XIAMEN: CITY WITH A VISION

UNCLAS SECTION 01 OF 03 GUANGZHOU 014848 SIPDIS SENSITIVE SIPDIS STATE FOR EB, R, EAP/CM, EAP/PD, DRL STATE PASS USTR - STRATFORD, CELICO USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE USPACOM FOR FPA E.O. 12958: N/A TAGS: ECON PGOV EWWT ETRD EINV CH SUBJECT: XIAMEN: CITY WITH A VISION REF: A) Guangzhou 13562 B) Guangzhou 13384 C) Guangzhou 13385 F) Guangzhou 14707 G) Guangzhou 14818 ¶1. (U) Summary: The city of Xiamen, Fujian Province's vibrant economic driver in the southern part of the province, continues to impress with both its current execution and future vision to be one of China's leading cities. During an early April visit to the city, Xiamen Vice-Mayor Zhan Cangzhou detailed the city's plan to enhance its reputation as China's most livable and civilized city by expanding its high-tech manufacturing and service industry base. The Xiamen International Port, led by Yao Zhang, corroborated this vision with plans for infrastructure growth, efficiency improvements, and safety and environmental concern as the port tries to move into the elite tier of international ports, following behind Shanghai and Shenzhen ports in a quest for mainland port supremacy. End Summary. The Vision Defined -------------- ¶2. (U) Xiamen Vice-Mayor Zhan Cangzhou met the Consul General at the Xiamen Mandarin Hotel to discuss the current and future state of the city of Xiamen. Zhan stressed that Xiamen, although already nationally ranked as the second "most livable city" and the "most civilized city in the People's Republic of China" in separate domestic surveys, would not rest on its laurels. Xiamen instead has a detailed plan to build on this sterling reputation and its already strong high-tech manufacturing base, currently represented by U.S. companies, Dell and Kodak as well as other foreign and domestic companies. The key to this plan is to leverage the city's reputation of being a civilized and livable city to better attract additional environmentally friendly, high-tech manufacturing jobs and continue to build its growing service industry. This desire is strongly motivated by city leadership wishes for Xiamen to maintain its uniqueness and avoid becoming yet another polluted, smoke stack filled Chinese metropolis. Gu Lang Yu - Part of the Xiamen Difference -------------- ¶3. (U) Earlier the same day, a short tour of Xiamen's best known attraction, Gu Lang Yu Island - the former enclave of foreigners in Xiamen, affirmed Xiamen's unique place among Chinese cities. Upon exiting from the ferry, licensed tour guides meet visitors and politely ask if their services are needed. Electric cars are also available to rent, as regular automobile traffic is not allowed on the island. The Xiamen government also provides an easily located tourist center just steps from the ferry pier that offers free maps, suggests walking tours for individuals, and provides a model of the island to help visitors orient themselves and easily find well preserved sites such as the former U.S. and other consulates and numerous grand restored homes of various European and Asian styles. A Port for the Future -------------- ¶4. (U) Executive Director Fang Yao of the Xiamen International Port Company stressed that Xiamen's unique position as the only deep-water port between the Pearl and Yangtze River Deltas had already enabled the port to become the seventh largest in the PRC and the 24th busiest in the world. With a current capacity of seven berths, the port is constructing three new berths that will come online between June and December of this year. Negotiations are also ongoing with Maersk, a global Danish shipping company, to build an additional three berths. The new berths, valued at over RMB 3 billion (USD 374 million),will be jointly owned and completed by the end of 2007. New container control software purchased from the United States will also allow the port to increase throughput from its current rate of 28 containers per hour to 32 containers per hour. The completion of these six new berths and the throughput improvements will enable Xiamen International Port to almost triple its shipping volume from 2005 levels to over seven million twenty-foot equivalent units (TEU). Additionally, the port is already handling many of the new super-sized 45- GUANGZHOU 00014848 002 OF 003 and 48-foot containers, a step up from the still mainstream 40-foot containers. Infrastructure is Key to Continued Success -------------- ¶5. (U) Infrastructure is critical for Xiamen International Port success as well. New freeways and railways are crucial to bringing export and import cargo to the port. Xiamen government and port officials are lobbying for an increased number and improved freeways to Jiangxi and