CORRECTED COPY--CONTACTS DISCUSS RECENT SHANGHAI PERSONNEL

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000142

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DEPT FOR EAP/CM, INR/B AND INR/EAP
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE
TREAS FOR OASIA - DOHNER/CUSHMAN
USDOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN
NSC FOR WILDER AND TONG

E.O. 12958: DECL: MANUAL REVIEW
TAGS: PGOV PINR EINV ECON CH
SUBJECT: CORRECTED COPY--CONTACTS DISCUSS RECENT SHANGHAI PERSONNEL
MOVES

REF: SHANGHAI 106

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CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer, U.S.
Consulate, Shanghai, Department of State.
REASON: 1.4 (d)


1. (C) Summary: According to one contact, more than half of
Shanghai's vice mayors have been or are rumored to soon be
removed and several high-level officials have been reshuffled in
a bid to pave the way for an outsider to come to Shanghai in one
of the top leadership positions. At least one vice mayor, Yang
Xiong, who was probably implicated in the Chen Liangyu scandal,
was being protected by party elder Jiang Zemin because of Yang's
business connections to Jiang's elder son. A separate contact
said that Huang Ju was considering divorcing his politically
sensitive wife, suggesting--if true--that Huang's illness may
have a political element to it. While many contacts in Shanghai
have been reluctant to speculate on where Han will end up once
the dust settles, one contact, close to Han's family, claimed
that the decision had been made and Han would be the new Party
Secretary. End summary.

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Vice Mayors Get the Shaft Gently
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2. (C) In recent months, Chinese and Hong Kong press reported
that five of Shanghai's eight vice mayors had been or were being
transferred to new positions, leaving two slots currently
unfilled. According to a February 27 article in Hong Kong's
South China Morning Post, Executive Vice Mayor Feng Guoqin was
moving off to head the Shanghai Chinese People's Political
Consultative Conference (SCPPCC) replacing Jiang Yiren.
However, Shanghai YMCA Secretary General Wu Jianrong told FSN
Political Assistant on February 26 that Feng would chair the
Shanghai Municipal People's Congress (SMPC) replacing Gong
Xueping. No further information was available on what would
happen to the incumbents in either position.


3. (SBU) According to a February 27 Xinhua report, Vice Mayor
Yan Junqi has already moved on to Beijing as vice chairwoman of
the China Association for Promoting Democracy. Sina.com
reported that vice mayors Zhou Yupeng and Liu Yungeng had been
elected Vice Chairman of the SMPC on February 3. The Shanghai
Municipal People's Congress announced in October that former
Secretary General Yang Dinghua had been promoted to Vice Mayor,

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presumably filling the position vacated by Yang Xiaodu that same
month. Yang Xiaodu had transferred to the Shanghai Party
Standing Committee and was concurrently Director of the United
Front Work Department, according to an October Xinhua article.
The six Shanghai vice mayors currently remaining in their
positions are: Feng Guoqin (rumored to be departing); Yang
Xiong; Zhou Taitong; Tang Dengjie; Hu Yanzhao; and Yang Dinghua.


4. (C) During a March 2 conversation, Tongji University
Professor and CPPCC member Frank Peng said that all of these
personnel moves were related to the Chen Liangyu scandal. He
explained that even though the removed vice mayors were staying
in Shanghai, their transfers to the United Front, CPPCC or the
SMPC stripped them of all real authority and were intended to
put them in sinecures. All of these vice mayors were involved
to some degree in the Chen case. Peng opined that there was
probably not enough evidence of their malfeasance to indict them
or that Beijing had decided to ameliorate the impact of the case
on Shanghai's economic stability (Reftel) and opted to
politically neuter them without subjecting the city to another
round of arrests.

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Musical Chairs Continues: Send in the Clowns
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5. (C) In addition to the vice mayors, several other high-level
Shanghai posts have been reshuffled. Former Shanghai
Development Planning Director Li Liangyuan has backfilled the
Secretary General slot vacated by Yang Dinghua. Former Director

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of Civil Affairs Xu Lin has moved laterally to fill the position
of Shanghai Agriculture Committee Director vacated by Yuan
Yixing. (Note: No information was available on what had
happened to Yuan. End note.) A relatively-unknown official
named Wang Wei replaced Xu as Director of Civil Affairs.


6. (C) On March 2, Chinese-language news outlets, including
SHanghai's Wenhui Bao newspaper, reported that nine Party

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members involved in the pension scandal had been officially
expelled from the CCP and removed from their government
positions. The nine included:

- Labor and Social Security Bureau Director Zhu Junyi;

- Baoshan District Mayor Qin Yu;

- Municipal CCP Deputy Secretary General Sun Luyi;

- Shanghai Electric Group Corporation Party Secretary Wang
Chengming and Deputy Party Secretary Han Guozhang;

- Shanghai State-Owned Assets Supervision and Administration
Commission Deputy Director Wu Hongmei;

- Shanghai Industrial Investment Group Company General Manager
Wang Guoxiong;

- Shanghai Labor and Social Security Bureau Fund Supervision and
Management Section Chief Lu Qiwei;

- Municipal Housing, Land, and Natural Resources Bureau Land
Usage and Management Section Chief Zhu Wenjin.

