CHONGQING STRUGGLES WITH RURAL POVERTY, RESETTLEMENT,

UNCLAS SECTION 01 OF 02 CHENGDU 000036

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/CM AND EB
NSC FOR CHRISTINA COLLINS

E.O. 12958: N/A
TAGS: ECON EAGR ELAB PGOV SOCI CH
SUBJECT: CHONGQING STRUGGLES WITH RURAL POVERTY, RESETTLEMENT,
DROUGHT

REF: A) CHENGDU 33 B) 06 CHENGDU 1022

CHENGDU 00000036 001.2 OF 002



1. (SBU) Summary. While Chongqing officials praise their own
response to last summer's drought -- the worst in the region in
over a century -- and speak optimistically of development
prospects, necessary funding for water conservation, education,
and health care may be lacking. The city of Fuling, featured in
the book "River Town" by a former Peace Corps volunteer, has
seen large-scale construction of protective dikes and new
housing projects, but local job opportunities appear scarce. An
upbeat situation? Decidedly not. End summary.


2. (U) Consul General and Congenoff traveled to Chongqing and
the city of Fuling January 22-28, meeting with government
officials to discuss rural poverty and the effects of last
summer's drought, and visiting areas affected by the filling of
the Three Gorges Dam reservoir. A visit to a U.S.-invested
agricultural project in Chongqing's Zhongxian County was
described ref A.

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A RURAL SECTOR BESET WITH PROBLEMS
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3. (U) Congenoffs met with Chongqing Rural Working Office
Director Mr. Xie Jinfeng to discuss the economic and social
challenges facing Chongqing's rural population. A
representative of Chongqing's FAO sat in on the meeting.


4. (U) Xie described how, although the Chongqing region's rural
population is 23.5 million (out of a total 37.8 million),its
rural economy accounts for only 15 percent of GDP. During 2006,
over 7 million of those rural residents left the countryside for
jobs in urban areas - about half going to other provinces.
Outside of Chongqing city, Guangdong, Hainan, Fujian, and
Zhejiang are the most common destinations. The income generated
by those migrant workers accounted for a substantial part of
rural GDP: in 2006, government figures claimed total rural per
capita income of 2871 RMB (USD 368),but Xie said RMB 1203 (USD
145) of that came from the earnings of migrant workers.


5. (U) Xie listed three major priorities for Chongqing's
government in 2007. First is the need to improve rural
infrastructure, especially irrigation/water conservation
systems, roads, and telecommunications. Xie said that Chongqing
would seek increased funding from the central government to meet
these objectives, and would encourage local governments and
rural residents to pay more attention to the care of existing
water conservation facilities.


6. (SBU) Funding for rural education is another major priority,
according to Xie. He said recent central government directives
had made 1.3 million Chongqing rural children eligible for free
tuition and textbooks, but Chongqing needed more money from
Beijing to cover these new expenses. The final major rural
priority was rural health insurance. Xie stated that "only" 64
percent of Chongqing's rural residents participated, a figure
which he considered too low. (Note: other interlocutors have
given far lower participation figures. End note.)

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WATER LACKING, AWARDS GALORE
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7. (SBU) Xie detailed the effects of the 2006 drought, the
"worst in over 100 years" on Chongqing's rural economy: 22.3
million people deprived of drinking water, direct economic
losses of over RMB 800 million (USD 102 million),a reduction in
grain output of over 2.58 million metric tons over 2005. (Note:
Rather improbably, Xie also stated that per capita rural income
had nevertheless increased by two percent in 2006. Admittedly,
increased remittances from migrant workers may have played a
role. Other contacts in Chongqing noted to us that government
officials usually refer to a "drop" of at least two to three
percent in per capita incomes due to the drought. End note.)


8. (U) Discussing the reasons for the drought, Xie dismissed the
idea of changes in Chongqing's microclimate due to the
construction of the Three Gorges Dam, and instead blamed global
warming. He admitted, however, that Chongqing's water
conservation system and irrigation network was unsophisticated
and in need of repair, adding that local governments lacked the
funds necessary to maintain the system properly. Asked about
the effectiveness of local leadership in coordinating the
response to the drought, Xie heaped praise on Chongqing's
officialdom: "The response was so effective that Party Secretary
Wang Yang was named as one of the ten most capable municipal

CHENGDU 00000036 002.2 OF 002


officials in all of China in 2006!"

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RIVER TOWN TEN YEARS ON
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9. (SBU) Congenoffs visited the city of Fuling, made famous in
former Peace Corps volunteer Peter Hessler's bestseller "River
Town." Although much of the older part of the city has been
demolished, a massive dike now protects the lower elevations.
New apartment buildings, hotels, and government offices have
been constructed on higher grounds. As a result, Fuling is now
divided into an "old city" and a "new city," with a seedy
section of low-rent hotels and massage parlors dividing the two
areas. Alongside the dike itself, authorities have encouraged
the development of an "entertainment district," featuring wide
sidewalks, art installations, night clubs, and restaurants.


10. (SBU) Fuling officials gave a rosy view of Fuling's
development prospects. According to Fuling Resettlement Bureau
Director Zhang Yanlu, almost 100,000 Fuling residents (out of a
total of 300,000) have been resettled in new housing areas.
Fuling Development and Reform Commission Director Xiao Lanyin
claimed a local GDP growth rate of 13.5 percent, based largely
on infrastructure construction and on the prosperity of its
cigarette, pharmaceutical, and chemical processing industries.
Fuling is also famous nationwide for the quality of its pickled
mustard tuber. (Note: A local resident interviewed informally
by Congenoff later complained about the city's economy, citing a
lack of employment opportunities: "Most young people go to
Chongqing to look for jobs." End note.)


11. (SBU) Asked about challenges, Xiao admitted that
transportation was his greatest concern. Although Fuling is now
linked to the highway system, a long-anticipated rail line has
not yet been constructed. And while Xiao waxed rhapsodic about
the city's prospects as a deep-water port alternative to
Chongqing during low-water seasons, he also admitted that
construction of the new port was far from complete.


12. (SBU) After Fuling, Congenoffs visited Zhongxian (ref B),
downstream on the Yangtze about two hours from Fuling. There,
they toured Shibaozhai Temple, a historic site threatened by
rising water levels. To protect the temple, another massive
dike was under construction, and tourist infrastructure such as
modern toilets and elevated walkways were being built. Nearby
was a large resettlement village filled with new apartment
buildings. Almost all of the residents visible on the streets
appeared younger than 15 or older than 50.

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COMMENT
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13. (SBU) Glossy official pronouncements and showcase projects
aside, rural Chongqing faces serious challenges. Post has
previously reported on the number of displaced farmers on
Chongqing's streets (ref B),and even a "windshield tour" of the
reservoir area reveals widespread air and water pollution as
well as poor housing and battered roads. The lack of young
people in the countryside and in smaller cities is also obvious.
Even assuming that there is no repeat of the 2006 drought this
year, rural Chongqing needs all the help it can get from central
and local authorities.
BOUGHNER