LOCAL REACTIONS TO XI JINPING'S APPOINTMENT AS SHANGHAI

C O N F I D E N T I A L SECTION 01 OF 03 SHANGHAI 000177

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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: X1 MANUAL REVIEW
TAGS: PGOV PINR EINV ECON CH
SUBJECT: LOCAL REACTIONS TO XI JINPING'S APPOINTMENT AS SHANGHAI
PARTY SECRETARY

REF: SHANGHAI 163

CLASSIFIED BY: Kenneth Jarrett, Consul General, , U.S.
Consulate Shanghai.
REASON: 1.4 (b),(d)




1. (C) Summary. The appointment of Xi Jingping as Party
Secretary has been heralded in the Shanghai official media, but

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business and academic contacts are taking a "wait and see"
attitude. Official newspapers and internet postings have
emphasized Xi's coastal experience and "rich social contacts."
One government contact noted that Xi would find Shanghai a more
challenging appointment than Zhejiang because the state sector
remained large. According to a few contacts, Xi was a
compromise candidate who was politically reliable and set his
priorities in accordance to Beijing. Two contacts noted rumors
that Shanghai Mayor Han Zheng would be replaced by Anhui
Governor Guo Jinlong, with one contact stating that her Beijing
sources believed there was a 50-60 percent chance that would
happen. According to one contact, Chen Liangyu was currently on
a hunger strike to protest his "unfair" treatment. Meanwhile,
Huang Ju's health continued to deteriorate. End summary.

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Xi's Last Hurrah, Li's Move up?
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2. (C) In the past week, Congenoffs have polled several
contacts in East China for views on the appointment of Xi
Jinping as Party Secretary. In separate meetings on March 28
with Poloff, Bao Jian, a politics and law reporter with the
People's Daily Shanghai Bureau and Tongji University Professor
and Shanghai Chinese People's Political Consultative Conference
(SCPPCC) member Frank Peng dismissed the idea that Xi owed his
promotion to Zeng Qinghong. Bao said Xi was politically
reliable and bureaucratically able to carry out Beijing's
wishes, but not terribly creative, making him acceptable to Hu
Jintao. Xi owed his promotion to his father's (Xi Zhongxun)
prestige and not his personal ties to a particular faction. She
said that Xi was not "too conservative" and overall was not a
bad choice for Party Secretary. Peng concurred with the idea
that Xi was a compromise candidate who was seen as
non-threatening by all factions and that his promotion was
largely given out of respect for Xi's father.


3. (C) Chairman of the Tianan Insurance Company Chen Pojian
noted at a March 28 lunch hosted by the CG that Xi was appointed
by Beijing, and would answer to Beijing. He added that when Xi
was Party Secretary in Zhejiang he set his priorities by
listening to the Central government, in contrast to Chen Liangyu
who based his priorities on his ambitions for Shanghai, which
was to make Shanghai into another Hong Kong. China already had
a Hong Kong and does not need another one. China, Chen said,
needed Shanghai to be a part of China.


4. (C) At the March 28 CG-hosted lunch, Deputy Director-General
of the Shanghai Municipal Financial Services Office Fang Xinghai
said that Xi would find it more challenging to manage the
economy in Shanghai. Since the state sector remained
substantial and the economy was already very developed. Lifting
Shanghai to the next level would not be easy. In contrast, Fang
said, most of Zhejiang's income and growth had been generated by
private enterprises. The fact that Xi's replacement, former
Deputy Director of the CCP Organizational Department Zhao
Hongzhu, had no economic experience whatsoever was an indication
that the leadership felt that Zhejiang would continue to do well
economically, no matter who was in charge. Fang also noted that
Xi would not be able to bring in his own lieutenants and would,
therefore, have to adjust to the Shanghai machinery.


5. (C) While most people believed that Xi's appointment would
come with a Politburo seat and, if he does well in Shanghai, he
could expect to be elevated to a higher position in the future,
some contacts had a contrary view. Bao said it was not a done
deal that Xi would receive a Politburo seat. During a brief
March 28 phone call, Nanjing University Professor Gu Su told

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Poloff that his contacts in Beijing had informed him the
previous day that Xi's move to Shanghai was likely his last and
that he would probably finish out his career in Shanghai. His
contacts informed him that Li Yuanchao's "chances are getting
large," meaning that it was almost certain that Li would be
heading to Beijing for an important post. Bao had also heard
that Li was heading for Beijing, with a possible promotion to
the Politburo Standing Committee in the works.

