BEIJING BANS LOCAL-LEVEL LOBBYISTS; FEW PACKING

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 000384

SIPDIS

E.O. 12958: DECL: 02/12/2030
TAGS: PGOV PHUM SOCI CH
SUBJECT: BEIJING BANS LOCAL-LEVEL LOBBYISTS; FEW PACKING
BAGS

REF: 09 BEIJING 1318

Classified By: Deputy Political Section Chief
Ben Moeling. Reasons 1.4 (b) and (d).


1. (C) Summary: China's State Council is moving to
close the thousands of local government
representative offices in Beijing. Notorious for
giving lavish gifts in exchange for central
government pork-barrel spending in their districts,
local government representatives, according to
several contacts, have become too great an
embarrassment for the Communist Party. A State
Council "opinion" document issued January 19 is
expected to result in the closure of hundreds of
county-level representative offices in Beijing.
The large provincial representative offices are
expected to remain. Media commentators expressed
skepticism and noted that past reform efforts have
failed to stem the growth of local government
representative offices, which now number an
estimated 5000. Post contacts also predicted that
local representatives would repackage themselves as
business enterprises and remain in place. A central
government cadre told us that the proliferation of
local government representative offices is a symptom
of the concentration of power and resources in
Beijing. However, another well placed contact
predicted that the central government would enforce
the order with budget rules to prevent local
governments from spending any money in Beijing.

China's K Street: Lobbyist by Day, Jailer by Night
-------------- --------------


2. (U) According to 2006 statistics cited in the
February 8 edition of China Newsweek, Beijing has
927 officially registered provincial and local
government representative offices. The magazine
also noted unofficial estimates that, if
unregistered county-level and sub-county-level
representative offices are included, the actual
number is over 5,000. Representative offices have
several functions including lobbying for central
government funding and handling logistics when local
leaders (or their spouses or children) visit
Beijing. Representative offices have also played a
central role in detaining and returning home
petitioners from their districts who come to Beijing
to present their grievances to the central
government. Some representative offices are
reported to operate "black jails," a term in common
use in China which refers to extralegal detention
centers where petitioners are held until they can be
sent home.


3. (U) Local government representative offices
represent an industry unto themselves in China's
capital. In addition to their official functions,
many also run restaurants and hotels, both to
entertain visiting leaders and to generate revenue
to cover the office's expenses. According to one
news report, the 50 provincial-level representative
offices in Beijing alone employ approximately 2,000
government employees and another 7,000 restaurant
and hotel workers. Beijing also has a newspaper
(www.zhujingban.cn) that caters exclusively to
representative offices.

County-Level Rep Offices Forced to Close
--------------


4. (U) On January 19, the State Council issued a
document, "Opinion for Strengthening and Regulating
the Management of Local Government Representative
Offices in Beijing," announcing new measures to
regulate representative offices in the capital. The
document calls for the elimination of all Beijing
offices at or below the county level. Beijing's 50
provincial-level representative offices, which in
addition to provincial governments also include
major metropolitan areas such as Shanghai, Chongqing
and Tianjin, will stay. The document also outlines
exceptions for representative offices of the
Xinjiang Production and Construction Corps (the
quasi-military "bingtuan") and special economic
zones. Also, some local governments will be allowed
to maintain representative offices at the discretion

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of provincial authorities. The document warns that
provincial and local governments must increase
oversight of their representative offices, ensure
they conform with anti-corruption efforts, and halt
lavish entertaining. In remarks to the press a
State Administration for the Affairs of State
Council Organs official announced that before July
19 of this year, 436 local government representative
offices and an additional 146 offices representing
functional departments within local governments
would be closed. (Note: These figures appear to only
refer to registered offices and it is unclear how
central authorities will deal with the many
unregistered offices in Beijing.)

