DPO CALLS ON SHANGHAI AGRICULTURAL COMMISSION CHAIRMAN

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000531 SIPDIS SIPDIS DEPT FOR EAP/CM, INR/B AND INR/EAP STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE STATE PASS USDA FAS ELECTRONICALLY USDA FAS FOR ITP/SHEIKH TREAS FOR OASIA - DOHNER/CUSHMAN, WRIGHT USDOC FOR ITA/MAC - A/DAS MELCHER, MCQUEEN NSC FOR WILDER AND TONG E.O. 12958: DECL: 8/23/2032 TAGS: PGOV PINR EAGR ECON CH SUBJECT: DPO CALLS ON SHANGHAI AGRICULTURAL COMMISSION CHAIRMAN SHANGHAI 00000531 001.2 OF 002 CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer, U.S. Embassy, Beijing, Department of State. REASON: 1.4 (b),(d) ¶1. (SBU) Summary: On August 8, DPO and Poloff met with Shanghai Agricultural Commission Chairman Xu Lin. According to Xu, although agriculture only occupied a small percentage of Shanghai's overall GDP, it remained a critical segment. Local residents were especially concerned about this segment of the economy of late due to rising prices of pork and vegetables. The Agricultural Commission was focused on allowing market forces to govern prices, while resolving structural problems that would hinder rapid market corrections and regulating the safety of agricultural products for consumers. Xu had also recently traveled with Shanghai Party Secretary Xi Jinping to Jiangsu and Zhejiang to discuss regional economic cooperation and integration. End summary. -------------- -------------- Agriculture, a Small but Important Part of Shanghai -------------- -------------- ¶2. (SBU) Xu explained that although agriculture accounted for only 0.9 percent of Shanghai's overall GDP in 2006, it was a critical issue for Shanghai's government. Shanghai's total land area was 6,400 square kilometers, the "downtown" portion of which only occupied approximately 1,000 square kilometers. Currently, there were only 3.5 million mu of cultivated land--with 1.6 million mu engaged in growing rice--with the rest of the land being used primarily for industrial, manufacturing or residential purposes. Given the relatively small amount of farmland, Shanghai was focused on using "high productivity" farming methods to get the most out of its limited space. Shanghai enjoyed certain advantages in this area, such as sufficient funding, professional expertise, a favorable geographic location, technological innovation, and developed industry. One of the main purposes of the Agriculture Commission was to coordinate Shanghai's advantages. -------------- -------------- Pork and Vegetables: You Can't Eat What You Don't Have -------------- -------------- ¶3. (SBU) Xu noted that Shanghai residents were most sensitive to price increases in pork and vegetables. Although these two areas had seen recent price increases, Xu believed that in general, production and consumption were balanced, and indeed, in some years, there was surplus supply. While market principles generally governed agriculture, there were some structural problems that needed to be corrected. Last year, for instance, the market price for pork was very low, which discouraged farmers from raising pigs. This led to the dearth in pork this year and the accompanying skyrocketing prices for consumers. ¶4. (SBU) Xu said that Shanghai residents consumed about 9 miilion pigs per year. One quarter of the pork was raised locally, while the remaining three-fourths came from neighboring provinces, including Zhejiang, Jiangsu, Anhui, Shandong, and Henan. These provinces all viewed Shanghai as a stable market for their pork. Shanghai did not import or export much pork from or to foreign countries. In order to maintain local production, this year, Shanghai began offering subsidies for farmers to maintain sows. Xu noted that it takes about 20 months for sows to reach breeding age, and hence, if they are not kept from slaughter, could seriously impact the speed with which the pork market corrects itself. ¶5. (SBU) Xu said that prices for vegetables took less time to correct. Shanghai residents preferred green leafy vegetables that were relatively fast growing. Recent natural disasters and Shanghai's excessive heat and humidity had driven prices up as crops were destroyed (Shanghai's vegetable supply had been reduced to 3,800 tons during July). However, reports as of August 7 claimed that the supply had returned to normal levels and Xu expected prices to level off. ¶6. (SBU) Xu said that the Agricultural Commission was more concerned with food safety and quality than market prices for vegetables. He explained that there are strict rules governing SHANGHAI 00000531 002.2 OF 002 the frequency and amount of fertilizers and pesticides and how close to harvest these chemicals could be used. Testing equipment was available to farmers and also at food markets. Moreover, the Agricultural Commission performed random checks on food quality. -------------- Expanding Yangzi Delta Regional Cooperation -------------- ¶7. (SBU) Xu also discussed his recent trip to Zhejiang and Jiangsu Provinces with Shanghai Party Secretary Xi Jinping. The visit had been to promote greater cooperation between the three Yangzi Delta Region economic powerhouses. Xu said that Shanghai needed to learn from the innovation and practical work styles found in these provinces. For instance, Zhejiang had a robust and highly developed private economy. While Shanghai was striving for a more diversified economy, it had more of a state-owned enterprise tradition. ¶8. (SBU) Xu said that Xi Jinping was focused on having the Yangzi River Delta Region cooperate more, expand its overall influence, and play a larger role in the national economy. Xi also wanted to more fully integrate the region to allow Zhejiang and Jiangsu to play more crucial roles in regional development. To do so, Xi was advocating greater cooperation in transportation infrastructure construction (particularly port integration),environmental protection, technological innovation, and preparing for the 2010 World Expo in Shanghai. -------------- Bio Comment: A Man Who Knows His Stuff -------------- ¶9. (C) Xu Lin, 44, is a college-level educated native of Shanghai. Chinese official press has referred to him as a popular "political star." Xu presented himself with professionalism and poise. He was on his brief during the conversation. Xu was able to speak extemporaneously and provide technical details about issues that were "in the weeds" without breaking his stride. While he entertained side questions, Xu was in charge of his meeting. Due to time constraints, Xu had precisely 30 minutes to meet with the DPO who initially presented Xu with three questions. Without once looking at his watch, Xu spent almost exactly 10 minutes on each topic, ending the meeting on time. Despite the time constraints, the meeting did not feel rushed and Xu was comfortable with a question and answer format. ¶10. (SBU) Xu was appointed to his current position in May 2007. Xu was previously the Civil Affairs Bureau (CAB) Director, a position he had held since 2003. He was directly responsible for NGO work under the CAB. Xu spent his early career in Shanghai's Nanhui District, where he served in various positions in the Communist Youth League, party, and government organizations. In 1995, Xu became a deputy party secretary for Shanghai's Jiading District. From 1995-98 he was seconded as deputy party secretary in Shigatse, Tibet and the group chief of the Liaison Group for Assisting Tibetan Cadre in the first such group sent from Shanghai. ¶11. (SBU) In 1998, Xu returned to Shanghai from Tibet to serve as Vice Chairman, Deputy Party Secretary, and General Manager of the Shanghai Agriculture Industry Commerce Supermarket (Group) Company, a large supermarket chain with over 400 outlets in Shanghai and the surrounding provinces that employed more that 12,000 workers. In 2000, Xu was promoted to CEO, Party Secretary, and General Manager of the company. SIPDIS ¶12. (SBU) According to a press report, Xu's colleagues at the CAB described him as a "workaholic" with "good decision-making and coordination ability." He does not speak English. JARRETT