
Jiabao that agricultural taxes be reduced or eliminated. The
Central Government officially abolished the agricultural tax
at the March 2006 session of the National People's Congress
(NPC). China will not be able to balance regional economic
growth if the government fails to boost incomes in the
countryside, Wang said.

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