Hunan provinces. This additional infrastructure will allow Xiamen International Port to ship products from the PRC's interior cities, themselves beneficiaries of migrating factory production from the relatively higher labor cost areas of Guangdong province, that are currently only connected to Shenzhen or Shanghai. A new railway from Shenzhen to Xiamen is already planned for completion by 2011 and construction will start by the end of this year. Products from southern and eastern Guangdong province will then have the option to ship out of Xiamen. With handling fees that are 60% lower than Shanghai and 50% of Shenzhen, Yao is certain that manufacturers will find this new option attractive. To help convince producers of the Xiamen International Port's merits, the company has even gone so far as to set up branch offices in many cities in Fujian and Jiangxi provinces to market its services. Location, Location, Location -------------- ¶6. (U) Xiamen's proximity to Taiwan is one of its biggest strengths and opportunities for growth. If and when the "three big links" (da san tong) between Taiwan and mainland China are approved and implemented, Yao believes that the bulk of Taiwan cargo will flow through Xiamen International Port. Much of this traffic is already going from Xiamen to Gaoxiong (Kaohsiung),Taiwan, but is delayed as the paperwork must currently travel through Hong Kong. The heavy investment from Taiwanese businesses in Fujian-located industry further drives Taiwan-bound exports through this, Fujian's largest port, accounting for more than 50% of all cargo now handled, according to Mr. Yao. With such a positive growth outlook and expansion backed up by 16% GDP growth for the city of Xiamen and 12% growth for Fujian Province in 2005, Xiamen International Port Company successfully went public, listing on the Hong Kong Stock Exchange on December 19, in part to fund its aggressive expansion plans. Port Security a Priority -------------- ¶7. (U) A tour of the port facilities after the meeting demonstrated Xiamen Ports' commitment to security, though the last major incident of alien smuggling via container reportedly originated from Xiamen Port. Among the first things noticed on entry were security checkpoints and cameras that recorded all incoming vehicles. As 18% of all cargo exported from Xiamen arrives in the United States and the past usage of containers and ships for alien smuggling from China, security at the port is or paramount concern. Yao highlighted that Xiamen International Port meets safety measures as agreed to in the 1974 International Convention for the Safety of Life at Sea (SOLAS). The United States Coast Guard performed a port security and safety inspection in 2005 as well. The port has recently added more illumination and increased monitoring by persons and systems to help safeguard boats from access by non-employees. Waterside security is provided by the Ministry of Public Security as well as by port security. Yao said that environmental protection is of major concern to Xiamen and the port runs frequent water quality tests to monitor pollution. Furthermore, the port has its own centralized wastewater treatment facilities. Finally, the excellent condition of the port was noticeable from extremely well- maintained tugboats, equipment in good condition, solid organization of its containers, to machines that automatically applied a sanitizing wash to all vehicles and GUANGZHOU 00014848 003 OF 003 containers leaving the port by road. Comment: When Can We Move There? -------------- ¶8. (U) Xiamen is an impressive city. Visiting delegations and Consulate officers all agree Xiamen is a very liveable place. Unlike some of the other cities visited during the short and long marches to northeast Guangdong and southern Fujian Provinces, Xiamen is blessed with a combination of geographical and leadership advantages. Building on its already strong base, Xiamen, also host to the annual China International Fair for Investment and Trade, will continue to develop its strengths and reach out to inland provinces with an eye to join the world's top 20 megaports. End comment. ¶9. (U) Officials visited in Xiamen include: Zhan Changzhou Vice Mayor Sun Yun Director, Political Institute under Taiwan Research Institute (TRI),Xiamen University Zhang Wensheng Deputy Director, Political Institute under TRI, Xiamen University Shi Zhengfang Deputy Director, Economic Research Institute under TRI, Xiamen University Chen Kongli Prof, TRI, Xiamen University Fang Yao GM, Xiamen International Port Co. Ltd Hong Lijuan Board Secretary, Xiamen International Port Co. Ltd Miu Luping Chief Economist, Xiamen International Port Co. Ltd Chen Aijing Director, Foreign Affairs Office (FAO), Xiamen Government DONG