UNCLAS SECTION 01 OF 05 BEIJING 024655

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SENSITIVE
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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 ECON PREL PHUM EMIN ENRG PBIO CH
SUBJECT: LABOR SECRETARY CHAO'S MEETING WITH SAWS MINISTER
LI YIZHONG

SUMMARY
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1. (SBU) Summary: Li Yizhong, Minister for the State
Administration for Work Safety (SAWS) met with Labor
Secretary Chao on December 15, after the conclusion of the

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Strategic Economic Dialogue (SED). SAWS did not participate
in the SED. Secretary Chao told Li that the SED was a
historic occasion and very important to both the United
States and China. Li agreed and said Chinese Ministers were
anxious to see the results. Minister Li said his Government
places great value on its cooperation with the United States
on work safety, especially mine safety. Secretary Chao and
Minister Li exchanged information about each Governments'
respective work safety watchdog agencies. Minister Li
provided detailed information about workplace accidents in
China. He explained the high accident rate in the coal
sector as a result of low mechanization and the relative
backwardness of China's coal industry, and explained some of
the coordination problems between China's central and local
governments. Li described Chinese Government efforts to
reduce workplace injuries, and said the media plays an
important role. Secretary Chao invited Minister Li to the
United States and encouraged him to remain in touch with the
Administrators of the Occupational Safety and Health
Administration (OSHA)and the Mine Safety and Health
Administration (MSHA). There was no discussion of new
projects. End Summary.

2. (SBU) Li Yizhong, Minister for SAWS met with Labor
Secretary Elaine Chao and her delegation at SAWS headquarters

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on December 15. (Meeting participants listed in para. 14)
Minister Li warmly welcomed the Secretary, noting that this
is her first visit to China since SAWS,s elevation to the
level of a Ministry in 2005. Li said the Chinese Government
places great value on cooperation with the United States
Department of Labor (USDOL) on work safety, particularly in
the area of mine safety. Throughout the meeting, Li
repeatedly cited the importance of studying the United
States, experience in improving work safety. Secretary Chao
recalled the Letters of Understanding on cooperation that she
signed with SAWS in 2004, as well as USDOL,s existing mine
safety program in China. There was no discussion of new
projects. The Secretary described the duties and
responsibilities of OSHA and MSHA, including how these
agencies interact with state governments in the United
States. She invited Minister Li to visit the United States
and encouraged him to remain in touch with the OSHA and MSHA
administrators.

Secretary Chao briefs SAWS on the SED

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3. (SBU) Secretary Chao briefed Minister Li on the Strategic
Economic Dialogue (SED), in which SAWS did not participate.
Secretary Chao said the SED was a historic occasion and very

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important to both the United States and China. She thanked
the Chinese side for its hospitality and complimented China
on its meticulous arrangements. Secretary Chao observed that
Americans tend to prefer informality and spontaneous
discussion, while the Chinese are more formal and put more

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emphasis on detailed preparation. She said the discussions
were useful and that the American side appreciated Chinese
hospitality. Secretary Chao said the United States
delegation brought a large press contingent to help publicize
the posit points emerging from the SED, saying it was
important to show Americans what China is really like.


4. (SBU) Minister Li observed that Chinese and Western
cultures are growing closer. As an example, he said the
Chinese Government is much more concerned with &putting
people first8 than 30 years ago. He congratulated the
United States on the productive outcome of the SED and said
Chinese Ministers were anxious to see the results.

Structure of SAWS and the Work Safety Situation
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5. (SBU) Minister Li gave a brief introduction to SAWS and
its areas of responsibility. He said that SAWS was
responsible for occupational safety and health (OSH)
supervision and workplace accidents. Natural disasters are
the responsibility of the Ministry of Civil Affairs, public
health emergencies are the responsibility of the Ministry of
Health, and national security emergencies fall under the
jurisdiction of the Ministry of Public Security. Li said
SAWS has two major duties: 1) to supervise the OSH
supervision and management activities of other Ministries
which have OSH responsibilities for certain sectors of the
economy, such as the Ministries of Construction and Railways,
and 2) to take primary responsibility for OSH in industries
where there is no other designated OSH watchdog agency, such
as in the coal, oil, metals and chemical sectors, and light
industries like textiles. To coordinate the activities of
SAWS and the OSH watchdog agencies of other ministries, the
State Council has its own Work Safety Supervision Committee,
headed by Vice-Premier Huang Ju. Minister Li said this same
structure is duplicated at the provincial level in each
province, and that SAWS provides guidance on OSH issues to
all provincial authorities.


6. (SBU) In the coal sector, however, Minister Li said
China learned from the United States, experience and has set
up 29 regional SAWS operations in key coal-producing
provinces and cities that answer directly to SAWS in Beijing.
SAWS and its provincial and local subordinates have a total
of 50,000 inspectors, 3,000 of whom are coal safety officials
who answer directly to Beijing. The remaining 47,000 deal
with non-coal industries and mostly answer to provincial or
local governments.


7. (SBU) Minister Li said that China had 718,000
work-related accidents in 2005, which included 127,000
fatalities, but these figures include traffic accidents.
100,000 traffic fatalities accounted for 77 percent of all
work-related fatalities in China in 2005. The "second
killer,8 Minister Li said, is the rail sector, which
accounted for 7,000 deaths in 2005. Coal is the &third
killer.8 Minister li said 5,938 coal miners died on the job
in 2005, amounting to 4.5 percent of all work-related deaths,
but that the coal sector is responsible for more than half of
all accidents in which 10 or more people die. The next

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highest number of deaths in 2005 were in the construction
(2,600 people) and non-coal mining (2,300 people) sectors.


8. (SBU) Minister Li said the Government is paying
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
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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

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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
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
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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
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-- 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


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