SCENESETTER FOR SPEAKER PELOSI'S VISIT TO SHANGHAI

UNCLAS SECTION 01 OF 03 SHANGHAI 000226

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: OVIP PREL PGOV ECON CH
SUBJECT: SCENESETTER FOR SPEAKER PELOSI'S VISIT TO SHANGHAI

REF: BEIJING 1315

(U) Sensitive but unclassified. Not for dissemination outside
USG channels; not for Internet distribution.

Summary
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1. (SBU) Madame Speaker, your visit to Shanghai will advance
U.S.-China business relations, support energy and environment
cooperation, and promote religious freedom. You will arrive in
Shanghai one year prior to the opening of the Shanghai 2010
World Expo, the largest World Expo in history, but for which the
United States Government (USG) has not been able to confirm
participation because the required funding has not yet been
pledged by private sources, as required by U.S. law. An
American absence at this massive event will create a perception
of American weakness or disinterest in the region and could
become an irritant in the bilateral relationship. Shanghai,
China's commercial capital and home to the world's busiest port,
has over 5,500 U.S.-invested projects, including GM, Intel, GE,
Kodak, and UPS, and you will have an opportunity to hear the
concerns of the U.S. business community, which is dealing with
the global financial crisis and China's own economic downturn.
Air and water pollution remain key issues in Shanghai, and the
Environmental Protection Agency (EPA) and other USG agencies
frequently cooperate on energy and the environment with
institutions in East China. The Food and Drug Administration
(FDA) also will begin staffing its new office in Shanghai just
days after your visit. The Shanghai Consular District is home
to dynamic religious communities, and Shanghai Bishop Aloysius
Jin Luxian remains active and has connections to both the
Vatican and to leaders within the Chinese Catholic Church.
Shanghai has taken steps to improve intellectual property rights
(IPR) protection and governmental transparency, but the city
still lacks strong grassroots NGOs to promote the development of
civil society. End Summary.

Welcome to Shanghai
--------------


2. (SBU) Madame Speaker, we at the Consulate General in Shanghai
are pleased that you have included this commercially,
politically and culturally important metropolis in your China
itinerary. The below information focuses on Shanghai-specific
issues and serves to supplement information provided by Embassy
Beijing (reftel).

Shanghai: China's Commercial Capital
--------------


3. (SBU) Often called the "New York" of China, Shanghai is
China's commercial capital and home to the world's busiest port.
Shanghai enjoyed double-digit GDP growth for the 16 consecutive
years prior to 2008 but fell below 10 percent in 2008, and GDP
growth in the first quarter of 2009 dropped dramatically to 3.1
percent year-on-year. Despite the downturn, Municipal
Government officials expect growth to rebound during the second
half of the year, and Shanghai's per capita GDP remains more
than USD 11,600, 3-4 times the national average. With its
strategic location, highly skilled workforce and solid
infrastructure, Shanghai is a magnet for foreign direct
investment (FDI). Foreign-invested companies account for half
of Shanghai's trade and roughly 20 percent of employment.

U.S. Economic Presence in Shanghai
--------------


4. (SBU) Shanghai has over 5,500 U.S.-invested projects,
including GM, Intel, GE, Kodak, and UPS. A majority of
investment is in manufacturing, but investments in service
industries are growing rapidly. U.S.-invested companies in
Shanghai account for approximately one-eighth of the total of
40,000 foreign invested companies in Shanghai. Shanghai's
American Chamber of Commerce (AmCham),with more than 1,500
member companies about 3,500 individual members, and 50-60 new
members a month, is Asia's largest AmCham. More than 25,000
Americans are long-term residents in the Shanghai Consular
District (Shanghai and the provinces of Anhui, Jiangsu and
Zhejiang),with up to 50,000 visiting at any time.

Shanghai 2010 World Expo - Will the USA Miss It?
-------------- ---


5. (SBU) In 2010, Shanghai will host the World Expo, a showcase
for China's development second only to the Beijing Olympics.
The Shanghai Expo, which will open on May 1, 2010, will be the
largest World Expo in history. The Expo will run through

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October 31, 2010 and Shanghai officials predict it will attract
more than 70 million visitors, the vast majority from China. To
date, 190 countries and 48 international organizations have
accepted invitations to participate in the Shanghai 2010 World
Expo, the largest number in Expo history. The theme of the
Expo, "Better City - Better Life", signifies Shanghai's
commitment to green urban development and status as a major
economic and cultural center.


6. (SBU) The United States Government (USG) has not been able to
confirm participation in the Shanghai 2010 World Expo, however,
because the required funding has not yet been pledged by private
sources. The State Department is prohibited by 1994 and 1999
statutes from spending appropriated funds to support a national
pavilion in the absence of a specific Congressional
authorization. Since 1994, non-governmental entities have been
formed to design USA national pavilions at World Fairs/Expos and
to raise 100 percent of the funding from the private sector. In
2000, the USA missed the Millenium Expo in Germany. In 2005,
the USA had a successful pavilion in Aichi, Japan, due primarily
to the majority-funding support provided by Toyota's North
American subsidiary.


