C O N F I D E N T I A L SHANGHAI 000154

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NSC FOR KURT TONG

E.O. 12958: DECL: 4/22/2033
TAGS: PGOV PHUM PREL ECON KIPR CH
SUBJECT: YIWU PARTY SECRETARY ON IPR, RMB APPRECIATION, AND TIBET


CLASSIFIED BY: Kenneth Jarrett, Consul General , Consulate
General of the United States Shanghai, Department of State.

REASON: 1.4 (b), (d)




1. (SBU) On April 18, the Consul General (CG) hosted Yiwu Party
Secretary Wu Weirong for lunch in Shanghai. Yiwu, a city in

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central Zhejiang Province of 1.6 million people, claims to be
home to the biggest small commodity wholesale market in the
world. Yiwu also has a reputation for being a distribution
center for IP infringing goods. The lunch discussion focused on
intellectual property (IP), economic developments, and current
events in China. Wu emphasized Yiwu's commitment to protecting
IPR, noting it was an integral part of promoting innovation and
creativity, a major focus of his government. Yiwu's special IP
court, which combines administrative, judicial and criminal
enforcement, is now operating, but Wu did not have any
statistics on the number and type of court cases. Wu said Yiwu
is providing special training to judges to increase their
effectiveness in handling IPR-related cases. According to Wu,
the city is also making a special effort to ensure there are IPR
complaint centers at the city's several large, yearly trade
fairs. Although the city does not currently produce an IPR
white paper, Wu agreed it would be a good way to publicize the
city's efforts to protect IPR.


2. (SBU) On other economic issues, Wu learned that the
appreciation of the RMB against the dollar had a serious
negative impact on exporter-oriented manufacturers and traders
around Yiwu. Most contracts were in U.S. dollars, even if the
goods were headed to places other than the United States. (FYI:
Yiwu's biggest customers were actually in Korea and the Middle
East.) Thus, many manufacturers were reluctant to sign large
contracts or long-term deals out of fear that by the time they
received payment, RMB appreciation would eliminate any profit
they had hoped to eke out of the deal. This reflected the tight
margins common among Yiwu's traders and manufacturers, Wu
explained. Surprisingly, there were few bankruptcies among the
many Yiwu small commodity manufacturers as compared with textile
producers in Guangdong. Still, they felt tremendous pressure
between the exchange issue and increasing domestic inflation.


3. (SBU) Party Secretary Wu also spoke at length about Yiwu's
efforts to balance economic development with environmental
protection. According to Wu, Zhejiang Province sets certain
environmental targets, and the cities are under a great deal of
pressure to meet them. This pressure was both top down from
provincial leaders and bottom up from local residents. Wu
described Yiwu's use of technology to monitor waste levels from
factories in order to comply with the targets. He complained
that America leads in this kind of environmental technology but
is unwilling to sell it. The CG assured Wu that the United
States was eager to sell environmental technology to China but
that one of the obstacles was high tariffs imposed by the
Chinese government.


4. (SBU) Wu offered a straight Party line version - spoken with
utter conviction -- of current problems in Tibet, adding that
most Westerners do not understand Tibet or China. He spoke in
strong terms about foreign politicians who he asserted just want
to score political points by criticizing China. Wu emphasized
that all factions of Chinese society are united on the Tibet
issue and China has brought great economic development to the
region. He pointed to many other minorities, such as the Hui
and Manchu, as models for how they are celebrated and thrive in
China. He blamed the "Dalai Lama clique" for the recent
problems and believed that the Dalai Lama definitely played a
key role in the recent troubles. Our efforts to engage Wu on
each of these points only fell on deaf ears.


5. (C) Comment. Wu, age 44, is an energetic, savvy,
business-minded leader and has had a rapid rise in the Communist
Party. He previously served as the Yiwu Mayor until he was
promoted to become the Party Secretary last year. His openness
and awareness of IP, economic, and environmental issues stood in
stark contrast to his views on Tibet. When the conversation
segued into Tibet, it was as if we had switched to the Xinhua
propaganda machine. Wu fluently and wholeheartedly the endorsed
party line on Tibet. His comments are indicative of how
deep-seated nationalist feelings about Tibet are among the Han
Chinese.

JARRETT