YUNNAN'S ROCKY INTERNATIONAL ROADS HAMPER ACCESS TO SE

C O N F I D E N T I A L SECTION 01 OF 04 CHENGDU 000069

SIPDIS

STATE FOR EAP/CM AND EB

E.O. 12958: DECL: 4/21/2034
TAGS: ECON ASEC PGOV
SUBJECT: YUNNAN'S ROCKY INTERNATIONAL ROADS HAMPER ACCESS TO SE
ASIA

CHENGDU 00000069 001.2 OF 004


CLASSIFIED BY: David Cowhig, Acting Consul General, U.S.
Consulate General Chengdu.
REASON: 1.4 (b)

1. (C) Summary: Road links from Southwest China's Sichuan
province through Yunnan Province to Southeast Asia have not yet
developed to the point where motorists can count on these
highways for safe and reliable passage south. Problems of
highway finance in Yunnan Province, corruption, poor
workmanship, and protectionism are the main impediments to safer
and better roads through Sichuan and Yunnan to Southeast Asia.
These problems with the highways through Sichuan and Yunnan
provinces to Southeast Asia illustrate difficulties in
interprovincial cooperation and the far-reaching implications of
Yunnan Province's 2006 decision to privatize highway
construction. End summary.



Road Travel to Southeast Asia For Evacuation or Commerce
Difficult

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2. (C) Residents of Southwest China's Sichuan Province would, at
best, find it difficult and dangerous to travel south through
Yunnan province and in to Southeast Asia, based on the current
condition of roads leading south from Chengdu. The Consulate's
Regional Security Officer (RSO) recently attempted to drive from
Chengdu - Kunming to survey potential evacuation routes.
Officials from the Thai Consulate General had previously
travelled from Chengdu to Kunming, and reported relatively good
road conditions. In contrast to this report, RSO found that the
most plausible route for an evacuation, using an expressway
completed at different times over the last 10 years, had
significant physical limitations.




3. (SBU) RSO found most of the road leading from Chengdu to the
northern border of Yunnan to be in relatively good condition,
although one short section of the road had deteriorated to a
rough dirt road-like condition. Once across the Yunnan border,
road quality appeared noticeably lower. The four lane divided
highway, two lanes northbound and two lanes southbound, snaked
through steep canyons. Poorly marked construction zones posed a
danger to drivers on the highway, and RSO noted that there were
very few opportunities for vehicles to exit the highway and
travel on secondary roads if the highway were blocked by an
accident or landslide. Pedestrians from local villages walking
along the highway (perhaps the only convenient road in the area)
and few street lamps to illuminate the road at night added even
more potential danger to this stretch of road. Foreign Affairs
Office [FAO] officials from Huize, a town north of Yunnan's
capital Kunming, even told RSO that they would not be permitted
to drive north along the road during the evening because it was
too dangerous.



Financial Problems, Protectionism and Corruption Led To Poor
Roads

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4. (SBU) The roads in southwest China have deteriorated rapidly
due to Yunnan's problems in financing its highways, Yunnan
Province protectionism, and apparently in both Sichuan and
Yunnan Provinces, poor workmanship and corruption. A road
engineer who has been living in Chengdu since 1990 and working
on road projects in China and Southeast Asia for more than
twenty years told Congenoff that the entire length of highway
from Chengdu to Kunming was less than 10 years old. He
described the roads in Sichuan and Yunnan as a "coming disaster"
and said that the particularly decrepit section of road in
Sichuan leading south was built less than six years ago. The
Sichuan government probably would not rebuild this road,
electing instead to build new roads, according to the engineer.
Sichuan's five year plan calls for the construction of 12,400
miles of new road, roughly doubling the total miles of road in
the province. The engineer said that Sichuan had once ranked
sixth among China's provinces for total miles of road, but had
now fallen to sixteenth place. He said that the provincial
government has a strong incentive to build new roads, but not
necessarily to maintain existing roads. Moreover, some of the
new roads will be seldom used, while others will exceed design
capacity as soon as they are opened.


CHENGDU 00000069 002.2 OF 004




Many Repairs Needed Soon After Road Completion

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5. (SBU) Poor workmanship also contributes to the poor road
conditions. The engineer said that as soon as roads were
finished, major repair work often needed to begin on the roads.
A separate contact in Yunnan told Congenoff in 2008 that many of
the tunnels along the recently completed route from Kunming to
the Laos border already need to be rebuilt due to poor initial
build quality. Inexperienced or poorly qualified project
managers bear much of the responsibility for the quality
problems, according to the engineer. He said that roads built
with funding from the Asia Development Bank tend to be higher
quality because outside funding for the projects helps to
attract more talented project managers.



