UP, UP AND AWAY: SHANGHAI'S FY-07 VISA NUMBERS GO THROUGH

UNCLAS SECTION 01 OF 05 SHANGHAI 000792 SIPDIS SENSITIVE SIPDIS DEPT FOR CA/VO AND CA/EX ALSO FOR EAP/CM BEIJING FOR DCM, CG, NIV E.O. 12958: N/A TAGS: CVIS CMGT CH SUBJECT: UP, UP AND AWAY: SHANGHAI'S FY-07 VISA NUMBERS GO THROUGH THE ROOF SUMMARY -------------- ¶1. (U) Consular officers in Shanghai adjudicated 16 percent more NIV applications in FY-07 than in FY-06. This follows a 19 percent increase in FY-06 over the FY-05 NIV workload, which in turn was up 20 percent over FY-04. This cable not only reports the quantitative increases but also provides a qualitative overview of Shanghai's NIV applicant pool. (Cable offering a more in-depth qualitative analysis will follow septel.) Numbers from the first two months of FY-08 indicate that these trends will continue, giving Shanghai its fifth consecutive year of double-digit growth in NIV demand. (END SUMMARY) SHANGHAI NIV WORKLOAD TRENDS -------------- ¶2. (SBU) AmConGen Shanghai has experienced a steady increase in its NIV workload since the post-9/11 worldwide downturn in NIV demand in FY-02 and the impact of SARS across the Asia-Pacific region in FY-03. Starting in FY-04 and continuing to the present day, Shanghai's year-on-year growth rate in NIV workload has been at least 10 percent. FY-07 alone saw a 16 percent increase in overall visa demand over FY-06. Recent yearly visa applicant figures for Shanghai are shown in the table below: Year Number of Applicants Change in Volume -------------- -------------- -------------- FY-01 101,216 FY-02 95,965 - 5 percent FY-03 80,079 - 17 percent FY-04 87,921 10 percent FY-05 105,658 20 percent FY-06 125,907 19 percent FY-07 146,626 16 percent Figures available for the first months of FY-08 indicate that this double-digit increase in visa demand will continue in Shanghai, with the October 2007 NIV workload up 21 percent over October 2006, and November 2007 NIV adjudications up 19 percent over November 2006. Month Number of Applicants Change in Volume -------------- -------------- -------------- Oct.06 9,316 Oct.07 11,268 21 percent Nov.06 10,222 Nov.07 12,167 19 percent ¶3. (SBU) The following statistics are selected from Shanghai's FY-07 applicant pool. Standout categories among Shanghai's FY-07 NIV growth are J-1 applicants (27 percent) and petition-based applicants including H-1B and L-1 visas (36 percent). (NOTE: The numbers in this cable were generated using the NIV consular application and at-post resources. Shanghai does not process immigrant visas -- all Chinese IV cases are processed at AmConGen Guangzhou. END NOTE) B-1/B-2 Travelers -------------- ¶4. (SBU) General business and tourism travel (B-1/B-2) continues to be Shanghai's primary visa category, representing 77 percent of the total applicant pool in FY-07. As such, this category is the primary driver of FY-07 visa demand. The demand for B-1/B-2 visas in FY-07 increased by 16 percent over FY-06 numbers, mirroring the 16 percent increase in overall NIV demand over the same period. Year Number of B-1/B-2 Applicants Change in Volume -------------- -------------- -------------- FY-06 97,744 FY-07 113,446 16 percent Student Applicants -------------- ¶5. (SBU) Recently, the Institute of International Education (IIE) released its "Open Doors" report on international students in the United States. The report shows that Chinese enrollment SHANGHAI 00000792 002 OF 005 in U.S. tertiary institutions increased 8 percent over the past year, compared with an increase of 4 percent in general international student enrollment. IIE reported that a record 67,723 Chinese students are studying in the U.S., which represents 12 percent of the total 582,984 international student population (just 3,339 off the FY-03 all-time high of 586,323.) Of the total 67,723 Chinese students in the U.S., 15,027 (22 percent) came through Shanghai's visa section in FY-07. Shanghai saw a 19 percent increase in student visa applicants, compared with the 8 percent increase in overall Chinese enrollment. This is a reflection of the high standard of living in East China, with an increasing number of students able to qualify for visas and to afford study in the United States. Year Number of F-1 Applicants Change in Volume -------------- -------------- -------------- FY-06 12,642 FY-07 15,027 19 percent Generally speaking, Shanghai's student applicants fall into two distinct