South China Leadership Changes; Political Highlights

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SUBJECT: South China Leadership Changes; Political Highlights

REFERENCE: A) Guangzhou 3993; B) Guangzhou 3991; C) 05 Guangzhou
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1. (SBU) SUMMARY: Guangdong Party Secretary Zhang Dejiang is poised
to move to Beijing to become a Vice Premier and current Beijing
Mayor Wang Qishan may become the next Guangdong Party Secretary.
Beijing, which has long had reservations about whether Guangdong's
leaders serve central government interests, has strengthened control
over the province by assigning a new disciplinary inspection
secretary from outside of the province; in addition, per national

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directives, Guangdong has reduced by half the positions of deputy
party secretaries inside CPC committees. Promotion opportunities
continue to favor officials with both Communist Youth League (CYL)
experience and regional ethnic backgrounds in Guangdong. A
semi-retired senior official at the vice governor rank has been
punished to send a strong anti-corruption message to current
officials. END SUMMARY.

Zhang Dejiang: Central Government Support Despite Setbacks as
Governor and "Shanghai Gang" Affiliation
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2. (SBU) Announcement is likely at the Guangdong CPC annual session
in May that Guangdong Party Secretary Zhang Dejiang, who has
survived a number of political crises, will take on a new position
as Vice Premier in the State Council. News reports indicate that
his successor might be current Beijing Party Secretary and former
Guangdong Executive Vice Governor Wang Qishan.


3. (SBU) Zhang's tenure in Guangdong has been rocky at times. It
included the SARS outbreak in 2003, during which time Guangdong
authorities were criticized for concealing information, and the
Dongzhou incident in December 2005, in which police killed at least
three farmers during a dispute related to land compensation (reftel
C). However, Zhang survived each of these crises. The central
media, including CCTV and People's Daily, published footage and
articles praising Guangdong's success in fighting SARS and
maintaining social harmony not long after each crisis.


4. (SBU) Local media reports on April 3 revealed a pension scandal
in Guangzhou in which RMB one billion (USD 125 million) was misused
in the 1990's in failed real estate projects - half of the amount
might not be retrievable. Some analysts have suggested that this
scandal might be targeted at hindering Zhang's promotion. Zhang is
not likely to be hurt as the scandal occurred before his arrival and
he does not bear responsibility. The official reviewing the case,
Guangdong Congress' Chairwoman Huang Liman, Huang also belongs to
the "Shanghai Clique," to which Zhang supposedly bellows, and should
have no interest in damaging Zhang. Unlike "Shanghai Clique" member
Chen Liangyu, the former Shanghai Party Secretary who is currently
under investigation, Zhang has not opposed but has closely followed
Beijing's decisions. When Beijing emphasized social stability and
harmony, Zhang set strict local guidelines for sufficient
compensation to farmers who lost their land. When Beijing promoted
the concept of "a new socialist countryside," Zhang responded by
stationing more than ten thousand officials in poor local villages
to support local development.


5. (SBU) The People's Daily published an article on February 6
complimenting Guangdong's impressive success in maintaining rapid
GDP growth while lowering its consumption of resources and pollution
discharge for each unit of GDP produced - indirectly recognizing
Zhang's implementation of the "scientific development approach" of
General Secretary Hu Jintao. Zhang is also credited with initiating
the "Pan Pearl River Delta Cooperation Program" in November 2003,
which promotes regional economic and social cooperation and
integration among provinces in South and Southwest China plus Hong
Kong and Macao.


6. (SBU) Other positive signs for Zhang are his previous assignments
heading central CPC delegations on overseas visits; this is one way
Beijing is able to observe how well a future national leader will
perform and to introduce him/her to the outside world. During the
past five years, Zhang has headed central CPC delegations to South
America (November 2003),Africa (October 2004),and the Middle East
(June 2006).


7. (SBU) Congenoff's interlocutors from business circles who have

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close relations with local provincial leadership also mentioned
early this year that Zhang is almost certain to move up to Beijing,
the only question being which position he would take. Since Chen
Liangyu is already out, the "Shanghai Clique" may see in Zhang a
defender of its prerogatives.