100K for Bathtub Hooch
--------------


5. (SBU) The seedy side of rep offices was
highlighted in April 2009 when news broke that the
Beijing representative offices of Xuchang and Luohe,
two cities in Henan province, together spent USD
100,000 to purchase 777 bottles of Maotai liquor, a
favorite gift among Party cadres. The alcohol
turned out to be counterfeit and the representative
offices contacted Beijing city authorities to
investigate. The phony Maotai story prompted a
media and Internet debate about the practice of
representative offices using expensive gifts to
curry favor among central government bureaucrats.
Even prior to the Maotai scandal, public interest in
representative offices had increased due to the
popularity of a series of novels, first published in
2007, that centered around a candid depiction of the
life of a Beijing representative for a fictitious
city. (Note: Following the January 19 State Council
notice, the author, Wang Xiaofang, a former aide to
a deputy mayor of Shenyang who was later jailed for
corruption, became a sought-after media commentator
on the representative office system.)

Who Will Be Left to Lock Up Petitioners?
--------------


6. (SBU) Media commentators expressed doubts about
the plan to rid Beijing of local representative
offices. An editorial in the January 28 edition of
Southern Weekend (Nanfang Zhoumo) noted that there
have been several failed attempts in the past to
regulate the offices. The State Council, the
article notes, issued a nearly identical order in
1990, only to watch the number of rep offices
explode from 309 in 1990 to the estimated 5,000
today. Representative office directors interviewed
by China Newsweek noted that the central government
depends on them to deal with petitioners and that
social order in the capital will suffer after the
offices close: "...once the petitioners increase,"
one representative told the magazine, "(the central
government) will regret it."

"Just Pushing It Underground"
--------------


7. (C) Several Embassy contacts also expressed
skepticism that the thousands of local rep offices
could really be closed. Mou Guangfeng (protect),
Director General for Environmental Impact Assessment
at the Ministry of Environmental Protection, told
PolOff January 29 that he did not think the policy
would succeed. The various representative offices,
he said, would simply be forced "underground" and
local governments would continue to have
representatives in the capital, even if they had to
operate out of hotel rooms. Mou said the rep office
phenomenon was a symptom of the over-centralization
of power and budget resources in China.


8. (C) Liu Xiaoyuan (protect),a human rights
lawyer, likewise predicted the crackdown effort
would ultimately fail. Many county-level
representative offices, he told PolOff February 2,
would continue to function under the guise of
business enterprises. In addition to lobbying and
rounding up petitioners, Liu said, representative
office workers also act as personal assistants for
visiting local leaders and their families, including
the children of local party secretaries studying at

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Beijing-area universities. (Note: During a May 2009
meeting with PolOff (reftel),the Party Secretary of
Hulunbeier (protect),Inner Mongolia, stressed the
importance of his city's Beijing representative
office in winning a central government funding for
large infrastructure projects in his district.
Though in Beijing for a private visit to see his
son, a senior at Renmin University, the Party
Secretary was chauffeured in a government car by
staff from his city's rep office. End note.) Such
blatant personal use of government resources has
sparked public ire, Liu said, and the damage done to
the Communist Party's image was the main reason
central leaders are moving to clean up the
representative office system. Provincial
governments, Liu said, are supportive of the reform
because it will increase their power over local
officials, who will be forced to work through the
provincial representative offices when interacting
with the central government.

Central Government Means Business This Time
--------------


9. (C) In a February 3 conversation with PolOff,
Deputy Director of the State Bureau of Foreign
Experts Zhang Jiangguo (protect) agreed with other
contacts that corruption was the main reason central
authorities wanted to close the local representative
offices. Party leaders also want to diminish the
role of local government lobbying in the budgetary
process. Zhang said the Bureau of Foreign Experts
(which not only controls the hiring of foreign
consultants for Chinese government entities but also
the distribution of official scholarships for
Chinese cadres to study overseas) worked regularly
with provincial representative offices but would not
deal with county- and city-level offices. Zhang
predicted the January 19 edict would result in "nine
out of ten" local representative offices in Beijing
being closed. Acknowledging that past efforts had
failed, Zhang said that this latest attempt would
succeed because the central government would enforce
the closure order with directives explicitly
forbidding local government from spending any funds
on offices or representational activities in
Beijing. Even so, Zhang said, some local
governments would inevitably attempt to maintain
their representative offices by registering them as
companies.
HUNTSMAN