CHANGZHOU EMBRACES CLOSER U.S. TIES, ENJOYS HONEYMOON WITH

UNCLAS SECTION 01 OF 03 SHANGHAI 000149 SENSITIVE SIPDIS DEPT FOR EAP/CM, ECA, OES STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH DOC FOR ITA/MAC - DAS KASOFF, MELCHER, SZYMANSKI, COUCH, LEHRMAN TREASURY FOR OASIA - DOHNER/HAARSAGER/CUSHMAN E.O. 12958: N/A TAGS: ECON EINV ETRD ELAB SCUL SENV CH SUBJECT: CHANGZHOU EMBRACES CLOSER U.S. TIES, ENJOYS HONEYMOON WITH INVESTORS DESPITE DOWNTURN REF: 07 SHANGHAI 61 (U) Sensitive but unclassified. Not for dissemination outside USG channels; not for Internet distribution. Summary -------------- ¶1. (SBU) A key Yangtze River Delta (YRD) city located roughly midway between Shanghai and Nanjing, Changzhou aggressively woos foreign investors, and city officials often travel to the United States and Europe to expand commercial ties. Responding to repeated invitations from energetic city officials, the Consul General (CG) visited Changzhou, Jiangsu Province on March 31, taking advantage of the city's on-going efforts to court U.S. officials and investors (reftel). The CG met with Changzhou's Party Secretary and Vice Mayor, as well as visited a U.S. joint venture railway car investment, university campus, waste water treatment plant, urban planning hall, and the bus rapid transit (BRT) system. Changzhou aims to beat out local competition by offering one of the best investment environments in the YRD. End Summary. Something Old: Changzhou's Going Out Strategy -------------- ¶2. (SBU) Changzhou Party Secretary Fan Yanqing thanked the CG during a March 31 meeting for continuing to promote a strong relationship between Changzhou and the United States, which Changzhou has enjoyed for the past several years (reftel). Fan argued that the global economic crisis and China's economic downturn provide greater incentive for Changzhou to restructure its economy while further promoting "opening up" by encouraging both inward and outward investment. With a total population of approximately 5 million, including 3.5 million residents and 1.5 million migrant workers, Changzhou now boasts 57,000 private firms, including 3000 foreign invested enterprises (FIEs) in sectors ranging from equipment manufacturing to agricultural processing to textiles. Vice Mayor Han Jiayu told the CG that he recently returned from an investment promotion trip to Germany and France, and he will travel to the United States in May to meet company representatives and government officials in Chicago, Illinois and Jackson, Mississippi. ¶3. (SBU) Party Secretary Fan highlighted the CSR Qishuyan Locomotive Company, a General Electric (GE) joint venture partner, as a positive example of Changzhou's long-standing commercial cooperation with U.S. firms. The Changzhou Municipal Government hopes the on-going partnership with GE will help upgrade the city's management methods and technology base, Fan said. During a visit to the CSR Qishuyan factory, General Manager Wang Hongnian told the CG that more than 200 CSR Qishuyan employees have participated in training programs at GE's facility in Erie, Pennsylvania. The company hopes its good relations with GE will help introduce more efficient transportation technologies into China, which are likely to be employed as part of the Central Government's stimulus package, Wang said. CSR Qishuyan's reputation helps attract graduates from some of China's best engineering universities, including those that emphasize transportation infrastructure, such as Jiaotong University in Beijing and Shanghai Jiaotong University, he added. Something New: Education and the Environment -------------- ¶4. (SBU) Seeking to consolidate Changzhou's scientific knowledge base and develop homegrown talent, officials from Jiangsu Polytechnic University and five vocational colleges, in cooperation with the city government, established the Changzhou Science and Education Town on the outskirts of the city in 2003. University officials emphasized that they are proud of the initiative -- which has attracted the attention of government leaders, including a visit from President Hu Jintao in 2005 -- and they believe an educational plan that "tailors" graduates to fit business needs is a successful model. According to Hu Peng, Vice Director of the Science and Education Town's Administration Commission, on a shared campus of 78,000 students, 90 to 95 SHANGHAI 00000149 002 OF 003 percent of the schools' graduates find jobs in their fields. (Comment: We found it strange, however, that Hu expressed optimism for the employment prospects for this year's graduates of the Town's Textile and Garments Vocational School given the economic downturn and reports of many textile factory closures in the YRD. End Comment.) The Chinese Academy of Sciences also sponsors a Research and Development Center at the Science and Education Town, which Hu said is supported by more than 150 companies and 13 other research institutes, including Tsinghua and Peking Universities. The contributions of the Changzhou Science and Education Town were perhaps best summarized, however, by a provincial government official who stated in a promotional video that the new initiative "has not yet proven" its value to Changzhou's future development. ¶5. (SBU) Changzhou's environmental protection efforts also are in a nascent stage, but city officials recognize the need to improve air and water quality. When asked what citizens are most concerned about, the FAO deputy director instantly replied, "the environment." Changzhou closed 900 small chemical factories in the last two years because they did not meet environmental standards, Party Secretary Fan said. Given Changzhou's proximity to the Yangtze River, water treatment projects are extremely important, Fan added. The CG later visited the Shenshui Jiangbian Wastewater Treatment plant where 800,000 cubic meters of water are treated per day and recycled back into the river. Officials of SZWG, the Shenzhen-based state-owned enterprise (SOE) that manages the project, acknowledged, however that Changzhou's water is not yet 100 percent treated and the wastewater treatment facility does not