Wang Qishan: Beijing Mayor with Guangdong Background Tops List for
Party Secretary
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8. (SBU) Reuters released a news report on April 3, citing two
sources in Beijing, predicting that Wang Qishan would become
Guangdong's next Party Secretary. Before assuming his current
position is Beijing's Deputy Party Secretary, Deputy Mayor and then
Mayor, the 59-year old Wang was Executive Vice Governor (in charge
of finance) and CPCC Standing Committee Member in Guangdong from
1997 to 2000. Wang, the son-in-law of the late CPC senior official
Yao Yilin, has considerable central and local administration
experience, financial industry expertise and an academic background
in both rural and financial research. In Guangdong, he was
responsible for handling the aftermath of the disastrous bankruptcy
of the Guangdong International Trust and Investment Co., which had
borrowed heavily from overseas financial institutions and invested
in local projects, most of which were failures.

Guangdong CPC Committee: Trimming Deputy Party Secretaries,
Appointments from Beijing to Disciplinary Positions
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9. (SBU) Guangdong is following a national directive to reduce the
number of its deputy party secretaries to two. Of the original five
deputy party secretaries, one was transferred to Zhejiang and two
received new appointments to less powerful organizations and may
soon lose their titles as deputy party secretaries. The two
remaining positions are those of Huang Huahua, Guangdong Governor,
and Liu Yupu.


10. (SBU) Wang Huayuan, former Deputy Party Secretary of Guangdong,
was transferred to Zhejiang as the province's Standing Committee
Member in charge of disciplinary inspection. No new deputy party
secretary was appointed to fill his vacancy. In November 2006, Zhu

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Mingguo (born 1957) was transferred from Chongqing to become a
Guangdong Standing Committee Member, taking over Wang's disciplinary
inspection responsibilities.


11. (SBU) Cai Dongshi and Ou Guangyuan, though retaining their
titles as Guangdong Deputy Party Secretaries, are expected to soon
leave the Standing Committee following their assignments as Vice
Chairs of Guangdong's CPPCC and Congress, respectively, in February

2007. This year Cai will be 60 years old and Ou will be 59, thus
reaching or soon to reach retirement age. Assignments to less
important positions in the CPPCC and Congress signify a departure
from the core power circle. Similar staffing patterns of one party
secretary and two deputy party secretaries have already been

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established in CPC committees at the municipal and district levels
throughout Guangdong.


12. (SBU) In recent years, Beijing has attempted to strengthen its
control over local provinces, particularly in significant economic
areas such as Guangdong, by appointing officials from outside the
province to hold key positions in the provincial standing
committees. For example:
-- Guangdong's current Deputy Party Secretary Liu Yupu originally
worked in Shanxi and came to Guangdong in 2000.
-- Guangdong's current Organization Department's Director General Hu
Zejun came from the Justice Ministry and landed in Guangdong in

2004.
-- Now, Zhu Mingguo, also from outside Guangdong, is taking over
Guangdong's anti-corruption authority and will help the central
government supervise Guangdong, which is known for its resistance to
Beijing's control. Zhu spent most of his career in Hainan with a
background in law enforcement and CPC personnel issues. In 2001, he
was transferred from the position of CPC Standing Committee Member
and Vice Governor of Hainan to become a Standing Committee Member in
charge of law enforcement as well as the Director General of
Chongqing's Public Security Bureau (PSB).
-- Also new to the CPC Standing Committee, and with a Beijing
background, is Lin Xiong, the new Director General of the Guangdong
Propaganda Department. Lin (born 1959) spent his early career in
the State Council and then became a Director General-ranking
secretary and is said to have worked for Wen Jiabao. He came to

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Guangdong in 1994 and worked in several prefectures including
Dongguan, Maoming, and Zhaoqing. His last position was as Party
Secretary and NPC Chair of Zhaoqing.

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-- Lin's predecessor, Zhu Xiaodan, who is still a Standing Committee
Member and has a CYL background, assumed the position of Party
Secretary of Guangzhou in July 2006.

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-- Liang Guoju (born 1947),former CPC Standing Committee member in
charge of law enforcement and justice issues and the Director
General of the Guangdong PSB, took a new job as a Vice Chair of the
CPPCC. This move indicates that he is likely to leave the CPC
Standing Committee and PSB position because of his age.
-- A police contact told us that that Liang's successor will be Zhu
Suisheng, current Deputy Director General of Guangdong PSB and
former Director General of the Guangzhou Municipal PSB.
Zhu Mingguo, Lin Xiong, and Zhu Suisheng are likely to serve in the
new Standing Committee to be elected in May.

