Identifier
Created
Classification
Origin
06BEIJING24654
2006-12-20 00:44:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:  

LABOR SECRETARY CHAO'S LUNCHEON WITH CHINESE LABOR

Tags:  ELAB EFIN ECON PREL CH 
pdf how-to read a cable
VZCZCXRO2212
RR RUEHCN
DE RUEHBJ #4654/01 5400144
ZNR UUUUU ZZH
R 200044Z DEC 06 ZDS
FM AMEMBASSY BEIJING
TO RUEH/DEPT OF LABOR WASHDC
RUEHC/SECSTATE WASHDC 3164
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEAEPA/HQ EPA WASHDC
RHEHNSC/NSC WASHDC
INFO RUEHUL/AMEMBASSY SEOUL 9777
RUEHKO/AMEMBASSY TOKYO 1097
RUEHCN/AMCONSUL CHENGDU 7655
RUEHGZ/AMCONSUL GUANGZHOU 2036
RUEHHK/AMCONSUL HONG KONG 8637
RUEHGH/AMCONSUL SHANGHAI 6646
RUEHSH/AMCONSUL SHENYANG 7317
RUEHGV/USMISSION GENEVA 1510
RUEHIN/AIT TAIPEI 6174
UNCLAS SECTION 01 OF 03 BEIJING 024654 

SIPDIS

C O R R E C T E D C O P Y -- PARA 9 - TEXT

SENSITIVE
SIPDIS

STATE PASS CEQ FOR CONNAUGHTON
STATE PASS CEA FOR BLOCK
STATE PASS USTR FOR STRATFORD/ALTBACH/CELICO/ROSENBERG
STATE PASS FEDERAL RESERIVE BOARD FOR JOHNSON/SCHINDLER
NSC FOR HUNTER/SHRIER/TONG
COMMERCE FOR 4420/MCQUEEN
TREASURY FOR SMITH/DOHNER/HAARSAGER/BAKER/CUSHMAN
GENEVA FOR CHAMBERLIN AND USTR
DOE FOR INTERNATIONAL/PUMPHREY/GEBERT
EPA FOR INTERNATIONAL/AYRES, FIDLER, MCCASKILL
HHS FOR STEIGER, ELVANDER AND BHAT
LABOR FOR OSEC-HUI, OSHA-DEMESME-GRAY AND ILAB

E.O. 12958: N/A
TAGS: ELAB EFIN ECON PREL CH
SUBJECT: LABOR SECRETARY CHAO'S LUNCHEON WITH CHINESE LABOR
MINISTER TIAN CHENGPING

REF: A. A) BEIJING 9677

B. B) BEIJING 22277

BEIJING 00024654 001.2 OF 003


SUMMARY
-------

UNCLAS SECTION 01 OF 03 BEIJING 024654

SIPDIS

C O R R E C T E D C O P Y -- PARA 9 - TEXT

SENSITIVE
SIPDIS

STATE PASS CEQ FOR CONNAUGHTON
STATE PASS CEA FOR BLOCK
STATE PASS USTR FOR STRATFORD/ALTBACH/CELICO/ROSENBERG
STATE PASS FEDERAL RESERIVE BOARD FOR JOHNSON/SCHINDLER
NSC FOR HUNTER/SHRIER/TONG
COMMERCE FOR 4420/MCQUEEN
TREASURY FOR SMITH/DOHNER/HAARSAGER/BAKER/CUSHMAN
GENEVA FOR CHAMBERLIN AND USTR
DOE FOR INTERNATIONAL/PUMPHREY/GEBERT
EPA FOR INTERNATIONAL/AYRES, FIDLER, MCCASKILL
HHS FOR STEIGER, ELVANDER AND BHAT
LABOR FOR OSEC-HUI, OSHA-DEMESME-GRAY AND ILAB

E.O. 12958: N/A
TAGS: ELAB EFIN ECON PREL CH
SUBJECT: LABOR SECRETARY CHAO'S LUNCHEON WITH CHINESE LABOR
MINISTER TIAN CHENGPING

REF: A. A) BEIJING 9677

B. B) BEIJING 22277

BEIJING 00024654 001.2 OF 003


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


1. (SBU) Summary: Ministry of Labor and Social Security
(MOLSS) Minister Tian Chengping hosted Labor Secretary Elaine
Chao for lunch on December 15. (Participants list in para.
9) Secretary Chao said the SED was a historic occasion and
very important to both the United States and China. Tian
said the first SED was highly successful. Secretary Chao
said she hoped to continue the cooperation between the United
States Department of Labor (USDOL) and MOLSS on pension
issues. There was no discussion of new projects. The
Minister and the Secretary described some of the challenges
each country faces in perfecting pensions systems comprised
of government pensions, employer-funded pension accounts, and
personal savings. Tian indicated that the draft Labor
Contract Law (ref A) will get a third reading in China,s
legislature no December 25. He said the All China Federation
of Trade Unions, (ACFTU) campaign to organize unions in
foreign-invested enterprises (FIEs - ref B) is not a new
policy, but that it received a lot of attention because of
the successful creation of unions in China,s Wal-Mart
stores. End Summary.