Officials Suspect Protectionism Behind Yunnan Road Deterioration

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6. (C) Corruption may also contribute to the poor quality of
roads or the decision to build roads along lightly-travelled
routes, while provincial level protectionism is further
hindering development of roads linking Sichuan with Kunming and
the sixteen roads linking Yunnan Province to various points in
Southeast Asia. The Thai Consul General speculated that the
deterioration of roads in Yunnan is the result of corruption.
The Sichuan Foreign Affairs Office (FAO) told the Consul General
that the Yunnan government was hindering the development of
roads linking Sichuan with Kunming and Southeast Asia. The
officials said that the Sichuan government has raised the issue
with Yunnan officials, but Yunnan appears to want to keep
Southeast Asian markets for themselves. The engineer similarly
suggested that Yunnan did not want more links with the province
to the north.



Yunnan Highway Construction Privatization Led To Financial
Problems

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7. (SBU) Financial difficulties, corruption and poor design are
among the problems discussed in "Yunnan's Disappointing
International Highways" an article which appeared in the April
8, 2009 issue of Guangzhou-based periodical Nanfeng Chuang.
In 2006, Yunnan transferred responsibility for highway
construction from the Yunnan Province Transportation Bureau to
a private corporation, Yunnan Province Highway Development and
Investment Corporation Ltd [Yunnan sheng gonglu fazhan touzi
youxian ziren gongsi]. Banks are much less willing to lend
money to this private corporation than they were to Yunnan
Province, so Yunnan province highway construction has been
chronically starved of needed construction funds. More details
are in the summary translation of the Nanfeng Chuang article
appended to this cable. The Yunnan provincial press has also
reported on corruption investigations within the provincial
transportation bureau.



Chengdu RSO Noted Restrictions on Travel and Toll Booth
Chokepoints

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8. (C) Chengdu RSO noted that traffic on and off Southwest
China's highway system is easily monitored and controlled
through a series of toll booths. This enables provincial
authorities to restrict access to groups or individuals on short
notice, as they did when RSO attempted to drive to Kunming. RSO
observed employees at the toll booths use what appeared to be
handheld radios immediate after the Consulate vehicle passed
through the toll gate. RSO's vehicle was intercepted by a
police checkpoint on the highway, which happened to be staffed
by officers from the Foreign Affairs section of the county

CHENGDU 00000069 003.2 OF 004


Public Security Bureau (PSB). RSO was subsequently restricted
from travelling any further south on the road, an action he
assesses the PSB could easily take toward other targeted groups
travelling on the highway. Note: Congenoff recently noticed an
armed security official at a toll both on another highway,
suggesting that the use of toll booths as access control
chokepoints may be common.




9. (C) Local PSB and Foreign Affairs officials also seem to be
able to coordinate interprovincial action, with relatively
little notice, to control the movement of targeted individuals.
After RSO was denied passage south and allowed to return to
Chengdu, he noticed that he was followed by marked and unmarked
security vehicles for the entire return journey. RSO's local
investigative assistant speculated that Yunnan Province probably
would not have coordinated directly with Sichuan Province, but
instead would have coordinated with Beijing officials who in
turn would have directed Sichuan to act. [Comment: The
difficulties of interprovincial PSB coordination seem to neatly
parallel the difficulties of Sichuan - Yunnan provincial
cooperation. End comment] Sichuan FAO officials told the Consul
General after RSO's return that Consulate personnel were
prohibited from driving Consulate vehicles to Yunnan without
permission.



Comment: The Difficulties of Inter-Provincial Cooperation

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10. (C ) The economic, management and engineering problems of
Sichuan and Yunnan Provincial highway connections to Southeast
Asia are overlaid with additional layers of problems of
protectionism, politics and inter-provincial coordination.
The difficulties of interprovincial coordination in highway
construction were neatly paralleled by the apparent necessity
for the Yunnan PSB to talk to the Sichuan PSB to continue the
shadowing of the Consulate Chengdu car back to Chengdu. The
extraordinary autonomy and lack of oversight that local and
provincial department leaders enjoy continues to have serious
consequences for southwest China.

