SOUTHEAST TIBET: ECONOMIC AND SOCIAL OVERVIEW

C O N F I D E N T I A L SECTION 01 OF 03 CHENGDU 000289

SIPDIS

DEPT FOR EAP/CM, INR, G

E.O. 12958: DECL: 12/16/2033
TAGS: ECON PGOV SOCI CH
SUBJECT: SOUTHEAST TIBET: ECONOMIC AND SOCIAL OVERVIEW

REF: A. CHENGDU 288

B. CHENGDU 287

C. CHENGDU 238

CHENGDU 00000289 001.2 OF 003


CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate
General, Chengdu.
REASON: 1.4 (b),(d)




1. (C) Summary: According to Linzhi Prefecture officials in
the southeast of China's Tibet Autonomous Region (TAR),ninety
percent of local government expenditures are subsidized by the
central government as well as the provincial governments of
Fujian and Guangdong. A major source of income for local
Tibetan families is the gathering of caterpillar fungus and any
significant decline in the price of this lucrative ingredient
used in Chinese medicinal tonics can lead to social instability.
Border trade is "informally" permitted to take place with
Burma. Migrants from inland China appear to be the principal
beneficiaries of incentives given to local businesses. Ethnic
Han-controlled prostitution is unabashedly out in the open in
Linzhi's Bayi Township. End Summary.

Reform and Development Commission
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2. (SBU) During a week-long visit in late November to Linzhi
located in southeastern TAR, officials at the prefecture's
Reform and Development Commission discussed with ConGenOff the
local economy and government support from other areas of China.
Linzhi has a population of 178,000 people living in seven
counties, 45 townships and 526 villages. It has an average
elevation of 3100 meters and is 46 percent forest with a total
of 2.64 million hectares of forestland. Inflation during 2008
was officially in line with national trends at between four to
five percent. The manufacturing and agricultural sectors have
registered some progress during the year, but the service sector
declined as overall investor confidence fell.


3. (SBU) According to the Reform and Development Commission,
official subsidies account for about 90 percent of local
government expenditures. The central government provides about
70 percent of assistance with coastal provinces, especially
Fujian and Guangdong, providing Linzhi with another 30 percent,
mostly by building infrastructure and providing "Help Tibet
Cadres." The central government invested RMB 700 million (USD
100 million) to build a tunnel through a mountain and a road to
Motuo County, one of the few counties in the PRC that had not
been accessible by road.


4. (SBU) According to the Reform and Development Commission,
persuading herders to maximize their income by killing yaks when
they are three-years-old has been difficult. The herders are
sentimentally attached to the animals and will only kill them
when they are much older, reducing the rate of return. Major
sources of income for local Tibetans include collecting
caterpillar fungus, farming and work on construction sites. The
price of caterpillar fungus dropped ranged from 70,000 Renminbi
per jin (approximately USD 10,000/lb) in 2007 to 50,000/jin in

2008. Drops in the price of caterpillar fungus can lead to
social instability. In response to a question from ConGenOff
about why there are so few Tibetan-run businesses in Linzhi's
Bayi Township, an official responded that Tibetans can make more
money by gathering caterpillar fungus and are also not very
interested in going into business for cultural reasons.

Trade with Burma and India
--------------


5. (C) Reform and Development Commission officials also claimed
that hydroelectric power stations on the tributaries of the
Brahmaputra River will not affect the flow of water to India.
Not entirely apropos to the conversation, one official who had
previously served in Miling County on the Indian border
volunteered, "we used to dump all our trash in the river until
we got complaints from the Indians." On the border with Burma
at Chayu County (Tibetan: Dzayul),the Chinese government
permits informal trade. Local government authorities have
already helped build a port administrative building to support
trade in consumer goods between Burma and China, although
"formal" trade has not yet been approved.

Labor Bureau
--------------


6. (C) Linzhi Labor Bureau officials told ConGenOff that their
office is responsible for providing job training, helping
workers find jobs, and educating workers about their rights
under China's labor laws. An ongoing poverty alleviation
project in the prefecture helps reduce unemployment by

CHENGDU 00000289 002.2 OF 003


subsidizing jobs. New investors to the region can have their
workers trained by the Bureau before opening a business and
benefit from a 40 percent subsidy of wages for the first five
years. A floating population of migrant workers mostly from
inland China also benefits from worker training. Forty percent
of the clients of the Labor Bureau are Tibetan (Note: Linzhi
Prefecture's overall population is 80 percent Tibetan). The
Labor Bureau has offices throughout the prefecture to assist in
rural areas. ConGenOff did not see any Tibetan language signs
and only a few Tibetan language leaflets at the Labor Bureau.