These cases had already been sent to the judicial department for
prosecution. Not on the list was Shanghai State-Owned Assets
Supervision and Administration Commission Director Ling Baoheng,
who had been named early on as having been implicated in the
scandal. According to an October 25, 2006 Xinhua article, Ling
was "assisting" related departments with their investigations.


7. (C) Peng opined that all of these recent personnel moves
showed that Shanghai was preparing for an outsider to come to
Shanghai. Peng said it was impossible to accurately speculate
on what shape the Shanghai leadership would ultimately take, but
he believed Han Zheng would remain on in one of the top
positions after the Party Congress. It would be too
destabilizing to remove Han and Shanghai needed to have a local
boy in at least one of the slots. Peng did not see any of the
rising Shanghai officials as potential candidates for either
job. Peng also noted that many people, including Jiangsu Party
Secretary Li Yuanchao, had been offered the job but that they

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had all turned it down. He noted that the Organization
Department did not have the authority to force people at Li's
level to take jobs without their consent.


8. (C) In contrast, some "insiders" appeared confident that Han
was in line for a promotion. In late February, the neighbor of
Han Zheng's mother told a Consulate spouse that things had been
"all settled" and Han would be confirmed as Party Secretary.
This neighbor had previously acted us on Han Zheng's mother's
behalf for a visa to travel to the United States after Han's
father died earlier last year.

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Jiang Zemin Still Helps Where he Can
--------------


9. (C) Peng said that Jiang Zemin was still exerting his
influence in trying to actively protect two Shanghai officials
involved in the Chen case. The first was Shanghai Police Chief
Wu Zhiming. (Note: According to Peng, Wu is Jiang's nephew, but
other sources describe him as the nephew of Jiang's wife. End
note.) The other official was Vice Mayor Yang Xiong. Yang was
tied to Jiang's elder son, China Academy of Sciences Vice
President Jiang Mianheng, through Shanghai United Investment
(Shanghai Lianhe Touzi). Their company had bankrolled major
infrastructure development projects in and around Shanghai, such
as the maglev train and the Yangshan port project. It was not
clear where Peng obtained this information, but Peng mentioned
that his older son worked with Jiang Mianheng at Grace
Semiconductors in Shanghai.

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Huang Ju: Still Ill, Divorcing Wife?
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10. (C) Peng claimed that Huang Ju was sick and bedridden in a
military hospital in Shanghai. Peng dismissed rumors that this
was a political illness, noting that Huang had already drawn up
his will asking that his body be donated to science after his
death. Peng pointed out that this was the first time a request

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of that nature had ever been made by a senior leader. During a
subsequent March 5 meeting with the CG, Peng acknowledged that
he had seen that Huang had attended the opening ceremony of the
National People's Congress in Beijing, but that he looked
unwell. According to Peng, Huang was obviously ill, and was
wearing makeup. Peng speculated that Huang's attendance was not
necessarily because Huang's health had improved, but was
designed to maintain a facade of unity in the party.


11. (C) During a March 5 meeting, NGO Roots and Shoots Officer
Director Zhong Zhengxi passed along rumors in the NGO community
that Huang's wife, who headed the Shanghai Charity Foundation,
had diverted many of the foundations funds into speculative real
estate deals, which were, at least in part, linked to the Chen
Liangyu case. She said it was rumored that Huang was seeking a
divorce from his wife to protect his political fortunes.
(Comment: If such rumors are true, it would certainly bolster
the notion that Huang's illness is more political these days and
he is seeking an appropriate "cure." This would not be the
first time a Politburo member in trouble had sought to protect
himself by publicly distancing himself from an errant spouse, as
Jia Qinglin did in the wake of the Xiamen smuggling scandal.
End comment.)

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Hu-Zeng Relationship
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12. (C) Speaking on more national-level issues, Peng assessed
that several elders were supporting Hu, including Zhu Rongji, Li
Ruihuan, Qiao Shi, Wan Li, and Song Ping. In contrast, Peng was
hard-pressed to come up with a single elder supporting Zeng
Qinghong. Zeng's previous patron, Jiang Zemin, considered Zeng
a traitor and was not inclined to provide assistance ever since
Zeng helped Hu remove Jiang from the Central Military
Commission. Zeng's personal network or proteges and friends,
however, was significant. Citing recent reports of Zeng
pressuring Hu to let him stay on in the Politburo Standing
Committee after retirement age, Peng warned that Zeng would find
it increasingly hard to balance his relationship with Hu.
JARRETT