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"Public" Reaction Excited
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6. (U) A scan of recent press reporting and internet postings
showed several themes emerging in what appears to be Beijing's
official line regarding Xi. A March 25 article in the PRC-owned
Hong Kong newspaper Ta Kung Pao quoted Shanghai scholars who
believed that Xi would follow the central government's
decisions. Three other articles in the March 25 Ta Kung Pao
cited Xi's extensive experience with other "East China"
provinces as having qualified him to work in Shanghai. One
report cited Taiwan businessmen who believed that Xi's coastal
experience in Fujian and Zhejiang meant that Xi understood what
Shanghai needed for development. The same article cited other
"Shanghai officials" as saying that Xi was open minded and not
afraid to take risks. In a separate article, an anonymous
Shanghai official noted that Xi, a princeling, would help
improve communications with the central government due to his
"rich social contacts." In another article, another Shanghai
official claimed that the Chen Liangyu case demonstrated that it
was not good to have an official who was born and raised in an
area rise up to take the top post, and that it was wise to bring
in Xi, whose outsider status would change the "group" politics
left over from the Chen era.

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Han Zheng's Days Numbered?
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7. (C) In a sign that perhaps the debate over the extent of the
leadership changes is not over (reftel),one of the Ta Kung Pao
articles cited an anonymous "Shanghai official" who said that it
would be good if Han Zheng stayed on as Mayor to help maintain
the city's stability. The official said that Han would be able
to help Xi build Shanghai's leadership group and help Xi
acclimate to his new environs. The official warned that if Han
were removed as Mayor, it would have a significant impact on
Shanghai. Fang said that Han had been working hard to show he
was doing a good job, to forestall a transfer. Being Mayor of
Shanghai was better than serving as governor in a remote corner
of China.


8. (C) Bao said her sources in Beijing told her that there was
a 50-60 percent chance that Han would be replaced by Anhui
Governor Guo Jinlong. Bao had interviewed Guo before and found
him to have a dictatorial management style, uncreative, and
generally a lackluster leader. She believed that Guo's
connections to someone at the top--possibly Hu Jintao--accounted
for the possibility of a transfer. Although she had no
information that Guo himself was corrupt, Bao said she had
discovered many of the vice governors and more especially the
county and local leaders in Anhui to be particularly dirty. She
noted that the people in a Chinese government bureaucracy,
typically, followed the style of whoever was at the top.


9. (C) Peng said he had also heard rumors that Han might be
replaced by Guo. He believed that Han would probably end up in
Beijing as the head of the Environmental Protection Bureau.
Peng said that Beijing was currently focused on tearing down the
"feudal lord" concept among local leaders and trying to develop
three "regional economic pillars" including the Yangtze River
Delta, the Pearl River Delta, and the Bohai Crescent (including
Dalian and Tianjin). That was one reason that made both Xi and
Jiangsu Party Secretary Li Yuanchao appropriate for the Shanghai
Party Secretary job. Peng said that the debate on bringing Guo
to Shanghai reflected the growing importance the central
government was placing on Anhui and its desire to include Anhui

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in the Yangtze River Delta economic region.

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What of Chen?
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10. (C) Peng said Chen was currently on a hunger strike to
protest what he considered was his "unfair" treatment. Chen
intended to kill himself. However, the Chinese authorities
would not allow Chen to starve to death prior to his trial but
would force feed him if necessary.

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Huang Ju's Swan Song
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11. (C) Peng noted as an aside that Huang Ju was going from bad
to worse. According to Peng, Huang attended the National
People's Congress (NPC) meeting in early March in effect to say
goodbye to his friends. Peng had several friends who attended
the Shanghai delegation meeting where Huang spoke. These
contacts informed him that both Huang and the delegates--many of
whom owed their political careers to Huang--were moved to tears
by Huang's words. Peng assessed that Huang would either die or
retire by this coming autumn's Party Congress, but either way,
he would not have another chance to appear in public and had
therefore insisted on attending at least the NPC opening
ceremony.
JARRETT