Vice Governorships Maintain Hakka and Chaoshan Ties
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13. (SBU) The Guangdong government has promoted three vice governors
since 2006: Tong Xing, Lin Musheng, and Huang Longyun. Former vice
governors You Ningfeng and Xu Deli resigned because of age in
February 2006. Tang Bingquan, Executive Vice Governor born in 1949,
is supposed to retire soon and join You and Xu to leave room for the
newcomers.


14. (SBU) Senior homegrown leaders in Guangdong are from three main
areas: the Hakka area in the north, including Meizhou, Shaoguan, and
Heyuan; the Chaoshan area in the east, covering Shantou, Shanwei,
Chaozhou, and Jieyang; and the Pearl River Delta (PRD). The Hakka
and Chaoshan areas have their own dialects and cultures and are
known for their strong preference for cadres from the same
hometowns. Senior officials representing these areas always hold
important positions at the provincial level. Promotions of these
officials have not necessarily been tied to their competence in
developing the economy, since the Hakka and Chaoshan areas remain
economically backward. The most prominent official from the Hakka
area is current Guangdong Governor Huang Huahua, and the Chaoshan
area was represented by the late former Party Secretary Xie Fei.
Officials with CYL ties who also come from these areas were blessed
during the recent vice governor promotions in Guangdong.


15. (SBU) New Vice Governors:
-- Huang Longyun, who is a Standing Committee Member of the
Guangdong CPC, is now Guangdong's Executive Vice Governor. He is a
native of Meixian in the Hakka area. Huang spent most of his early
career in the Guangzhou Steel Factory, which was a source of many
senior Guangzhou officials from 1973 to 1991. His principal
experience includes serving as the Party Secretary and Mayor of
Zhuhai and later Foshan. His Hakka background is helpful as he
fills the position left by You Ningfeng, also a Hakka native.
-- Lin Musheng (born 1956),was the former Party Secretary of
Shantou. He spent 10 years in the Guangdong CYL from 1985 to 1995,
and has been the Secretary of the Guangdong CYL since 1991. He is a
native of the Chaoshan area. He was Party Secretary and Mayor of
Shantou and Jieyang from 1995 to 2006 and is believed to have been
selected to replace retired Chaoshan Vice Governor Xu Deli.
-- Tong Xing (born 1951),is the former Party Secretary of Dongguan.
He spent his early career in Guangdong's CYL from 1977 to 1990,
becoming Deputy Secretary. In Dongguan, where he spent 16 years,
Tong upgraded the city's industrial structure to take on a more
high-tech and value-added dimension.

Corruption: Beijing Sends a Message in Case of Retired Senior
Official
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16. (SBU) Guangdong filed 3,743 investigation cases in 2006 against
officials who violated the law, according to the Guangdong CPC
Disciplinary Inspection Committee. The committee punished 23 cases
involving 23 officials at the director general rank, and 224 cases
involving 236 officials at the division chief rank. In all, cases
involving 686 officials were transferred to the PSB for criminal
penalties.


17. (SBU) The most senior official punished recently was Liu
Weiming, Executive Vice Chair of the Guangdong CPPCC and former Vice
Governor of Guangdong. Liu was sacked from the Guangdong CCPCC in
January for "serious violations of discipline." Liu also lost his
CPC membership and national delegate qualification. According to

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Xinhua, Liu, who is said to be the nephew of the late President Liu
Shaoqi, helped his son obtain a lucrative loan from a provincial
state-owned enterprise for a real estate project in Shenzhen in

1992. It is very unusual for the CPC to punish a semi-retired
senior official for a misdemeanor occurring 15 years ago. Similar
cases in which retired corrupt officials were punished have also
occurred recently in Henan and Jiangsu. These cases are believed to
be serious warnings from Beijing to provincial and local officials.


Comment
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18. (SBU) Beijing is likely to continue to tighten its control over
Guangdong through official appointments and anti-corruption efforts.
However, the CPC personnel appointment mechanism has shown little
improvement in its overall transparency and fairness. The
appointments of Guangdong Vice Governors Tong Xing and Lin Musheng
show that officials with CYL backgrounds continue to be favored for
promotion.

GOLDBERG