MAYBE THE CAGE IS GETTING BIGGER: HANGZHOU CONTACTS DISCUSS

C O N F I D E N T I A L SHANGHAI 000250


STATE FOR EAP/CM, INR AND DRL
NSC FOR LOI, KUCHTA-HELBLING

E.O. 12958: DECL: 6/5/2034
TAGS: PGOV PHUM ECON ELAB SOCI CH
SUBJECT: MAYBE THE CAGE IS GETTING BIGGER: HANGZHOU CONTACTS DISCUSS
POLITICAL TRENDS ON JUNE 4

REF: A. (A) SHANGHAI 249

B. (B) SHANGHAI 245

C. (C) SHANGHAI 193

D. (D) 08 SHANGHAI 522

E. (E) CHENGDU 99

F. (F) GUANGZHOU 338

G. (G) BEIJING 1467

H. (H) BEIJING 1390

CLASSIFIED BY: CHRISTOPHER BEEDE, POL/ECON CHIEF, US CONSULATE
SHANGHAI, DEPARTMENT OF STATE.
REASON: 1.4 (b),(d)


Summary
--------------


1. (C) Three Hangzhou-based reform-minded contacts told PolOff
on the 20th anniversary of the June 4 Tiananmen Square massacre
that they are optimistic the "cage is getting bigger" in East
China, as the Communist Party, unable to control everything, has
been forced to yield ground on basic freedoms in cities like
Hangzhou, which they said is more "open" than Shanghai or
Beijing. Corruption remains the top concern of both Central and
Zhejiang provincial government leaders, and aggressive
anti-corruption efforts so far in 2009 demonstrate the Party's
seriousness with regard to maintaining social stability, they
said. The recent public furor over a high profile fatal car
accident in Hangzhou is illustrative of the direction of
political trends in East China today, they claimed. They
expressed concern, however, about the possible negative
political impact resulting from the economic downturn, remarking
that the current Central Government economic stimulus package
will not meet the needs of Zhejiang's business community, which
is known to be a center of China's private small- and
medium-sized enterprises (SMEs). End Summary.


Hangzhou Contacts: "The Cage is Getting Bigger"
-------------- -


2. (C) Zhuang Daohe, a Hangzhou-based lawyer and a Charter 08
signatory, told PolOff on the 20th anniversary of the June 4
Tiananmen Square massacre that he is optimistic about current
political trends in East China. Meeting in Shanghai, which was
quiet on the Tiananmen anniversary (Ref A and B),Zhuang
expressed his belief that the government and the Party are
unable to control everything, which is one factor that makes
"today's crisis" different from the political crisis in 1989.
Lawyers and human rights activists have more room to maneuver in
cities like Hangzhou, which are more "open" than Shanghai and
Beijing and where residents have greater freedom. Zhuang said
that he is not the only human rights activist in Hangzhou who is
increasingly optimistic. "Even Zhu Yufu is more optimistic,"
Zhuang stated, referring to a Hangzhou-based dissident who was
detained prior to June 4 (Ref A). Xu Pengchen, General Manager
of the Zhejiang Pengsen Import and Export Company, who
accompanied Zhuang to the meeting, added that there also are
more opportunities for exchanges between the Hangzhou business
community and foreigners, which fosters a "more open" outlook.

Corruption Still the Top Concern
--------------


3. (C) Xu said that one factor in common between 2009 and 1989
is that the Communist Party sees corruption as its greatest
potential downfall, and in a year of sensitive political
anniversaries, Zhejiang Province has seen an increase in the
number of corruption cases that have been investigated and
prosecuted. He cited the case of Wang Yuanhua, the former Party
Secretary of Zhejiang's Provincial Disciplinary Inspection
Commission and CPC Zhejiang Standing Committee member, who was
arrested in Hangzhou by CPC Central Disciplinary Inspection
Commission officers on April 14 for his role in the bribery
scandal of former Gome CEO Huang Guangyu (Ref C). Xu said the
government's aggressive anti-corruption efforts throughout the
province so far in 2009 demonstrate the Party's seriousness with
regard to maintaining social stability in Zhejiang.


Furor Over Car Accident
--------------


4. (C) The recent public furor over a high profile fatal car
accident in Hangzhou is illustrative of the direction of
political trends in East China today, they claimed. On May 7, a
25-year-old resident of Hangzhou, Tan Zhuo, was struck and
killed by a red sports car driven by 20-year-old Hu Bin, a
wealthy university student who was racing through city streets
at speeds approaching 100 mph. Victim Tan was himself a native
of a poor region in Hunan Province who worked his way through
Hangzhou Normal University and remained in the city to work
after graduation. Bloggers immediately passed information and
photos about the incident, and dozens of Zhejiang University
students went to the scene of the accident. Witnesses
reportedly overheard Hu Bin comment to friends after the
accident that "money can solve anything," and netizens widely
circulated the quote on the internet. More than 1000 Hangzhou
residents attended Tan's funeral even though the local
propaganda department had blocked official news of the accident.
Hangzhou Mayor Cai Qi ultimately issued an instruction to the
judiciary to "severely punish" the driver. On May 21, Xinmin
Weekly reported that Hu's family had agreed to pay RMB 1.13
million (USD 150,000) to the victim's family as "civil
compensation" but the case still would go through a criminal
trial.


5. (C) According to the contacts, the incident reiterated three
key baseline social and political trends that have emerged in
East China in recent years: (1) the explosion in scale and scope
of information exchanged on the internet, (2) the deeply held
concern about the growing rich-poor gap, and (3) the anger over
threats to public safety that are not addressed by the
government. Xu Pengchen observed that young residents of
Hangzhou were quickly apprised of the accident by active
bloggers who were able to exchange news and photos and share
information. Spontaneous candlelight vigils that were held for
the victim on the side of the road in Hangzhou by dozens of
mourners were organized online, Xu observed. Zhuang Daohe
stressed that the accident clearly demonstrated concerns about
the growing rich-poor gap, as many students from middle class or
poor families demanded that the courts severely punish the
wealthy student who was driving the red sports car. Zhang
Limin, an attorney at Grandall Legal Group, said that public
reaction might not have been as strong if there had not
previously been other car accidents in the city resulting from
fast driving. Such repeated threats to public safety, Zhang
said, cause the public to react angrily.


Political Fallout from Economic Downturn?
--------------


6. (C) The three contacts uniformly expressed concern, however,
about possible negative political impacts from the economic
downturn, remarking that the current Central Government economic
stimulus package will not meet the needs of Zhejiang's business
community. Zhejiang, which is known to be a center of China's
export-oriented private small- and medium-sized enterprises
(SMEs),has not received sufficient help from the Central
Government, Xu lamented. China's economic stimulus package as
it is currently designed, Xu continued, will only free up credit
for large companies (many of which are state-owned enterprises
(SOEs)),while small private firms fend for themselves. As
these companies have closed their factories throughout the
province, there has been a corresponding increase of unemployed
workers, which could further threaten social stability in the
coming months (see also Ref D).


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