Identifier
Created
Classification
Origin
06GUANGZHOU14848
2006-05-18 03:17:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Guangzhou
Cable title:  

XIAMEN: CITY WITH A VISION

Tags:  ECON PGOV EWWT ETRD EINV CH 
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DE RUEHGZ #4848/01 1380317
ZNR UUUUU ZZH
R 180317Z MAY 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 8177
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI
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

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