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### Viewing cable 06GUANGZHOU14848, XIAMEN: CITY WITH A VISION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06GUANGZHOU14848 | 2006-05-18 03:17 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Guangzhou

`

    VZCZCXRO8839
    RR RUEHAG RUEHCN RUEHDF RUEHGH RUEHIK RUEHLZ
    DE RUEHGZ #4848/01 1380317
    ZNR UUUUU ZZH
    R 180317Z MAY 06
    FM AMCONSUL GUANGZHOU
    TO RUEHC/SECSTATE WASHDC 8177
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUCNMEM/EU MEMBER STATES COLLECTIVE
    RUCPDOC/USDOC WASHDC
    RUEAIIA/CIA WASHDC
    RUEKJCS/DIA WASHDC
    RHHMUNA/HQ USPACOM HONOLULU HI

` `

    UNCLAS SECTION 01 OF 03 GUANGZHOU 014848

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR EB, R, EAP/CM, EAP/PD, DRL
    STATE PASS USTR - STRATFORD, CELICO
    USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE
    USPACOM FOR FPA

    E.O. 12958: N/A
    TAGS: ECON PGOV EWWT ETRD EINV CH
    SUBJECT:  XIAMEN: CITY WITH A VISION

    REF:  A) Guangzhou 13562 B) Guangzhou 13384 C) Guangzhou
    13385 F) Guangzhou 14707 G) Guangzhou 14818

    ¶1.  (U) Summary:   The city of Xiamen, Fujian Province's
    vibrant economic driver in the southern part of the
    province, continues to impress with both its current
    execution and future vision to be one of China's leading
    cities.  During an early April visit to the city, Xiamen
    Vice-Mayor Zhan Cangzhou detailed the city's plan to enhance
    its reputation as China's most livable and civilized city by
    expanding its high-tech manufacturing and service industry
    base.  The Xiamen International Port, led by Yao Zhang,
    corroborated this vision with plans for infrastructure
    growth, efficiency improvements, and safety and
    environmental concern as the port tries to move into the
    elite tier of international ports, following behind Shanghai
    and Shenzhen ports in a quest for mainland port supremacy.
    End Summary.

    The Vision Defined
    ------------------

    ¶2.  (U) Xiamen Vice-Mayor Zhan Cangzhou met the Consul
    General at the Xiamen Mandarin Hotel to discuss the current
    and future state of the city of Xiamen.  Zhan stressed that
    Xiamen, although already nationally ranked as the second
    "most livable city" and the "most civilized city in the
    People's Republic of China" in separate domestic surveys,
    would not rest on its laurels.  Xiamen instead has a
    detailed plan to build on this sterling reputation and its
    already strong high-tech manufacturing base, currently
    represented by U.S. companies, Dell and Kodak as well as
    other foreign and domestic companies.  The key to this plan
    is to leverage the city's reputation of being a civilized
    and livable city to better attract additional
    environmentally friendly, high-tech manufacturing jobs and
    continue to build its growing service industry.  This desire
    is strongly motivated by city leadership wishes for Xiamen
    to maintain its uniqueness and avoid becoming yet another
    polluted, smoke stack filled Chinese metropolis.

    Gu Lang Yu - Part of the Xiamen Difference
    ------------------------------------------

    ¶3.  (U) Earlier the same day, a short tour of Xiamen's best
    known attraction, Gu Lang Yu Island - the former enclave of
    foreigners in Xiamen, affirmed Xiamen's unique place among
    Chinese cities.  Upon exiting from the ferry, licensed tour
    guides meet visitors and politely ask if their services are
    needed.  Electric cars are also available to rent, as
    regular automobile traffic is not allowed on the island.
    The Xiamen government also provides an easily located
    tourist center just steps from the ferry pier that offers
    free maps, suggests walking tours for individuals, and
    provides a model of the island to help visitors orient
    themselves and easily find well preserved sites such as the
    former U.S. and other consulates and numerous grand restored
    homes of various European and Asian styles.

    A Port for the Future
    ---------------------

    ¶4.  (U) Executive Director Fang Yao of the Xiamen
    International Port Company stressed that Xiamen's unique
    position as the only deep-water port between the Pearl and
    Yangtze River Deltas had already enabled the port to become
    the seventh largest in the PRC and the 24th busiest in the
    world.  With a current capacity of seven berths, the port is
    constructing three new berths that will come online between
    June and December of this year.  Negotiations are also
    ongoing with Maersk, a global Danish shipping company, to
    build an additional three berths.  The new berths, valued at
    over RMB 3 billion (USD 374 million), will be jointly owned
    and completed by the end of 2007.  New container control
    software purchased from the United States will also allow
    the port to increase throughput from its current rate of 28
    containers per hour to 32 containers per hour.  The
    completion of these six new berths and the throughput
    improvements will enable Xiamen International Port to almost
    triple its shipping volume from 2005 levels to over seven
    million twenty-foot equivalent units (TEU).  Additionally,
    the port is already handling many of the new super-sized 45-

    GUANGZHOU 00014848  002 OF 003

    and 48-foot containers, a step up from the still mainstream
    40-foot containers.

