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06SHANGHAI7139 2006-12-21 09:42:00 CONFIDENTIAL Consulate Shanghai
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DE RUEHGH #7139/01 3550942
R 210942Z DEC 06
					  C O N F I D E N T I A L SECTION 01 OF 05 SHANGHAI 007139 






SHANGHAI 00007139 001.2 OF 005

CLASSIFIED BY: Veomayoury Baccam, Acting Policital/Economic
Section Chief, U.S. Consulate, Shanghai, Department of State.

REASON: 1.4 (b), (c), (d)

1. (C) Summary. An open budget initiative that is moving into
its third year in Zeguo Township of Zhejiang Province's Wenling
municipality, has introduced an unusual level of participatory
democracy. The process was launched out of the Zeguo Party
Secretary's frustration with competing voices for the town's

limited budgetary resources and the inescapability of the
perception of corruption caused by closed-door budget
negotiations. The initiative, which randomly selects nearly 300
participants to act as an advisory body to the local government
in drafting the budget, was orchestrated by Stanford University
Professor James Fishkin and Australian Professor He Baogang and
is an outgrowth of the "democratic consultation" process Wenling
has been experimenting with over the past six years. While one
contact warned that the experiment could run into future
problems and have limited impact, others claimed the project was
advancing a form of consultative democracy, which is reportedly
being studied by an advisory body in Beijing. This is the first
of two cables about democratic experimentation in Wenling. The
second cable focuses on experiments in legislative democracy
being carried out in some of Wenling's other townships. End

2. (C) Poloff traveled on October 6 to Wenling, an
administrative region under Zhejiang Province's Taizhou City to
meet with Chen Yiming, Head of the Wenling Municipal Propaganda
Department's Theory Office, Deputy Director of the Wenling
Municipal People's Democratic Consultation Work Office, and
author of Wenling's political experimentation. Separately,
Poloff met on May 10 with Jiaotong University Law Professor Zhu
Mang who traveled to Wenling's Zeguo Township in April 2005 to
observe the democratic consultation process. Poloff also met on
June 21 and October 25 with Shanghai Municipal People's Congress
researcher Zhou Meiyan to discuss Wenling's reforms. Zhou has
been advising Chen on his reform program and has been promoting
Chen's experiments within Shanghai and national-level political

3. (C) Zhou also forwarded Poloff the presentation materials
and summary notes from a November 2005 conference in Beijing
that examined Zeguo's experiment. That meeting was attended by
about 40 participants from the United States, Brazil, Beijing,
Shanghai, and Zhejiang. Later, she forwarded Poloff the summary
of a May 13-14 2006 "Workshop on the Legislature, Budget
Supervision, and Public Finance," hosted jointly by the China
University of Politics and Law, Peking University, and the Yale
Law School that primarily discussed the Wenling reforms.



Birth of "Democratic Consultation Meetings" in Songmen



4. (C) According to a 2005 book Chen co-edited entitled
"Democratic Consultation: Creation of the People of Wenling"
(Minzhu Kentan: Wenling Ren de Chuangzao"), the system of
"democratic consultative meetings" ("minzhu kentan huiyi" or
"minkenhui") began in Wenling's Songmen Township--Chen's
hometown--in June 1999. At the time, the Taizhou Municipal
Propaganda Department and the Wenling Propaganda Department were
charged with finding an innovative way to educate local
residents about the town's agricultural policies, which avoided
the "listen-to-what-I-say" town meetings that local villages had
been hosting. The solution they came up with was to hold a
"Conference on Building a Modernized Agricultural Countryside,"
which allowed cadres and local residents to communicate
face-to-face, giving the residents the opportunity to voice
their opinions as well as listen to what local officials had to
say. The meeting attracted over 100 participants and was so
successful that Songmen decided to hold a total of four meetings
that year. Over 600 people attended altogether, offering 110
suggestions, 84 of which were responded to, with 26 leading to
promises of action.

5. (C) By the end of 1999, the Wenling government called for
the expansion of the "Songmen Method," and held public hearings
that had genuine give and take throughout the Wenling
municipality. In August 2000, the Wenling Party Committee and

SHANGHAI 00007139 002.2 OF 005

the Zhejiang Daily co-hosted a conference in Wenling and adopted
the phrase "Democratic Consultation" to describe the myriad of
discussion meetings that had sprung up. The conference also
decided to label the meetings as "democracy building" and the
Wenling Party Committee gave its seal of approval. Around this
time, Chen said, he began to realize that the work of building
democracy was more important than ideological work and began
focusing all of his efforts toward this.