categories. One group is comprised of excellent students with outstanding standardized test (frequently perfect quantitative scores) and generous scholarships to well-known schools. The other group contains students without English skills who have been admitted without test scores to relatively small, lesser known (at least to Chinese applicants) schools. There is a large void between these two groups -- an absence of applicants headed to mid-sized regional and state schools. Exchange and Visitor Applicants -------------- ¶6. (SBU) In FY-07, exchange and visiting scholar applicants seeking J-1 visas increased by 27 percent, a much greater percentage than the increase in the general visa pool. Year Number of J-1 Applicants Change in Volume -------------- -------------- -------------- FY-06 4,222 FY-07 5,373 27 percent FY-02 Comparisons -------------- ¶7. (SBU) FY-02 is generally considered a watershed year for student and academic exchange visa applications. Due to post-9/11 safety fears and post-9/11 tightening of visa security, starting in FY-02 international students began to go someplace other than the U.S. to study -- Canada, Australia, U.K., etc. For Shanghai in FY-07, F and J applicant volume has not only returned to, but far surpassed pre-9/11, FY-01 levels. Year Number of F-1 Applicants Change in Volume -------------- -------------- -------------- FY-01 9,581 FY-07 15,027 57 percent Year Number of J-1 Applicants Change in Volume -------------- -------------- -------------- FY-01 2,742 FY-07 5,373 96 percent Third Country Nationals -------------- ¶8. (SBU) As China's economic center, Shanghai has an ever-increasing expatriate community. This fact is reflected by the increase in Shanghai's third country national (TNC) visa applicants, which grew 19 percent in FY-07. Year Number of TNC Applicants Change in Volume -------------- -------------- -------------- FY-06 1,928 FY-07 2,300 19 percent Petition Travelers -------------- SHANGHAI 00000792 003 OF 005 ¶9. (SBU) Petition-based applications (H, L, M, O, and P categories) grew more than any other visa category in FY-07. In particular, Shanghai saw a significant increase in the number of highly skilled Chinese workers (H-1B) and Chinese managers (L-1),with a total increase in petition-based travelers of 36 percent. Year Petition-Based Applicants Change in Volume -------------- -------------- -------------- FY-06 6,359 FY-07 8,652 36 percent MANTIS Program -------------- ¶10. (SBU) Despite an increase in overall applicant volume (especially J-1 visiting scholars),Shanghai's special advisory opinion (SAO) MANTIS volume decreased by 5 percent during FY-07. In response to this decrease, Shanghai consular management queried SAO coordinators in Washington who replied that Shanghai's current SAO volume is appropriate. This implies that in the past Shanghai ConOffs had erred on the side of caution in their decisions to submit SAO requests and require MANTIS clearances. Year Number of Applicants Change in Volume -------------- -------------- -------------- FY-06 6,882 FY-07 6,639 - 5 percent FAO Applicants -------------- ¶11. (SBU) Chinese applicants carry one of four kinds of passport: diplomatic, service, public affairs, or private. Diplomatic, service, and public affairs passports are collectively referred to as "official" passports and are issued to members of governmental organs or employees of state-owned enterprises on official travel. Applications from these passport holders are submitted through the provincial Foreign Affairs Offices (FAO), which ensure that the applicants generally have verified employment and are traveling for official purposes. Whereas in Beijing FAO passports constitute a quarter of the workload, Shanghai's FAO applicants represent only 15 percent of the visa pool. Although the number of "official" applicants increased only slightly (2 percent) in FY-07, FAO applicants continue to be "high maintenance" applicants -- frequently requesting expedited services and routinely expecting preferential treatment. Year Number of FAO Applicants Change in Volume -------------- -------------- -------------- FY-06 21,399 FY-07 21,724 2 percent AMCHAM Program -------------- ¶12. (SBU) Shanghai is home to Asia's largest American Chamber of Commerce (AmCham). U.S. invested companies in Shanghai account for approximately one-eighth of the total of 40,000 foreign invested companies in