Environmental Bureau
--------------


7. (C) Dawa, an ethnic Tibetan, leads the Linzhi Prefecture
Environmental Bureau, established in 2002, which sits in a new
office building built for it by the Guangdong Province
Environmental Bureau. Many of the Linzhi Environmental Bureau's
staff of twenty-four employees were trained by the Guangdong
Environmental Bureau either in Guangdong or by "Help Tibet
Cadres" seconded to Linzhi. In addition, there are two
environmental officials in each of the seven counties of Linzhi
who report to both their county government and the Prefectural
Environmental Bureau under China's "dual leadership system."
Air pollution has not been a problem in Linzhi and the local
government discourages polluting industries from locating to the
prefecture. Most of the environmental work in the prefecture is
focused on water and soil pollution, as well as regular checks
of vegetables for pesticide levels. On the first floor of the
Linzhi Environmental Bureau ConGenOff saw a giant poster noting
that, "the Linzhi Environmental Bureau Denounces the Dalai Lama
Criminal Gang".

Education Bureau
--------------


8. (SBU) Officials at the Linzhi Educational Bureau claimed that
99.4 percent of school-age children receive nine years of
compulsory education. Seventy percent of the students in
prefecture schools are ethnic minorities. Most classes in rural
areas are conducted in Tibetan, while in such urban areas such
as Bayi Township classes are in Chinese. Political education,
called education in the "legal system," is the responsibility of
deputy school principals and has been strengthened since the
March 2008 outbreak of unrest.
ConGenOff was given a tour by Chinese officials of the recently
built campus of Linzhi No. 1 Middle School, which has 2500
students and 165 teachers. Guangdong Province and several
cities along the southeast coast of China built buildings on the
campus, including a library donated by Zhuhai City.

Land of Opportunity for Sichuan Pig Farmer
--------------


9. (SBU) ConGenOff was also shown a modern pig raising operation
on the outskirts of Bayi Township that had about 2500 pigs. The
ethnic Han owner, originally from Zigong in Sichuan Province,
proudly noted, "I could never have managed to have gotten so
much land (80 mu, or about 10 acres) back in Sichuan." He also
remarked that that there is a great demand for pork in Linzhi
Prefecture. Local quarantine checks make it hard to transport
pigs long distances on the Tibetan Plateau, so his operation has
been very successful in the local Linzhi market. Tax subsidies
also made starting up the operation relatively easy. Many
superior varieties of European and U.S. pigs are bred and
raised. Most of the staff is ethnic Han, although Tibetans do
some unskilled work.

Heifer Project A Big Hit in Linzhi
--------------


10. (U) ConGenOff visited a Heifer International Project just
outside of Bayi Township. He saw a group of two-year old
heifers among the 27 donated to village farmer by the Heifer
International. Village leaders said that local Tibetan farmers
are enthusiastic about the Heifer Project. Their only complaint
was that the project scale is too small and that, with the price
of cattle going up, it is hard to stay within budget. Cows
supplied to the farmers in Linzhi come from a farm in Shandong
Province. A local official reported that Heifer International,
as of November 2008, had spent 2.1 million RMB to provide two
cows each to 198 households in its two-year project in Linzhi.

Red Lights of Bayi Township
--------------


11. (C) During one evening stroll through downtown Bayi,
ConGenOff counted at least 20 houses of prostitution complete
with red lights and women sitting inside aggressively calling
out to passersby. The establishments were all small shops with

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a back room and the vast majority of prostitutes appeared to be
young ethnic Han. The large numbers of military personnel and
migrant workers in the region are the principal clientele.

Lulang Valley: Tibetans Rent Horses, Han Make the Big Bucks
-------------- --------------


12. (C) ConGenOff was also given a tour of Lulang, a scenic area
popular with tourists that lies approximately one hundred miles
along the Sichuan - Tibet highway from Bayi Township beyond
mountain passes that rise up over 4000 meters. Local officials
said tourism has dropped 80 percent compared with 2007 due to
the disturbances that broke out in Tibetan areas in March of

2008. During 2008, they have seen individual tourists but not
tour groups. Government grants have enabled some local Tibetans
to expand their houses to accommodate tourists. A local Party
leader whose family lives in Chengdu but joins him in the summer
noted, "this place is practically a suburb of Chengdu -- just
take a two hour non-stop flight and drive another two hours from
the Linzhi airport." Almost all the restaurants in the nearby
town appeared to be run by ethnic Han. According to two local
Tibetans who rent ponies for tourists, "businesses are run by
Han; we don't have any money and wouldn't know how to run a
restaurant if we did." The Tibetans said they earn about RMB
400 (USD 60) per month in rentals.

Comments
--------------


13. (C) Lower in altitude and closer to inland China than other
parts of the TAR, Linzhi Prefecture appears to be somewhat
similar to Diqing Prefecture in Northwest Yunnan Province in
terms of the overall comfort level of ethnic Han who have
resettled there (see ref c). Diqing Prefecture, today
one-third Tibetan, may well be one day the future of Linzhi, now
80 percent Tibetan. Diqing Tibetans are much more assimilated
to Han culture than are their Linzhi counterparts since
large-scale Han settlement in Diqing has a much longer history
predating the establishment of the PRC in 1949. Although Linzhi
remains predominantly Tibetan in terms of population, as a
priority area for TAR development it is also very much an area
where Han control the urban centers. Tibetans, who predominate
in the countryside, are the object of development programs aimed
to reorient them towards the urban market economy and the
"blessings" of Han civilization that come along with it.
BOUGHNER