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E.O. 12958: N/A
TAGS: ELAB ECON PREL PHUM EMIN ENRG PBIO CH
SUBJECT: LABOR SECRETARY CHAO'S MEETING WITH SAWS MINISTER
LI YIZHONG

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increasing attention to OSH, incorporating it into the
five-year plan and other major economic policy documents.
The Government is taking a number of legal, educational and
technical measures to improve the OSH situation, including
examining OSH records when evaluating the performance of
local government officials and managers of enterprises. He
said China has tightened investigation procedures and
increased punishments for workplace accidents, including
punishing officials for holding shares in coal mines or
colluding with employers to circumvent safety regulations.
Minister Li also said the media plays an important role in
alerting SAWS to mine accidents and publicizing Government
efforts to investigate them.


9. (SBU) Secretary Chao asked whether the collection and
publication of OSH statistics is something new for China.
Minister Li said the Government has maintained and published
OSH statistics since 1949, but has recently improved its
reporting. He said the National Bureau of Statistics (NBS)

began publishing four new OSH indicators in 2005, including
fatalities per 100 million RMB of GDP, fatalities per 100,000
workers, fatalities per 10,000 registered motor vehicles, and
coal mine fatalities per 100 million metric tons (mmt)of coal
produced. Minister Li said the Chinese Government will use
these indicators to track progress in OSH. For example, the
2006-2011 five-year plan sets the goal of reducing the first
two NBS indicators by 25 and 35 percent respectively over
five years.


10. (SBU) Minister Li said that projections for 2006
indicate that workplace fatalities will be about 10 percent
lower than in 2005, and 21 percent lower in the coal mining
sector. However, he said he warns his staff not to be
complacent or boast about their achievements. Li said
China,s goal is to reach a level of workplace accidents
comparable to a moderately developed country within 15 years.
He said that studying the experience of other countries,
this is a rapid rate. In the United States, for example, Li
said, industrial accidents increased every year for 60 years
before beginning to decline. In the UK, this took 70 years,
and in Japan, 26 years. Minister Li said that countries with
per capity GDP of $1000 to $3000 face the highest rates of
industrial accidents.

Problems in the Coal Sector
--------------


11. (SBU) Minister Li said there are 5.5 million coal miners
in China, and 25,000 mines. In 2005, China produced 2.2.
billion tons of coal in 2005, a rate of 400 tons per worker,
compared with a rate of 10,000 tons per worker in the United
States. There were 2.8 fatalities per mmt of coal produced
in 2005, and SAWS expects the rate for 2006 to be 2.2.
Minister Li acknowledge that this rate is about 100 times the
rate of the United States (0.03). Of the total number of
coal mines, Minister Li said, 23,000 are classified as
&small,8 meaning they produce less than 30,000 tons per
year. Li said these small mines are responsible for most of
the accidents and fatalities. Larger mines are highly
mechanized and have much better safety records, Li said. The
small mines are labor-intensive and do not make necessary

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investments in safety. Li said all small coal mines are
privately-owned, and that many of them are illegal. (Note:
most small mines are owned by township or county governments
and contracted to private mine operators. End note.) Li said
the Central Government and most provincial governments are
resolved to close these small mines, but face considerable
resistance from county and township governments. Li said the
Government would use economic and technical measures to limit
these small mines, access to the market, and thus force them
out of business. Part of this would be to require mine
operators to pay royalties for the coal they extract, and
force them to comply with higher environmental and safety
standards.


12. (SBU) Part of the mine safety problem, Minister Li
said, is also the level of education of miners. Fifty-six
percent of all miners are migrant workers, with no work
experience aside from farming, and low levels of education.
The Minister added that in many parts of China, local farmers
live on top of thin or low quality coal seams, and find it
more profitable to illegally mine this coal than to farm. Li
said government policies to improve rural education would
hopefully help workers protect themselves.


13. (SBU) Recalling his experience as Chairman of Sinopec
(one of China,s largest state-owned petroleum companies,) Li
said China,s coal industry is underdeveloped. Unlike most
of China,s oil companies, Li said most of China,s coal
companies are not publicly listed. He said China,s coal
sector needs to open itself up to the outside world to
attract foreign capital and management expertise.

Participants List
--------------


14. (U) United States Participants
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--Elaine L. Chao Secretary of Labor
--Laura Genero, Associate Deputy Secretary of Labor
--Robert Athey, USDOL Midwest Regional Representative
--Randolph Clerihue, Assistant Secretary of Labor
--Anna Hui, Special Assistant to the Secretary of Labor
--Bruce Levine, Embassy Labor Officer (notetaker)
--Interpreter

Chinese Participants
--------------

-- Li Yizhong, SAWS Minister
-- Wang Dexue, SAWS Vice-minister
-- Liang Jiakun, SAWS Vice-minister
-- Tian Yuzhang, SAWS Director General
-- Huang Yi, SAWS Director General
-- Bai Ran, SAWS Director General
-- Interpreter


15. Associate Deputy Secretary of Labor Laura Genero cleared
this message.
Randt