BEIJING OFFICIAL VISITS HONG KONG FOR FUNERAL,

C O N F I D E N T I A L SECTION 01 OF 02 HONG KONG 002465

SIPDIS

NOFORN
SIPDIS

DEPARTMENT FOR EAP AND EAP/CM
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 09/21/2032
TAGS: PGOV PREL PINR CH HK SOCI
SUBJECT: BEIJING OFFICIAL VISITS HONG KONG FOR FUNERAL,
"OPINION-GATHERING"

REF: A. HONG KONG 02202

B. HONG KONG 02359

C. HONG KONG 02333

Classified By: E/P Section Chief Laurent Charbonnet; Reasons 1.4 (b, d)


1. (C) Summary: Director Liao Hui of the PRC Hong Kong and
Macau Affairs Office (HKMAO) visited Hong Kong September 18
for the funeral of journalist and veteran Beijing loyalist Xu
Simin. Following the funeral, attended by numerous
high-level political and business figures, Liao moved to
Shenzhen for discussions with various Hong Kong political
contacts regarding recent political developments in the Hong
Kong Special Administrative Region (HKSAR). According to
Hong Kong NPC delegate Allen Lee Peng-fei (protect),Liao's
visit was sparked by Anson Chan's recent decision to enter
the December 2 Legislative Council (Legco) by-election. Lee
said the central government is concerned that Chan would gain
further political legitimacy and stature with a seat in
Legco. Beijing also is worried about her candidacy's impact
on the "Green Paper" political reform process, the November
18 district council election, the 2008 Legco election, and
even the 2012 Chief Executive (CE) election, said Lee. Lee
estimated Chan would defeat her most likely rival, former
Secretary for Security Regina Ip, by a 60:40 margin. End

SIPDIS
Summary.


2. (C) Comment: Other motivations notwithstanding, the
dispatch of Liao to Hong Kong and Shenzhen suggests a fair
level of concern in Beijing regarding Chan's unexpected entry
into the by-election race. The central government seems to
fear that an effective Chan campaign could energize and
propel the Hong Kong pan-democrats to success in the November
18 district council election. Then, a resounding Chan
victory in the December 2 by-election would provide a
platform for her to build further momentum for next year's
Legco general election and, more worryingly, for the 2012
Chief Executive contest. End Comment.


3. (SBU) HKMAO Director Liao Hui visited Hong Kong September
18 to attend the funeral of veteran Beijing loyalist Xu
Simin. Xu was the founder and publisher of the pro-Beijing
"Mirror" magazine, which often sharply criticized comments by
U.S. Consuls General and other perceived acts of foreign
"interference" in Hong Kong. His outspoken opinions and
sharp criticisms on various topics (including, on occasion,
the Chinese Communist Party) earned him the nickname "Big
Cannon Xu." He served as a Chinese People's Political
Consultative Conference (CPPCC) local delegate from 1949
until his retirement in 2003, and also as a CPPCC Standing
Committee member. Xu died September 9 at age 93.

Strategy Meetings in "Less Sensitive" Shenzhen
-------------- -


4. (C) Following the funeral, Liao traveled back across the
border to Shenzhen, where he spent several days conferring
with various pro-government Hong Kong representatives on
recent developments in the HKSAR. Liao and his contacts
reportedly preferred to meet in Shenzhen to avoid press
attention and to minimize accusations of central government
meddling in local affairs. Hong Kong political commentator
and National People's Congress (NPC) delegate Allen Lee
Peng-fei on September 20 confirmed to us that Liao was in
Shenzhen to discuss Hong Kong political issues. According to
Lee, the central government was surprised and extremely
concerned that Anson Chan had joined the by-election. He
said Beijing's concern was not just the by-election, but
rather the political legitimacy and mandate Chan could claim
if she won. Liao's mission was to "gather opinions" about
why Anson had decided to run and what impact she would have
on the Green Paper, district council election, 2008 Legco
election, and 2012 CE election.