6. (C) In 2001, the Party Committee reviewed the "Democratic
Consultation" effort, decided the Propaganda Department was
doing a great job, and officially assigned the "Building
Grassroots Democracy" portfolio to the department. Chen said
that his efforts in the Propaganda Department were given a boost
of legitimacy with the 16th Party Congress Communique in 2002
that called for building "people's democracy" and strengthening
"people's supervision."


Letting the People Speak in Zeguo


7. (C) After the initial success of the minkenhui, Chen, with
the cooperation of Zeguo Township Party Secretary Jiang Zhaohua,
set out to deepen the people's supervisory authority of the
government. Zeguo is a relatively wealthy township with a
registered population of about 120,000 people and another
estimated 10,000 migrant workers. According to materials
provided by Zhou, Zeguo had an annual public works budget of
around 40 million RMB for several years. However, according to
Professor Zhu, in recent years, needs outpaced means in Zeguo,
with annual public works budget proposals routinely running
upwards of 100 million. Zhu said that Wenling Party Secretary
Jiang had complained about the difficulties of trying to balance
all of the competing interests within the government, all of
whom wanted a bigger piece of the pie. According to Zhu, the
Party Secretary was also concerned about the influence of
several wealthy contractors who had been bribing government

8. (C) Zhu said that although minkenhui had been held in Zeguo
since 2000, people there remained somewhat apathetic. At a 2004
conference on minkenhui in Hangzhou's Zhejiang University, Jiang
met Australian Professor He Baogang and Professor Fishkin and
asked them to help design a scientific method to increase public
participation in governance. Working with Chen and others in
the Propaganda Department, Zeguo held its first budgetary
minkenhui in March 2005.

9. (C) According to the materials from the November 2005
conference, the town government was allocated 40 million RMB for
its 2005 public works budget. At the beginning of the year, the
township government selected 30 public works projects that it
considered to be most important. It then had a panel of experts
carry out research into the proposed projects to determine the
costs and put forward impartial explanations of what each
project would entail. The government found that the projected
cost of all 30 projects was almost 137 million RMB, more than
three times their budget.

10. (C) Using the method designed by Fishkin and He, the
government then selected 275 people through a scientific random
sampling process that represented all of the different interests
of the township's constituencies. Of the 270 who actually
participated in the exercise: 66.8 percent were male; 33.2
percent were female; 94.4 percent were married; 5.6 percent were
engaged; and the average age was 47.5. Interestingly, 11.2
percent of the participants were also illiterate. According to
Professor Zhu, the illiterate were initially going to be
excluded from the proceedings until they successfully argued
that they possessed wisdom from which the group could benefit.

11. (C) According to the conference materials, after
representatives were chosen, they were each given a copy of the
findings of the panel of experts to review for 15 days. On
April 9, the representatives convened a minkenhui at the local
high school to discuss the issues. The participants separated
into 16 small groups where everyone was allowed to voice their
opinions and express their concerns about the proposed items.
They were also asked to fill out a questionnaire before they
began, marking each project with a grade from "0" to "10," with
"0" being items that the respondents felt were a complete waste
of resources. One of the high school's teachers was assigned to
chair each of the groups and ensure that government officials

SHANGHAI 00007139 003.2 OF 005

did not attend the discussions. The illiterate participants
were assisted by high school teachers during the minkenhui.
(Note: We assume that the family members assisted the illiterate
participants review the materials prior to the minkenhui. End

12. (C) According to Zhu, the groups tried to come up with a
unified budgetary proposal. The stipulation was that the budget
must have only ten items or less and could not exceed 30 million
RMB. The groups then chose a spokesperson to present each plan
when the groups reconvened in an upstairs auditorium. In groups
that could not come up with a unified proposal--some had two or
three proposals--spokesmen for each proposal were assigned. The
chair of the large meeting (also a high school teacher) then
called on the spokesperson for each proposal to briefly describe
how they had reached their ideas and gave a panel of 12 experts
a chance to weigh in with their feedback and suggestions. The
participants then divided into their small groups a second time
to discuss their proposals again. They redrafted their
proposals based on the discussions (most groups only had one
this time), and reconvened the large group to discuss the
proposals and receive feedback from the experts. According to
conference materials, the full body of the Zeguo government
attended the large group meetings as non-participating
observers. After this final meeting, each member filled out
another questionnaire nearly identical to the first, ranking
their budget preferences.