2. (SBU) MOLSS Minister Tian Chengping hosted Secretary Chao
and her delegation for lunch at the Great Hall of the People
on December 15. Minister Tian said he believed the first
meeting of the SED was highly successful, and said he was
also pleased to have a chance to reciprocate Secretary
Chao,s hospitality during his September 2006 visit to

Washington. Secretary Chao said the SED was a historic
occasion and very important to both the United States and
China. She thanked the Chinese side for its hospitality and
complimented China on the meticulous arrangements for the
SED.

Pension Issues
--------------


3. (SBU) Secretary Chao said she hoped to continue the
cooperation between the United States Department of Labor
(USDOL) and MOLSS on pension issues, as retirement issues are
important to citizens of both countries. There was no
discussion of new projects. Minister Tian asked about
prospects for pension reform in the United States. Secretary
Chao told him that the Pension Protection Act was passed this
year and that USDOL is in the process of writing implementing
regulations. Minister Tian said he took interest in
President Bush,s 2005 State of the Union Address, in which
he discussed proposals to reform Social Security. Secretary
Chao described the issue as highly politicized. She
explained that everyone in the United States knows that the
Social Security system faces serious problems, and she
described President Bush,s proposal to create individual
accounts to help make up for Social Security benefits cuts
that may be necessary in the future. She explained some of
the dynamics of Social Security reform between America,s
political parties, and between Congress and the White House,

BEIJING 00024654 002.2 OF 003


and how it all relates to the election cycle. Minister Tian
said he did not understand the &subtle politics8 of the
two-party system, but that he thought the future of Social
Security would be a very serious problem.


4. (SBU) Minister Tian explained that the Chinese
Government has just issued a policy White Paper on the Aging
Society last week. He said China,s aged populatin would
peak around 2030, so China needs to aopt good policies on
pensions and elder care nw. If China waits until 2030 to
deal with the issue of an aging society, he said, it would be
impossible to find solutions.


5. (SBU) Minister Tian described a conversation he had with
an American expert on the margins of a recent international
conference on pensions, who said that the United States'
experience suggests that the government should avoid taking
greater responsibility for pensions, and leave a bigger role
for markets. Minister Tian noted that governments which take
a direct role in pensions, such as the UK and some Nordic
countries, face a very heavy burden. Minister Tian told the
Secretary that while in the United States in September, he

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met with the Principal Group, a private manager of pension
funds. He said the company has formed a joint-venture with
China Construction Bank and has contacted MOLSS about future
participation in managing Chinese pension accounts.


6. (SBU) Secretary Chao said the ideal pension system had
three elements: a government pension system, employer-funded
pensions, and private savings. Minister Tian said he saw
this as the right approach. Chao described the United States
system in which pension management was largely a private
sector issue, but where there are strong regulations to
prevent the misuse of pension funds, which the Government
enforces aggressively. Minister Tian said Chinese Government
policies envision a similar system, but so far it was mainly
state-owned enterprises (SOEs) participating, and this does
not reduce the fiscal burden on the government. He said
MOLSS,s challenge is to find a way to encourage non-SOEs and
foreign-invested enterprises (FIEs) to participate in the
pension system.

The Labor Contract Law
--------------


7. (SBU) Minister Tian said the National People,s Congress
will have a second reading of the draft Labor Contract Law
(ref A) on December 25, and will have at least one more
reading after that. Tian said the legislative process in
China can take as little as a year, but can be very time
consuming during the drafting phase.

Efforts by Chinese Union to Organize in Foreign Invested
Enterprises
-------------- --------------


8. (SBU) Secretary Chao asked about ACFTU,s recent campaign
to organize unions in all FIEs. She said there seemed to be
confusion about this campaign in the business community (ref
B). Tian said MOLSS has no direct involvement in the
activities of ACFTU, but that all enterprises, whether SOEs

BEIJING 00024654 003.2 OF 003


or privately owned, domestic or FIEs, were supposed to have
unions. Jiang Mohui, Deputy Director General of the MOLSS
international department clarified that it is not mandatory
for any enterprise to have a union, but that if workers wish
to form one, employers have no right to obstruct them. Tian
said almost all SOEs have unions, but many privately owned
businesses and FIEs do not. Minister Tian said ACFTU,s
interest in organizing unions in FIEs was not a new policy.
Unions were necessary, he said, for Chinese workers to
bargain collectively with employers. The reason the issue
has gotten so much attention this year, Tian said, was
because, after several years of trying, ACFTU established
unions in Chinese Wal-Mart stores. Minister Tian said ACFTU
unions collect dues equal to two percent of the wages of
union members, and added that ACFTU has &a lot of money.8
(Note: By law, ACFTU dues are two percent of the
enterprise,s total payroll, not just the wages of union
members. End note.)

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


9. (U) United States Participants
--------------

--Elaine L. Chao, Secretary of Labor
--Laura Genero, Associate Deputy Secretary of Labor
--Randolph Clerihue, Assistant Secretary of Labor
--Anna Hui, Special Assistant to the Secretary of Labor
--Bruce Levine, Labor Officer, United States Embassy
(notetaker)
--Interpreter

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

-- Tian Chengping, Minister of Labor and Social Security
-- Xin Changxing, DG General Affairs Office (MOLSS)
-- Liu Xu, DG MOLSS International Department
-- Jiang Mohui, Deputy DG MOLSS International Department
-- Interpreter


10. (U) Associate Deputy Secretary of Labor Laura Genero
cleared this message.
Randt