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