13. (C) The questionnaires revealed a shift in priorities after
the exercise. There was a large increase in support for
projects that dealt with water pollution, environment and
sanitation. Participants ranked environmental protection as the
most important factor in their decision-making (9.64 out of 10)
and economic development as a close second (9.08). The
experiment also served to raise people's understanding of issues
the government faced in deliberating its budget. Accurate
knowledge about the increase in the town's financial revenues,
for instance, jumped more than 21 percentage points after the
minkenhui, while the understanding of how many migrant workers
were in Zeguo increased more than 19 percentage points.

14. (C) The participants were also asked to rank the
effectiveness of the exercise. They gave a rank of 8.46 to the
utility of the small group discussions and a rank of 8.66 to the
large group meeting. All of the representatives believed that
the minkenhui had treated everyone's ideas fairly and that the
chairpersons of the small groups basically acted justly and did
not use their positions as a bully pulpit to browbeat other
members into agreeing with them.

15. (C) After the minkenhui ended, the government convened a
work conference with the relevant component officials. The work
conference took the results of the second survey and laid out
the projects in the rank order given by the minkenhui
participants. The work conference took the top 12
projects--with an estimated cost of 34.4 million RMB--as the
items for its 2005 budget, with the next 10 items--with an
estimated cost of 22.5 RMB--as reserve projects, to be addressed
if and when funds were available. The municipal People's
Congress passed the budget 82 to seven with one abstention.


Zeguo 2006: Even Better the Second Time Around



16. (C) According to Zhu, Zeguo continued the budgetary
experiment in 2006, although with three main differences that
made the groups more representative and encouraged broader
discussion. First, migrant workers who had resided in Zeguo for
several years were included in the pool of participants and each
small group had one or two migrants. Second, in 2005, the
random sampling procedure was based on family, and not
individuals. Each family that was selected chose its
representative, which probably accounted for the high percentage
of males and married participants. In 2006, however, the
sampling used individuals rather than families, allowing "young
women and old grandmothers" equal chance to participate. Due to
the change in sample, Zhu noted that the illiteracy rate among
the participants jumped to 14 percent. Third, the 16 small
groups were divided into two categories. Six of the groups were
run as in 2005. In the other 10, however, the chairman took an
active devil's advocate role, encouraging the participants to
look at the projects from every possible angle.

SHANGHAI 00007139 004.2 OF 005


Provincial Leaders Give OK


17. (C) Zhu noted that the officials involved in the program
were all very pleased with its success. The Zeguo Party
Secretary, in particular, was happy with the results, since it

gave him a good excuse to turn down bad programs being pushed at
him by corrupt superiors and others. The officials also said
that it kept problems associated with the implementation of
these projects down, since the projects were suggested by a
group that supposedly represented the general population's

18. (C) According to Professor Chen, the provincial leadership
was on board with these reforms. The Taizhou Mayor and Party
Secretary had both praised the Zeguo experiment, as had the

Zhejiang Provincial People's Congress. Zhejiang Party Secretary
Xi Jinping visited Wenling in 2005 and applauded the minkenhui
activities, particularly the Zeguo experiment.


Limits on the Love-fest


19. (C) Although all observers and participants of the program
Poloff spoke with had nothing but praise for the Zeguo
experiment, Zhu raised several potential problems for the
program's continuation or expansion and limits on its impact on
China's democratization. First, the minkenhui process itself
was quite expensive. The 2005 minkenhui cost Zeguo 100,000 RMB
to host. While the township was able to trim costs to 50,000
RMB in 2006, Zhu said township officials estimated that was the
bare minimum needed to convene such a meeting. Although the
Zeguo leaders felt this was a small price to pay for social
harmony, Zhu doubted that poorer towns or villages could afford
to host such an event, regardless of its benefits.