By-Election Outlook
--------------


5. (C) Lee, an advisor to Chan who maintains good relations
with almost all sides in Hong Kong politics, also provided
his assessment of the by-election. Although Ip - if she
joins the race -- would be a strong opponent, he believed
Chan would win by a 60:40 margin. Lee, in an analysis that
he provided to Chan before her declaration, estimated she
would receive nearly all of the votes cast in the 2004 Legco
election for the Democratic Party, the Article-45 Concern
Group, and the Frontier, for a total of about 205,000. The
pro-government candidate, presumably Ip, would win all of the

HONG KONG 00002465 002 OF 002


Democratic Alliance for the Betterment and Progress of Hong
Kong (DAB) votes and most but not all of the ballots cast for
independent Legco president Rita Fan, for a total of about
140,000.


6. (C) In Lee's opinion, however, if Ip ran she would have
"nothing to lose." A reasonably close loss to Chan in the
by-election would leave her politically undamaged, and she
would defeat the pro-business Liberal Party's Miriam Lau "by
a mile" in the 2008 Legco general election. If through some
unforeseen contingency Ip were to defeat Chan, then she would
be re-elected in 2008 and in place to contest the 2012 CE
election. Lee said he had half-jokingly told Chief Secretary
(CS) Henry Tang that "she's your opponent for (the CE race
in) 2012!"

Another Patriotic Funeral in Hong Kong
--------------


7. (SBU) With his coffin draped with the PRC national flag
and hundreds of political leaders and business magnates in
attendance, Xu's funeral was similar to the August 24
ceremony for the late DAB Chairman and Legco member Ma Lik,
whose death necessitated the December 2 by-election (ref a).
The 292-member funeral committee to oversee preparations
included CE Tsang, former CE Tung Chee-hwa, and tycoon Li
Ka-shing. Floral wreaths from President Hu Jintao, NPC
Standing Committee Chairman Wu Bangguo, and Premier Wen
Jiabao adorned the funeral hall. In addition to Liao,
Director Gao Siren of the Central Government Liaison Office
in Hong Kong represented Beijing; Gao, along with former CE
Tung, CS Henry Tang, and others served as pall bearers. Hong
Kong CE Tsang attended the funeral. In his eulogy, Gao
praised Xu as a "loyal critic of the Chinese Communist Party"
and lauded his service fighting the Japanese during World War
II. He also noted Xu's support for the "one country, two
systems" concept and his "courageous" views on numerous
issues. Xu's body was taken to Shenzhen for burial.


8. (SBU) The attendance of Liao, who was not present for Ma's
funeral, may have been related to his family ties to Xu.
Liao's father, Liao Cheng-zhi, formerly headed the Overseas
Chinese Affairs Office and was honorary chairman of the
Federation of Returned Overseas Chinese; in those capacities,
he is believed to have maintained professional and private
contacts with Xu, who was born and grew up in Burma. Liao's
grandfather, Liao Zhi-gao, was a close confidant of Sun
Yat-sen, while his grandmother, He Xiang-ning, was chair of
the NPC Standing Committee from 1954 until her death in 1972.

Selective Press Coverage
--------------


9. (C) All of Hong Kong's major Chinese and English language
newspapers, including both the pro-PRC and the independent
dailies, covered Liao's travel to Hong Kong and attendance at
the Xu funeral. Two Chinese papers - the "Hong Kong Economic
Times" and the "Apple Daily" - noted that Liao might use his
visit to collect information on the by-election campaign.
Only one paper, the independent English language "South China
Morning Post" (SCMP),reported Liao's travel to Shenzhen for
additional meetings with Hong Kong political figures. The
SCMP, citing an unnamed source "close to Beijing," said the
central government was concerned about the by-election and
dispatched Liao to confer and strategize with
"representatives from different community sectors."
According to the article, the pro-government and pro-Beijing
camp hoped their candidate, presumably Ip, would win at least
38 percent of the vote, which they would regard as a
successful outcome.
Cunningham