Identifier
Created
Classification
Origin
07BEIJING1672
2007-03-13 10:18:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

LI YUANCHAO DISCUSSES REFORM, PROPERTY LAW AT

Tags:  PGOV ECON KCUL SOCI CH 
pdf how-to read a cable
VZCZCXRO3537
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #1672/01 0721018
ZNY CCCCC ZZH
O 131018Z MAR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5584
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001672 

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/13/2032
TAGS: PGOV ECON KCUL SOCI CH
SUBJECT: LI YUANCHAO DISCUSSES REFORM, PROPERTY LAW AT
DINNER WITH AMBASSADOR

REF: A. SHANGHAI 101 AND PREVIOUS


B. 06 BEIJING 4689

Classified By: Ambassador Clark T. Randt, Jr. Reasons 1.4 (b/d).

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 001672

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/13/2032
TAGS: PGOV ECON KCUL SOCI CH
SUBJECT: LI YUANCHAO DISCUSSES REFORM, PROPERTY LAW AT
DINNER WITH AMBASSADOR

REF: A. SHANGHAI 101 AND PREVIOUS


B. 06 BEIJING 4689

Classified By: Ambassador Clark T. Randt, Jr. Reasons 1.4 (b/d).

Summary
--------------


1. (C) Pressing ahead with political and economic
reform poses the biggest challenge for Jiangsu,
provincial Party Secretary Li Yuanchao said at a
dinner hosted by the Ambassador March 8. Interest
groups that are unwilling to compromise, especially on
issues such as health care, are slowing positive
change. The National People's Congress is sure to
pass the draft private property law. While its new
property protections for individuals and enterprises
could limit the provincial government's flexibility in
initiating public works, the law is a step forward in
safeguarding citizens' rights. Jiangsu continues to
move ahead with experiments in village and township
elections, while its larger cities are increasingly
turning to polling to gauge public sentiment about
government performance, Li said. The Ambassador and
Li discussed health care reforms, protection of
intellectual property rights, development of Jiangsu's
rural areas and enhancing the province's academic
exchanges with the United States. End Summary.

Who Moved Jiangsu's Cheese?
--------------


2. (C) For the third year in a row, Party Secretary
Li took a break from his participation in the annual
National People's Congress and Chinese People's
Political Consultative Conference legislative sessions
and accepted an invitation to dine with the
Ambassador. The dinner discussion was lively and
upbeat. Li remarked that the biggest challenge he
faces in Jiangsu Province is pressing ahead with
economic and political reforms, noting that a main
hurdle is convincing various powerful interest groups
to sacrifice a little for the larger public good.
(Note: A rising political star within the Party
system, Li has not vocally advocated democratic
openness in China. He has, however, overseen
considerable experimentation with elections at the
grass-roots level in Jiangsu. End note.)


3. (C) The introduction of any quick political or
economic change is bound to ruffle feathers, Li said.
Referring to the bestselling inspirational book "Who
Moved My Cheese," by Spencer Johnson, Li commented
that "whatever reforms we pursue, someone will be
unhappy." To illustrate the point, Li related that in
his own family, there are divisions over how to mend
the health care system. Li's nephew, who heads a
medical research firm in Shanghai, believes the
Chinese Government interferes too much in health care,
particularly on the research and development side.
His sister-in-law takes an opposing view, maintaining
that the government should significantly ramp up its
financial support for health care. His younger
brother, who has cancer and spends much time in
hospitals, is deeply dissatisfied with the treatment
he receives and believes "all medical personnel should
be given the death penalty." Such a lack of consensus
in society at large is a primary part of what slows
the process down, Li said.

Property Law Will Certainly Pass
--------------


4. (C) A major reform the NPC is considering this
year is a draft law that would expand protection for
private property. Li said he attended the March 8
session at which Wang Zhaoguo, an NPC Vice Chair and
Politburo member, explained the draft law on property
rights. Describing the draft law as "of historic
importance," Li said he is certain it will pass. Its
basic principle is to accord private individuals and
enterprises some protection for their property. For
Jiangsu, the law will pose considerable challenges,
especially because it will limit the provincial
government's flexibility in how it manages land
resources. Under the current system, when authorities
want to take land for public works, such as for
building highways or power plants, they can issue
binding orders requiring local residents to depart.
The proposed property law, however, requires the
consent of residents before any relocations can occur.

BEIJING 00001672 002 OF 003




5. (C) Li said he supports the draft law because it
enhances citizens' rights. In most cases, officials
and residents will be able to reach agreement on
compensation and projects will proceed smoothly. But
how to handle situations where residents refuse to
move will be a question mark.

