Identifier
Created
Classification
Origin
08SHANGHAI364
2008-08-28 08:44:00
CONFIDENTIAL
Consulate Shanghai
Cable title:  

DOL SECRETARY CHAO'S AUGUST 27 MEETING WITH SHANGHAI PARTY

Tags:  CH ECON ELAB ENRG PGOV PINR 
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FM AMCONSUL SHANGHAI
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INFO RUEHBJ/AMEMBASSY BEIJING 2073
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGZ/AMCONSUL GUANGZHOU 1340
RUEHHK/AMCONSUL HONG KONG 1518
RHEHAAA/NSC WASHINGTON DC
RUEHSH/AMCONSUL SHENYANG 1365
RUEHIN/AIT TAIPEI 1176
RUEHGH/AMCONSUL SHANGHAI 7692
C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000364 

SIPDIS

DEPT FOR EAP/CM, DRL
STATE PASS ELECTRONICALLY TO DEPT OF LABOR FOR OSEC
NSC FOR WINTER, LOI
USDOC FOR ITA DAS KASOFF

E.O. 12958: DECL: 8/28/2018
TAGS: CH ECON ELAB ENRG PGOV PINR
SUBJECT: DOL SECRETARY CHAO'S AUGUST 27 MEETING WITH SHANGHAI PARTY
SECRETARY YU ZHENGSHENG

CLASSIFIED BY: Simon Schuchat, Acting Consul General, U.S.
Consulate General, Shanghai, Department of State.
REASON: 1.4 (b),(d)



C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000364

SIPDIS

DEPT FOR EAP/CM, DRL
STATE PASS ELECTRONICALLY TO DEPT OF LABOR FOR OSEC
NSC FOR WINTER, LOI
USDOC FOR ITA DAS KASOFF

E.O. 12958: DECL: 8/28/2018
TAGS: CH ECON ELAB ENRG PGOV PINR
SUBJECT: DOL SECRETARY CHAO'S AUGUST 27 MEETING WITH SHANGHAI PARTY
SECRETARY YU ZHENGSHENG

CLASSIFIED BY: Simon Schuchat, Acting Consul General, U.S.
Consulate General, Shanghai, Department of State.
REASON: 1.4 (b),(d)




1. (C) Summary: In an August 27 lunch meeting with Department of
Labor (DOL) Secretary Elaine L. Chao, Shanghai Party Secretary
Yu Zhengsheng described challenges facing Shanghai, such as
relocating residents out of poor housing blocks, providing
adequate social services to migrant workers, and shifting
Shanghai from a labor-intensive economy to a white-collar,
service-oriented economy. Yu also expressed his hope that U.S.
companies will actively contribute to the U.S. pavilion at the
2010 Shanghai World Expo. Yu noted that "360 degree" performance
reviews have brought discomfort to high-level officials. End
summary.


2. (U) During an August 26-28, 2008, visit to Shanghai, Shanghai
Party Secretary Yu Zhengsheng hosted an elegant lunch in honor
of U.S. Secretary of Labor Elaine L. Chao on August 27. See
paragraph 11 for a full list of participants.

Looking For a Better Deal
--------------

3. (C) Yu discussed some of the challenges facing the Shanghai
Government in light of its rapid growth, including efforts to
relocate residents out of poor housing blocks. Shanghai
regulations stipulate all relocated residents must be
compensated with new housing from the government. Most relocated
residents are offered housing superior to their original.
However, some residents want to be compensated with an
"unreasonable" amount of cash, and others plainly refuse to move
for personal reasons. According to Yu, some local officials
relocate the "easier" residents first, then offer better
compensation to the more "difficult" ones later, thus creating
an unfair system.


4. (C) Many Shanghai residents are also opposed to building
power generators in downtown areas, despite Shanghai's surging
need for more electricity. These residents cite possible health

risks associated with electromagnetic radiation, but Yu asserted
there is no scientific basis for their claims. He speculates the
real reason for people's opposition is a fear that this would
impact local real estate market values. This has forced power
utility companies to build generators underground at much higher
costs.