Shanghai, amounting to USD 11.2 billion worth of investment as of August 2007. Shanghai's AmCham boasts more than 1,500 member companies, 3,600 members, and about 80 new members a month. To facilitate business with the U.S., Shanghai offers a special visa appointment process that expedites visa interviews for member companies of AmCham's Corporate Visa Program (CVP). Participation in Shanghai AmCham's CVP program is on the rise, growing 23 percent in FY-07. Year Number of CVP Applicants Change in Volume -------------- -------------- -------------- FY-06 9,450 FY-07 11,605 23 percent Despite a 23 percent increase in visa volume, NIV refusals for CVP applicants dropped dramatically in FY-07. This would seem SHANGHAI 00000792 004 OF 005 to indicate that Shanghai is becoming more accommodating to business travelers to the United States Year Number of AmCham Refusals Change in Volume -------------- -------------- -------------- FY-06 232 FY-07 141 - 40 percent Visa Refusals -------------- ¶13. (SBU) Visa officers are not just bullish about AmCham applicants. There is a perception among Shanghai visa officers that the quality of applicants in the East China region is generally improving. The FY-07 drop in refusal rates bears this out. As can be seen in the table below, both the raw refusal rate and the adjusted refusal rate (taking into account refusals subsequently overcome or waived) fell significantly from FY-06 figures: Year Refusals Raw Refusal Rate Adjusted Refusal Rate -------------- -------------- -------------- -------------- FY-06 33,506 36 percent 21 percent FY-07 29,826 26 percent 14 percent The decrease in refusals appears to have accelerated recently, as demonstrated by a comparison between October 2006 and October 2007, with a year-on-year decrease from 30 percent to 16 percent. Month Number of Refusals Raw Refusal Rate -------------- -------------- -------------- Oct. 06 2,168 30 percent Oct. 07 1,532 16 percent Many factors likely contribute to this decrease in refusal rates, but it would seem that the simplest explanation is that Shanghai's applicants are significantly better than many other regions in China, and are getting better all the time. TDY exchanges bear this out. In FY-07, Shanghai participated in several NIV officer exchanges with Guangzhou, Hong Kong, Taipei, Beijing, Shenyang, and other posts. Line officers say that TDY-ing out of Shanghai, and receiving TDY-ers from other areas in the region allows them to more accurately evaluate Shanghai's visa applicant pool. When push comes to shove, applicants from Shanghai are more likely to return (and overcome 214(b)) because they see greater opportunities in Shanghai than they might have in the United States. Fraud Workload -------------- ¶14. (SBU) Aware of a decreasing refusal rate, Shanghai has been extra-cautious to ferret out fraud and discourage out-of-district applicants who "visa shop" at higher issuance posts. Although the number of refusals went down, the number of fraud investigations in Shanghai increased by 75 percent. Year Fraud Investigations Percent Increase -------------- -------------- -------------- FY-06 425 FY-07 745 75 percent Despite a decrease in refusals, Shanghai's consular district remains very economically diverse, with many impoverished regions. Eastern China's economic wave has left many people behind. There are several well-known high fraud areas, and document fraud is rampant, especially in and around the production "boomtown" of Wenzhou. As with most of China, family-based fraud is also an ongoing concern. Visa Reciprocity -------------- ¶15. (SBU) Shanghai routinely issues 12-month, multiple-entry visas to Chinese nationals applying in the B-1/B-2 category. By comparison, China normally issues Americans tourists a 1-month, single-entry visa. China-wide numbers for calendar year 2006 showed that 18 percent of B-1/B-2 applicants had been issued a visa in the previous 24 months, and that 28 percent had been SHANGHAI 00000792 005 OF 005 issued a visa in the previous 60 months. Based on these numbers, a significant increase in visa validity reciprocity would decrease B-1/B-2 demand (the primary visa category) by almost 40 percent. The current limited visa reciprocity not only ensures that Shanghai's visa demand will continue to outstrip its resources, but it also means Shanghai's applicant pool will see double-digit growth in FY-08, FY-09, and beyond. JARRETT