Voting and Polling
--------------


6. (C) Li remarked that despite his role as a top
official, he believes the power of government should
be answerable to a sound legal system. In connection
with this, democratic change in China can only come in
the context of rule of law. Jiangsu has experimented
with village and township elections. County-level
balloting is a ways off because organizing a vote for
millions of people is still logistically "too hard,"
Li contended. At the same time, in the province's big
cities, authorities are increasingly turning to
polling as a way to gauge public sentiment about
provision of government services. In Nanjing and
other metropolitan areas, cities conduct annual
surveys of up to 10,000 residents. Officials at
government departments that receive low marks can be
sacked or reprimanded. Although a government agency
conducts the polling, Li considers the results
reliable because even that agency is a subject of
survey questions and can also come in for harsh
treatment from respondents.

Health Care Dissatisfaction
--------------


7. (C) Poll results indicate that Jiangsu citizens
are most unhappy about the health care sector and food
safety issues, Li said. But in Suqian, a northern
Jiangsu industrial city, an experiment is underway in
which the municipal government provides most basic
health care coverage and the hospitals have been
privatized. Citizens are appreciably more satisfied
with this system, Li stressed, adding that surveys
show Suqian residents do not rank health care among
their top three or four areas of discontent. But the
hospital privatization scheme has elicited harsh
criticism from scholars and some officials who believe
such market-based solutions are tantamount to the
government's abandoning its responsibilty to the
people. Li enthusiastically agreed ith the
Ambassador's observation that, in his personal view,
China's Ministry of Health is focused less on the
interests of citizens than on protecting the medical
industry and drug companies, adding that this is
precisely the key obstacle to health care reform.

New Rules about Public Finances
--------------


8. (C) Li related that Jiangsu has instituted reforms
in handling its public finances. Whereas before
localities could decide on their own how to allocate
public funds, now provincial authorities preside over
every detail of the process for all levels of
government. This centralized approach has the
advantage of ensuring that the poorest regions get the
money they need to address problems. This is in line
with Jiangsu's policy of promoting development in the
countryside, Li said, asserting that if larger cities
were left to pull the provincial purse strings, they
would use money only for their own construction
projects.

Suzhou Catches Seoul
--------------


9. (C) Asked about Premier Wen Jiabao's March 5 Work
Report stressing the concept of building a "New
Socialist Countryside," Li judged that the idea
carries a different meaning in Jiangsu than in other
provinces. Without going into specifics, Li said
Jiangsu has used it as a basis to address
environmental issues and enhance protection of
cultural heritage sites. At the same time, cities
remain the backbone of Jiangsu's economy. Li lauded
the humming development of Suzhou, Jiangsu's second
city, where per capita GDP has reached USD 10,000, on
a par with Seoul, he claimed. "Suzhou should become
China's Europe," he said. Li underlined that he
envisions a Jiangsu in which city dwellers and rural
residents all belong to the middle class. The aim is

BEIJING 00001672 003 OF 003


to spread the wealth from Jiangsu's developed south to
its economically lagging north, Li said, adding that
it may take as many as 10 to 20 years to do this.


10. (C) In response to the Ambassador's comments
commending Jiangsu's efforts to combat Intellectual
Property Rights infringements, Li readily agreed that
protecting IPR is in his province's own interests.
Jiangsu has a swiftly growing number of innovators in
a variety of fields who need to be defended from
piracy. "We are committed to fighting against IPR
violations," Li declared.

More Exchanges, Upbeat on APP
--------------


11. (C) Li described his trip to the United States in
May 2006 as a success. His focus on the visit was to
promote educational exchanges between Jiangsu and the
United States. He reported having productive
conversations with education experts about
establishing private primary and secondary schools in
the Nanjing area whose aim would be to attract
international students. Lauding the 20th anniversary
of Johns Hopkins' Nanjing Center, Li related that
Nanjing University has signed agreements with six
other American institutions, including the State
University of New York. The Ambassador pointed out
that the State Department has tapped Nanjing as a
location for one of the first four proposed American
Presence Posts in China, which would certainly bolster
the kinds of exchanges Li is seeking. While our
Government has authorized a budget, China's Foreign
Ministry has still not approved the APP project, the
Ambassador said. Li said he hopes the APP in Nanjing
can move forward.

Nanjing Wants More Visitors
--------------


12. (C) Li extended an open invitation to Members of
Congress to visit Nanjing. When foreigners consider
China, they immediately think of cities such as
Beijing, Shanghai and Shenzhen. Shanghai wants to be
considered China's New York. Beijing is the political
center. But Nanjing has "everything" a visiting
politician could want in terms of having a productive
visit. "I will have one banquet for them and then we
can go and see everything in Jiangsu," Li remarked.
RANDT