DINNER WITH JIANGSU PARTY SECRETARY LI YUANCHAO

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000530

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 8/23/2042
TAGS: PGOV PINR EINV ETRD ECON CH
SUBJECT: DINNER WITH JIANGSU PARTY SECRETARY LI YUANCHAO

SHANGHAI 00000530 001.2 OF 002


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




1. (C) Summary: During an August 9 dinner, Jiangsu Party
Secretary Li Yuanchao said that he had been ordered by Vice

SIPDIS
Premier Wu Yi to increase his province's imports. He also
discussed his views on democracy, noting significant pressure on
the party from the people to move forward with implementing
democratic reforms. Li believed that competitive elections for
top party slots could be held within 20-30 years, but asserted
that the situation at present would not allow for them. Li was
described as an "up-and-comer" by his staff, but he would not
comment directly on his prospects for promotion to a slot in
Beijing. End summary.


2. (C) On August 9, DPO and Poloff attended a dinner hosted by
Jiangsu Party Secretary Li Yuanchao for Congressman Wexler and
arranged by the Congressman's friend and traveling companion,
U.S.-based investor in Chinese real estate Neil Gu. Li said he
had just returned from Shaanxi province where he had attended a
conference on supporting China's western provinces. Indeed,
prior to entering the restaurant, the FAO insisted the U.S.
delegation remove their jackets and ties to accommodate Li's
attire, since Li had come directly from the airport. Li said
that Jiangsu had especially close economic ties with Shaanxi and
Shanxi provinces. Jiangsu provided investment capital to these
provinces, who in turn, provided raw materials for Jiangsu's
manufacturers.

--------------
Jiangsu Under Orders to Import More
--------------


3. (C) Li said that Vice Premier Wu Yi had recently given him
an explicit order that Jiangsu needed to import more.
Specifically, Li was trying to figure out how to import more
from the United States. Currently the province's number one
source of imports was Japan. Li agreed with the Congressman
that since Japanese products relied on U.S. technology, it made
more sense to import directly from the United States. Li also
noted the Carlyle Group's effort to acquire a share in Xugong
Machinery Group, noting that he expected a resolution on the
issue "soon." Li appeared exasperated by the difficulties the
deal has run into.

--------------
Democracy in 20 Years
--------------


4. (C) During an after-dinner private conversation, Li told DPO
and Poloff that he was optimistic about the prospects for
democracy in China. He explained that it was "important" for
the party to develop greater intra-party democracy, including
greater openness, transparency, and competition. There was
significant "bottom-up" pressure coming from the public that was
driving democratic reform initiatives. In Jiangsu, for
instance, they were experimenting with allowing anyone to apply
for any government or party job--including party secretary--at
the prefecture level and below. Throughout China, there were
also unspecified experiments at the township level introducing a
level of competition for top party slots.


5. (C) Li believed that within 20-30 years, it would be
possible to have competitive public elections for Politburo or
even Politburo Standing Committee positions. This kind of
election could not be held now, however, because the public was
not "familiar enough" with the national-level leaders to make
good decisions. Li warned against "too much democracy" or "big
democracy," noting that during the Cultural Revolution
(1966-76),the people reined supreme, leading to thousands of
violently competing factions and widespread chaos, and in the
end the Communist Party had to reassert its authority.


6. (C) Li, himself, was comfortable as a "man of the people."
He accompanied the delegation on a walk through a park in the
evening without much of a security presence beyond one or two
plain clothes officers in the crowd. Although he did not cause
much of a stir among the people, it was clear that he was
recognizable and respected. At one point, when Li walked
through a group of ballroom dancers practicing in the park, the
DJ turned off the music and everyone grew silent. Li, almost
embarrassed, told them to put the music back on and enjoy

SHANGHAI 00000530 002.2 OF 002


themselves.

-------------- --------------
A Courteous Host, a Rising Star, and a "Friend of America"
-------------- --------------


7. (C) Li was a gracious host. During the dinner, he noticed
that the Congressman was not eating a shrimp dish and inquired
as to why. Wexler explained that it was not kosher, prompting
Li to ask what kosher standards were. Li then sent his own
shrimp back, reviewed the menu, and had the staff change
whatever was being served to Wexler, Wexler's son, and himself
to foods that the Congressman could eat. Li had met with Wexler
on two other occasions; in 2006 Li had hosted another dinner for
Wexler and the Congressman had also hosted Li in Washington.
Wexler also hosted Li's son in Washington D.C. last year while
he was in the United States looking at graduate schools.


8. (C) Jiangsu FAO Director Wang Hua told the DPO that Li was
an up-and-comer who could be Premier within five years. Li,
himself, was more coy about his prospects, replying to Poloff's
query about a potential upcoming move to Beijing that "things
are not always as they appear in the press."


9. (C) Wang also told the DPO that Li is a "close friend of
America." During the discussion with DPO and Poloff, Li
expressed that the U.S.-Sino relationship was important to both
sides. He hoped it would not become confrontational, like the
former U.S.-Soviet relationship. Li believed that most
"executive branch" leaders on both sides realized the importance
of the Sino-American relationship, but averred that the U.S.
Congress seemed to have less of an understanding.

--------------
The Happy Family
--------------


10. (C) Li's son, Li Haijin, graduated in Spring 2007 from
Shanghai's Fudan University with a degree in biostatistics. He
had already secured a job with Novartis doing biomedical
research in Switzerland, where he intended to work for one or
two years before pursuing a graduate degree at an American
university. Haijin hoped to attend Harvard; his father had also
received training at the Kennedy School. Haijin speaks English
and is able to carry on basic conversations. He does not speak
German, although he said he intends to learn it while he is in
Switzerland. Haijin, like his father, enjoys playing tennis.


11. (C) Li's wife, Gao Jianjin, is the Director of the Central
Conservatory of Music's Department of Music Education. She
lives in Beijing and travels weekly to see her family by train;
Li was quick to point out that she does not fly. Like her
husband and son, she is a Fudan graduate. Gao seemed quiet and
demure, perhaps, in part, reflecting a lack of English ability
(she neither appeared to understand nor speak English). Gao
plays the violin.


12. (U) Congressman Wexler did not have an opportunity to clear
this cable.
JARRETT