5. (C) Yu believes some of these difficulties dealing with local
residents stem from China's legal system: if plaintiffs are not
satisfied with the initial court hearing, they can continue
petitioning higher level government officials until they
succeed. Thus, residents who do not want to be relocated can
continue petitioning every level of government, as happened with
several cases that made it all the way up to Yu's desk. Yu
thinks this system is "democratic" but also undermines authority.

Taking Care of the Migrants
--------------

6. (C) Yu estimates there are about five million migrant workers
in Shanghai. Migrants currently receive social security
benefits, Yu said, though their level of benefits differs from
those of farmers and regular urban residents. The government is
also looking to provide free primary and secondary schooling to
children of migrant workers even if they are not officially
registered residents of Shanghai. The government also plans to
build more apartment complexes specifically for migrant workers.

Moving to a White-Collar Economy
--------------

7. (C) Yu emphasized that Shanghai must continue to "open up"
and reform if it is to meet the current and future demand for
white-collar jobs, which all parents in Shanghai now desire for
their child or children. He sees Shanghai at the forefront of
China's economic transition from a labor-intensive,
manufacturing economy to a service-oriented, white-collar
economy. The recently implemented Labor Contract Law (LCL) has
benefited many workers. But increased costs associated with the
LCL and Renminbi appreciation have forced many labor-intensive

SHANGHAI 00000364 002 OF 002


factories in Shanghai to move or shut down. Yu hopes to attract
more service-oriented companies to Shanghai. The Shanghai
Government is considering how to make it easier for highly
skilled, white collar workers who are not official Shanghai
residents to acquire Shanghai residency and work permits.

Concerns Over U.S. Company Participation in World Expo
-------------- --------------

8. (SBU) Yu expressed his hope that more U.S. companies will
decide to contribute to the U.S. pavilion at the World Expo,
scheduled to be held in Shanghai in 2010. Shanghai Expo Bureau
leaders will visit the United States this September to campaign
for more active participation by U.S. companies. Secretary Chao
assured Yu that we hope to see a successful U.S. pavilion at the
World Expo. She suggested that Yu continue to encourage U.S.
companies to contribute to the U.S. pavilion. Yu acknowledged
that circumstances in the United States are different from those
in other countries, since the U.S. pavilion must be financed
entirely by the private sector. In other countries, governments
pay for their national pavilions.

"Not Good Fortune" to Be a Senior Leader in China
-------------- --------------

9. (C) Yu gave some candid remarks on the difficulties of being
a leader. He noted that when he was Minister of Construction, he
and his deputies underwent a "360 degree review" of their
performance in which they had to list their weaknesses. The
people they supervised also anonymously contributed their views
on the leaders' performance, to which the leaders had to provide
"good" answers acceptable to higher level officials. He said
some of his deputies were "brought to tears" by the process and
added half-jokingly that it is "not good fortune" to be a
Cabinet Minister in China.

Comment
--------------

10. (C) Yu was relaxed and appeared to be in command of the
subject matters. He did not rely on prepared notes or ask his
subordinates for assistance but allowed members from the Chinese
side to add comments. Although the meeting was formal, Yu seemed
comfortable engaging in substantive conversation, even adding
his personal thoughts on leadership issues.

Participants
--------------

11. (U) Chinese Side:
Yu Zhengsheng, Shanghai Municipal Party Secretary
Tang Dengjie, Vice Mayor, Shanghai Municipal Government
Zhang Yali, Director General, International Cooperation
Department, Ministry of Human Resources and Social Security
Zhou Haiyang, Director General, Shanghai Bureau of Labor and
Social Security
Fan Yufei, Deputy Director General, Shanghai Foreign Affairs
Office
Zhang Jie, President of Shanghai Jiaotong University
Ma Dexiu, Chairman of Shanghai Jiaotong University Council

U.S. Side:
Secretary of Labor Elaine L. Chao
Acting Consul General Simon Schuchat
James Chao, Secretary Chao's father
Anna Hui, Associate Deputy Secretary, DOL
Jennifer Coxe, Deputy Assistant Secretary, Office of Public
Affairs, DOL
Ken Toko, ConGen Shanghai, notetaker


12. (U) Secretary Chao has cleared on this report.
SCHUCHAT