7. (SBU) Currently, the United States has communicated only its
hopes to participate, contingent on private fundraising success.
The estimated total budget of the USA Pavilion is USD 61
million, which includes all construction, staffing, operation,
show presentations, and post-Expo building demolition and
materials removal costs. Fundraising to date for the planned
USA National Pavilion has only raised a fraction of the USD 61
million required, though several well-known companies have made
modest commitments in recent days. A number of American
companies are involved in the Expo on their own, independent of
a national pavilion. Coca-Cola, General Motors-China, and
possibly Best Buy will build their own corporate pavilions in a
separate area of the Expo, entirely unrelated to the USA
National Pavilion. Cisco and IBM have become Senior Sponsors of
the overall Expo. The NBA and Anschutz Entertainment Group are
helping to build the Expo's permanent Performing Arts Center on
the Expo grounds.


8. (SBU) Taking place within China for the first time, the
Shanghai Expo is not a typical World Expo/Fair. Its
unprecedented size and public diplomacy value far surpass those
of other Expos in recent decades. Unlike the Olympics, which
last just two weeks and allow the host country to showcase
itself to a global audience, World Expos are six months long and
allow the rest of the world to showcase themselves to the
citizens of the host country. For the United States, a USA
National Pavilion at the Expo represents an outstanding public
diplomacy opportunity to tell America's story directly to an
expected 60 million Chinese visitors the way that we want it to
be told. Speculation that America will be one of only two
countries that have diplomatic relations with China to miss the
Expo (the other is Andorra) is already rampant in both Chinese
and Western media and blogospheres. Chinese observers are
already making the unfortunate and inaccurate conclusion that
the U.S. is in decline and "cannot afford a pavilion." Others
are interpreting a possible U.S. absence as a deliberate slap in
China's face and warning it could damage U.S. commercial
interests in China. Looking further afield to China's
neighbors, at a time when America is seeking to emphasize its
strong interest in the region -- as evidenced by Secretary
Clinton's choice of Asia as her first overseas trip -- a U.S.
absence at the Expo will not go unnoticed.

Environmental and Health Cooperation in East China
-------------- --------------


9. (SBU) As one of China's key areas of economic growth and
development with a large, concentrated population, East China
has a broad range of environmental and health issues. Water and
air pollution are the key environmental issues in East China.
Authorities grapple with the need to mitigate industrial air and
water pollution while maintaining sustained economic
development. Nearby Lake Tai, a source for drinking water, has
had blue algae issues attributed to industrial waste and
agricultural and residential pollution, causing the neighboring
Jiangsu Provincial Government to adopt a series of stricter
regulatory measures. As the affluence of East China's populace
has grown, so has its focus on environmental and quality of life
issues.


10. (SBU) The U.S. Environmental Protection Agency (EPA)
recently extended its cooperation agreement with the Ministry of
Environmental Protection and has many cooperative programs in
the region on water and air pollution, waste treatment, and

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legal/regulatory frameworks. EPA Region 9 (California) has a
"sister" relationship with the East China Regional Supervision
Center near Nanjing, which facilitates visits and information
sharing between the two sides. Research institutions in East
China frequently host international conferences on a wide range
of environmental issues, drawing U.S. visitors from EPA, HHS,
NOAA, DOE, NSF, NIH, academia, and the private sector. The Food
and Drug Administration (FDA) is currently in the process of
setting up a presence in Shanghai to work on medical device and
pharmaceutical issues, and the first U.S.-direct hire for the
FDA Shanghai office is expected to arrive at post at the end of
May.

Religious Freedom in Shanghai
--------------


11. (SBU) The Shanghai Consular District is home to dynamic
religious communities. Consulate officers routinely meet with
religious contacts to better understand current developments.
The most prominent Catholic figure in the Consular District is
92-year-old Shanghai Bishop Aloysius Jin Luxian. Bishop Jin
remains active and has connections to both the Vatican and to
leaders within the Chinese Catholic Church. His designated
successor, Bishop Xing Wenzhi, received approval from both the
Vatican and Beijing prior to his elevation to that position. We
are working with Xujiahui Church and the Shanghai Municipal
People's Congress to arrange a meeting with Bishop Jin during
your visit.


12. (SBU) The official Protestant Church of China, CCC/TSPM, is
headquartered in Shanghai. Two of China's most active
Protestant congregations are located in neighboring Zhejiang
Province, where there are approximately 1.5 million Protestants
according to Zhejiang CCC/TSPM officials. (It remains difficult
to estimate the actual number of Protestants in East China
because official statistics do not include house church
members.) China's only "megachurch" -- with a capacity to hold
6,350 parishioners -- is located in Hangzhou, Zhejiang's
capital. Nanjing in Jiangsu Province is home to the CCC/TSPM's
seminary and to the Amity Bible Printing Press, the world's
largest printer of Bibles.

Shanghai Politics: Limited Reforms
--------------


13. (SBU) To attract investors and bolster economic development,
Shanghai has taken measures to protect intellectual property
rights (IPR) and improve governmental transparency. The
municipal government has an Open Government Information Act and
publishes some of its draft laws on the Internet for public
comment. The Pudong New District in the eastern half of
Shanghai is also experimenting with transparency and has put
many of its regulations on the Internet. In other spheres,
however, such as media, religion, and NGO development, the
Shanghai Government continues to be very cautious. As in most
cities in China, the media is tightly controlled and the
Internet monitored. Shanghai has very few grassroots NGOs, and
most NGOs have a close relationship with the Government.
SCHUCHAT