20. (C) Second, was the issue of control. Although Zeguo's
experience had been positive to date, Zhu asked what would
happen if the people's budgetary priorities clashed with the
desires of the leadership? He said that in practice, this
process took away some of the authority of the People's Congress
and put it in the hands of the people. By thus empowering the
people, it would be very difficult to overrule the budget
proposals put forward by the minkenhui without risking social

21. (C) Third, Zhu noted that much of the success of the Zeguo
experience was due to Zeguo Party Secretary Jiang Zhaohua.
Jiang was a promising young official in Beijing but quit his job
so he could return to his hometown. Jiang was not interested in
promoting himself and understood that with power came
responsibility. He was one of the rare officials who was
willing to share his power with the people he served. Zhu
speculated that if a different person were in charge--one given
to graft or power seeking--then the Zeguo experiment would
ultimately fail. Not all leaders were willing to cede even part
of their authority to the public.

22. (C) At the May workshop, Chen disputed this notion, arguing
that the "political ecology" in Wenling was gradually changing
and that public awareness of democracy was increasing so that
even with a change in personnel, reforms would continue to move
forward. At the same meeting, however, Qinghua University
Professor of Public Administration and Vice President of the NGO
Studies Institute Jia Xijin argued that to protect the budding
reforms, current practices needed to be institutionalized,
including: the public's right to information; the right to
participate and express opinions; the right to supervise; and
codified voting procedures, including shifting from a raise of
hands to vote by secret ballot.

23. (C) Finally, Zhu said, although it had made real
breakthroughs in returning power to the people, the Zeguo
experiment needed to be viewed in perspective. Only a part of
the budget there was open to public review. Zhu said that there
were no plans at present to allow people to introduce items on
the budget, noting that people were only allowed to discuss what
the government had already put forward as its priorities.


Pushing "Consultative Democracy" Forward


SHANGHAI 00007139 005.2 OF 005

24. (C) According to Zhou, Zeguo was advancing a form of
"consultative democracy" (xieshang minzhu), or "participatory
democracy" (canyu minzhu). In Chinese consultative democracy,
the people, through a representative body, were able to
participate in the decision-making process, although not able to
necessarily make decisions. She said that China's current
official consultative body was the Chinese People's Political
Consultative Conference (CPPCC), an advisory body designed to
legitimize Communist Party rule by allegedly giving voice to
"grass roots" interest groups (Ref A). The Zeguo experiment,
however, was moving the representative group beyond the
consulting role and empowering it with direct influence over the

25. (C) Zhou said that the Central Government was taking an
active interest in studying Zeguo's experiment. Beijing was
using the Central Editing and Translation Bureau (ETB)
(zhongyang bian yi ju)--originally set up to retranslate the
works of Marx and Engels as part of the Marxist Revival campaign
(Ref B)--to examine Zeguo's reforms. Heading the effort was
liberal scholar and Director of Beijing University's Center for
Comparative Politics and Economics Yu Keping, whom Zhou
described as being "trusted" by President Hu Jintao. Liberal
scholar He Zhengke was also involved in the research project.
According to Zhou, the ETB liked what was happening in Zeguo and
was promoting the line that China needed to more broadly
implement participatory democracy to allow for multiple views
and voices to be heard.

26. (C) According to Zhou, the ETB recently published a book
called "Participation is Democracy" (Canyu Shi Minzhu)
describing the participatory budget experiments that had been
carried out in Brazil's Porto Alegre. Zhou said that the Zeguo
experiment had been loosely based on the Porto Alegre model.
(Note. According to press reports, the Porto Alegre model was
first developed in 1989 and utilized a system of community
meetings where local democratically elected representatives
worked to prioritize infrastructure needs identified by the
city. The representatives, in conjunction with the municipal
government, developed a budget plan and an investment and
services plan, which they submitted to the mayor and city
council for approval. End note.)


Comment: Baby Steps


27. (C) The Zeguo experiment is one of the only efforts the
Consulate has heard of to genuinely empower the people at the
expense of governmental authority. As Professor Zhu rightly
pointed out, however, these steps are small when compared to the
progress that Chinese political reformers would like to see.
Moreover, the Zeguo model, while technically legal, was not
codified in the official bureaucratic decision-making structure,
and hence is potentially subject to the whims of the officials
in power.