An Overview of the Pearl River Delta: Hong Kong's

UNCLAS SECTION 01 OF 05 GUANGZHOU 010088 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/CM USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE STATE PASS USTR USPACOM FOR FPA E.O. 12958: N/A TAGS: ECON ETRD PGOV SOCI EINV ELAB CH SUBJECT: An Overview of the Pearl River Delta: Hong Kong's Consul General Visits South China (U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. NOT FOR RELEASE OUTSIDE U.S. GOVERNMENT CHANNELS. NOT FOR INTERNET PUBLICATION. ¶1. (SBU) SUMMARY: During a recent visit to Guangdong, Hong Kong Consul General Cunningham met with officials and business leaders to discuss the rapid economic growth of southern Guangdong and its consequences for Hong Kong industry and the region's environment. The Consul General visited Guangzhou's new Baiyun Airport and Shenzhen's booming Yantian Port, both key links in the Pearl River Delta's connection to global trade and business. Hong Kong and Chinese officials lamented the environmental consequences of the region's rapid economic growth, but Shenzhen officials said they plan to follow the central government's directives and develop a greener economic growth model. Meanwhile, Hong Kong's top official in Guangdong, the Guangdong Amcham president, and a Duracell factory manager all cited serious energy shortages in the area, and the Yantian port director said Shenzhen's underdeveloped road and rail network is restricting the flow of goods further inland. END SUMMARY. A Grudging Approval by MFA -------------- ¶2. (SBU) The Guangzhou Consulate first requested government appointments for the Hong Kong group via the Guangdong Foreign Affairs Office (FAO) on March 2. The FAO replied on March 6 that only the Ministry of Foreign Affairs (MFA) could approve the visit because officers from Consulate Hong Kong wished to perform duties outside of their consular district, citing Article 23 of the Consular Conventions between China and the United States. On March 9, Consulate Hong Kong sent a diplomatic note to the Office of the MFA Commissioner in Hong Kong. After more than a week with no decision, Embassy Beijing on March 17 contacted the MFA in Beijing to request a decision on the visit. MFA did not approve the Monday, March 20 visit until approximately 7:30 pm on Friday, March 17. Despite the go-ahead, MFA denied requests to visit Shenzhen's Shekou Port and to meet with the Shenzhen Public Security Bureau's Economic Crimes Investigative Division to discuss intellectual property rights (IPR). Guangdong DRC: Innovation Coming to a City Near You! -------------- -------------- ¶3. (SBU) Guangzhou Consul General (CG) Dong, accompanied by CG Cunningham, met with Zhang Jun, Deputy Director General of the Guangdong Development and Reform Commission. CG Dong began by noting that the priority for Guangdong in the 11th 5-Year Plan is to build an "innovation society" and he asked how Guangdong will adjust its use of resources to achieve this goal. Zhang acknowledged that in terms of R&D Guangdong has always lagged behind Beijing and East China, but he noted that Guangdong's patent applications last year ranked first in the country. In 2002, Guangdong's R&D spending accounted for 0.8% of GDP, but the percentage has risen to 1.5% of GDP, showing, according to Zhang, the government's dedication to supporting innovation. ¶4. (SBU) Zhang explained that because the energy supply is inadequate, Guangdong put forward the innovation concept to contend with this shortfall, but he admitted that the transformation will be slow. Zhang explained that financial support for innovation should be increased through added funding for education at all levels and for science and technology research. He also said the science system should be improved and he suggested allowing university labs to play bigger roles. Zhang pointed out that Guangdong companies Huawei and ZTE are already innovators and he noted that Guangzhou and Shenzhen are the province's innovation centers; he conceded, however, that the east and west areas of Guangdong are lacking in this area. He suggested that the government coordinate with enterprises in those areas to support them and guide them to combine R&D efforts with market demand. GUANGZHOU 00010088 002 OF 005 ¶5. (SBU) In response to a question from CG Cunningham on the future of the Pan-PRD, Zhang said that the development of the Pan-PRD has been faster than expected and he predicted it will have a bright future. (Note: The Pan-PRD, also called "Nine Plus Two," is the nine provinces of Fujian, Guangdong, Guangxi, Guizhou, Hainan, Hunan, Jiangxi, Sichuan, and Yunnan, as well as the two special administrative regions of Hong Kong and Macau. End Note.) Zhang noted Hong Kong's close connection with Guangdong -- and there are now 87,000 Hong Kong companies in Guangdong with investments of more than USD 100 billion -- but he opined that Hong Kong should build more connections with inland provinces. He pointed out that through Pan-PRD cooperation, Hong Kong can contribute to the development of inland provinces, and in doing so(create mozd opportufhdi%s for0itsdlf. Qhoow"konw"Egn~oic?VRade Obfya%: Gxp~fij K4waCoveraee -Q--.-)5.-+5/Q/=.=!%//5,=)l=/Q+M=/-/-9,--=Q!! /=QQQ$_e%NXt vxez,ZtQbtg$-+oiY