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APPENDIX: Summary translation of the article "Yunnan's
Disappointing International Highways" which appeared in the
April 8, 2009 issue of the Guangzhou-based magazine Nanfeng
Chuang is appended below



BEGIN SUMMARY TRANSLATION - ENTIRE TEXT UNCLASSIFIED



Funding shortfalls owing to corruption and the transfer of the
responsibility for constructing highways from the Yunnan
Provincial Highway Bureau to a private corporation to which
banks are reluctant to lend, has led to incidents of unpaid
workers blocking highways and the deferral of needed highway
construction and repairs. According to the article, the new
Yunnan province portions of the Kunming - Thailand highway were
poorly planned, resulting in killer intersections and severe
local obstacles for trade and transportation since few bridges
or pedestrian overpasses or underpasses were built. For three
weeks after the opening of the Kunming to Bangkok highway,
several sections of the Yunnan portion were blocked by workers
protesting non-payment of their wages. Banks are much less
willing to lend money for highway construction after the May
2006 transfer of highway construction responsibility from the
Yunnan Provincial Transportation Bureau to the Yunnan Province
Highway Development and Investment Corporation Ltd [Yunnan sheng
gonglu fazhan touzi youxian ziren gongsi].



The reluctance of the banks to lend money to the new highway
company has made it much more difficult for the company to pay
for construction work on time and to pay workers their wages on
over ten highway projects. By the time of workers blocked parts

CHENGDU 00000069 004.2 OF 004


of the Xiaoma highway on the Kunming - Bangkok route in March
2008, the highway company was 2 billion RMB (USD 300 million)
behind in payments to contractors for that highway project.
After the highway construction guidance office persuaded the
12th Railroad Bureau to send personnel and 49 million RMB for
the workers, did the workers stop blocking the highways after 20
days of protests. The Xiaoma highway project portion of the
Kunming - Bangkok highway, originally planned for end of 2007,
was not ready until June 2008. Poor road planning and
construction however led to a spate of fatal road accidents
along the highway, angering local peasants and minority people.
This led to more protesters blocking the highway. However,
reports Nangfeng Chuang, authorities quickly put an end to the
protests and redid the roadway to make it safer, since this was
Olympic time and Yunnan feared being responsible for hurting
China's image abroad.



In March 2009, the Nanfeng Chuang journalist traveled on the
Xiaoma portion of the highway and found that the promised
pedestrian overpasses where pedestrians were being killed had
still not been built. A few lines later, the article quotes
highway officials claiming that the many overpasses and safety
improvements at intersections had been built.. The Yunnan
Province Highway Development and Investment Corporation is still
1.4 billion RMB behind in payments to its contractors, noted the
April 2009 article. More troubling for the company is the
central government's order that collection of tolls on secondary
highways end. The Xiaoma highway is slated to be one of the
first to be required to stop collecting tolls.



According to the Nanfeng Chuang report, similar problems are to
be found on other Yunnan highways. On the Xinjie to Mengzi
portion of the Yunnan highway leading to Hanoi, the highway was
blocked by people in highway uniforms who claimed the road was
closed because some signs had not yet been installed. The Xinje
- Mengzi portion of the highway (originally planned to open in
April 2009) has caused many problems. In September 2007, 20
Sichuan women organized the "wives' get-back-wages brigade"
(taitai taoxindui) to claim over RMB 200 million (USD 30
million) in back wages from the highway company. They were
beaten up, but caught the attention of the media, so their
dispute with the highway company was resolved. One source told
the journalist "because the project funds aren't coming in,
construction contractors are dragging their feet and we have no
idea when work will be completed. Moreover, in many cases
agreement has not been reached with local peasants on
compensation for land being taken, some peasants are being paid
while others are only getting partial payment. Sometimes the
company pays someone impersonating the peasant whom they should
pay." Frequently a few peasants or up to several hundred
peasants block the highway.



The Nanfeng Chuang article quoting a traveler who reported that
the section of the Kunming - Bangkok highway that runs through
Laos is poorly maintained and deteriorating. Moreover the river
bridge planned to replace the ferry boat at the Laos - Thai
border won't be completed until 2011. The article concludes by
noting that the Yunnan Highway Development Investment
Corporation has a heavy debt burden that it must repay, sharply
reducing the money available to spend on roads. An unnamed
official in Xishuangbana is quoted as saying the Chinese central
government should take responsibility for Yunnan's international
highways, saying that "The Chinese government should see the
construction and maintenance of these roads as part of its
responsibility to international society and not give up on them
halfway." The article concludes that western observers see
China as building a great highway network with itself at its
center, but given all the problems the highways have had and the
poor support Yunnan's international highways have received, the
road construction effort can be only just barely be said to have
begun.



END SUMMARY TRANSLATION
COWHIG