treat the water to the level of being potable. Construction is on-going at Shenshui Jiangbian with only one-third of the planned facility complete. Something Borrowed: The Ubiquitous Urban Planning Hall -------------- -------------- ¶6. (SBU) A quick tour through Changzhou's urban planning hall reflected the big dreams of a city trying to move past its shortcomings towards a high-tech future. Borrowing the urban planning hall concept from large metropolises, including Shanghai and Beijing, as well as similar-sized cities such as its Yangtze River neighbor to the southwest, Jiujiang, Changzhou spotlights its rapid development from a city of moderate historic and cultural significance to one of the YRD's economic and commercial hubs with its four-floor museum. Changzhou's urban planning hall is part of a new city complex that includes the high-rise municipal government headquarters, a theater, Olympic sports stadium, and municipal museum. With an eye on attracting investors, Foreign Affairs Office Director Shen Yilin said the urban planning hall gives house buyers and potential investors a better idea of where they might want to buy or build. Something Blue: Bus Rapid Transit Moving Commuters -------------- -------------- ¶7. (SBU) An additional sign of Changzhou's urban development is that the primary north-south thoroughfare is dominated by powder blue bus stations -- noticeable markers of the recently launched bus rapid transit (BRT) system. Entering its second year, the BRT has improved traffic flow and contributed to better air quality, said project consultant (and American citizen) Xu Kangming. Of the 120,000 riders each day, approximately 11 percent used to be full-time private car drivers, he said. Changzhou is one of several cities in China -- including Xiamen, Chongqing, Zhengzhou, and Beijing -- using variations of the BRT. The city's powder blue bus stops sport Scania buses with a matching blue color scheme that cost RMB 2 million (USD 300,000) and adhere to Euro IV emission standards. To date, there have been no reported instances of private cars driving in the BRT lanes, which, Xu said, would carry a heavy fine. Meanwhile, new office building and apartment construction in the city has gravitated to areas near the BRT's 24 km-long north-south line and its three spur lines; an additional east-west line will go into operation on May 1. ¶8. (SBU) The Changzhou BRT's first year in operation was SHANGHAI 00000149 003 OF 003 eventful, as a major snowstorm knocked out the city's transportation network a few days after the BRT's launch in January 2008. The BRT was the only transportation in-service during the storm, offering the new public transit option free publicity in its early days, Xu said. On the downside, in October 2008, controversy struck the BRT when an internet blogger alleged that city officials had benefited from kickbacks related to the system. Mayor Wang Weicheng posted a three-page letter in an on-line forum a few days later, refuting the allegations (see septel). Presently, however, BRT officials are focused on the opening of the east-west line in May, said Changzhou Transit Group General Manager Cai Jianchen. Comment: Changzhou Sizing Up the Other Suitors -------------- - ¶9. (SBU) A key Yangtze River Delta (YRD) city located roughly midway between Shanghai and Nanjing, Changzhou aggressively woos foreign investors, and officials often travel to the United States and Europe to expand commercial ties. The Consulate General has frequent contacts with the city's officialdom at events in Shanghai such as the "Changzhou Meets Shanghai" event on February 24, 2009. Armed with a professional and extremely articulate Foreign Affairs Office staff and a series of glossy promotion materials, Changzhou aims to beat out local competition by offering one of the best investment environments in the YRD. City officials recognize that competition with neighboring cities is fierce, particularly during an economic slowdown. Our trip to Changzhou indicated that the city's economy is still strong, and city officials expressed optimism that the future also looks bright. From a Mercedes pick-up at the train station to a fancy lunch and dinner, city officials are adept at giving visitors the positive impression of a prosperous, progressive, and harmonious city. End Comment. Bio Note: Changzhou Party Secretary Fan Yanqing -------------- -- ¶10. (SBU) Party Secretary Fan Yanqing is a strong proponent of active cooperation with the United States, as well as other foreign countries, having hosted the "Changzhou Meets Shanghai" meeting in February 2009 and having met with previous Consul General Jarrett in August 2008. A native of Wuxi, Changzhou's close neighbor on the Yangtze River, the 53-year old graduate of Shanghai Jiaotong University held several positions in Wuxi up to Vice Mayor and Deputy Party Secretary before moving to Changzhou as Mayor in 2001. Fan, who has been Changzhou's Party Secretary since 2003, is energetic and personable, deftly handling the CG's questions on a range of issues from environmental protection to the city's e-government initiatives. Bio Note: Changzhou Vice Mayor Han Jiayu -------------- ¶11. (SBU) Vice Mayor Han is one of Changzhou's eight vice mayors, and he is primarily responsible for the overseas investment and foreign trade portfolio. He travels frequently to Shanghai and hosted a Spring Festival reception for the diplomatic corps in January 2009. Han frequently travels abroad to represent the Changzhou Municipal Government and previously has met with officials from the U.S.-China Chamber of Commerce, State of Virginia, and State of Illinois among other U.S. company and government representatives on his travels. A native of Jurong, Jiangsu Province, Han, 44-years-old, joined the Communist Party in 1985 and specialized in water conservation, serving in several technical capacities first in Jintan County and later in Changzhou. He was named Vice Director of Changzhou's Water Resources Bureau in 1996. In 2001, Han was named Secretary of the CCP Jintan County Committee, and he became Vice Mayor of Changzhou in 2003. CAMP