    Infrastructure is Key to Continued Success
    ------------------------------------------

    ¶5.  (U) Infrastructure is critical for Xiamen International
    Port success as well.  New freeways and railways are crucial
    to bringing export and import cargo to the port.  Xiamen
    government and port officials are lobbying for an increased
    number and improved freeways to Jiangxi and Hunan provinces.
    This additional infrastructure will allow Xiamen
    International Port to ship products from the PRC's interior
    cities, themselves beneficiaries of migrating factory
    production from the relatively higher labor cost areas of
    Guangdong province, that are currently only connected to
    Shenzhen or Shanghai.  A new railway from Shenzhen to Xiamen
    is already planned for completion by 2011 and construction
    will start by the end of this year.  Products from southern
    and eastern Guangdong province will then have the option to
    ship out of Xiamen.  With handling fees that are 60% lower
    than Shanghai and 50% of Shenzhen, Yao is certain that
    manufacturers will find this new option attractive.  To help
    convince producers of the Xiamen International Port's
    merits, the company has even gone so far as to set up branch
    offices in many cities in Fujian and Jiangxi provinces to
    market its services.

    Location, Location, Location
    ----------------------------

    ¶6.  (U) Xiamen's proximity to Taiwan is one of its biggest
    strengths and opportunities for growth.  If and when the
    "three big links" (da san tong) between Taiwan and mainland
    China are approved and implemented, Yao believes that the
    bulk of Taiwan cargo will flow through Xiamen International
    Port.  Much of this traffic is already going from Xiamen to
    Gaoxiong (Kaohsiung), Taiwan, but is delayed as the
    paperwork must currently travel through Hong Kong.  The
    heavy investment from Taiwanese businesses in Fujian-located
    industry further drives Taiwan-bound exports through this,
    Fujian's largest port, accounting for more than 50% of all
    cargo now handled, according to Mr. Yao.  With such a
    positive growth outlook and expansion backed up by 16% GDP
    growth for the city of Xiamen and 12% growth for Fujian
    Province in 2005, Xiamen International Port Company
    successfully went public, listing on the Hong Kong Stock
    Exchange on December 19, in part to fund its aggressive
    expansion plans.

    Port Security a Priority
    ------------------------

    ¶7.  (U) A tour of the port facilities after the meeting
    demonstrated Xiamen Ports' commitment to security, though
    the last major incident of alien smuggling via container
    reportedly originated from Xiamen Port.  Among the first
    things noticed on entry were security checkpoints and
    cameras that recorded all incoming vehicles.  As 18% of all
    cargo exported from Xiamen arrives in the United States and
    the past usage of containers and ships for alien smuggling
    from China, security at the port is or paramount concern.
    Yao highlighted that Xiamen International Port meets safety
    measures as agreed to in the 1974 International Convention
    for the Safety of Life at Sea (SOLAS).  The United States
    Coast Guard performed a port security and safety inspection
    in 2005 as well.  The port has recently added more
    illumination and increased monitoring by persons and systems
    to help safeguard boats from access by non-employees.
    Waterside security is provided by the Ministry of Public
    Security as well as by port security.  Yao said that
    environmental protection is of major concern to Xiamen and
    the port runs frequent water quality tests to monitor
    pollution.  Furthermore, the port has its own centralized
    wastewater treatment facilities.  Finally, the excellent
    condition of the port was noticeable from extremely well-
    maintained tugboats, equipment in good condition, solid
    organization of its containers, to machines that
    automatically applied a sanitizing wash to all vehicles and

    GUANGZHOU 00014848  003 OF 003

    containers leaving the port by road.

    Comment: When Can We Move There?
    --------------------------------

    ¶8.  (U) Xiamen is an impressive city.  Visiting delegations
    and Consulate officers all agree Xiamen is a very liveable
    place.  Unlike some of the other cities visited during the
    short and long marches to northeast Guangdong and southern
    Fujian Provinces, Xiamen is blessed with a combination of
    geographical and leadership advantages.  Building on its
    already strong base, Xiamen, also host to the annual China
    International Fair for Investment and Trade, will continue
    to develop its strengths and reach out to inland provinces
    with an eye to join the world's top 20 megaports.  End
    comment.

    ¶9.  (U) Officials visited in Xiamen include:
    Zhan Changzhou Vice Mayor
    Sun Yun        Director, Political Institute under Taiwan
                   Research Institute (TRI), Xiamen University
    Zhang Wensheng Deputy Director, Political Institute under
                   TRI, Xiamen University
    Shi Zhengfang  Deputy Director, Economic Research Institute
                   under TRI, Xiamen University
    Chen Kongli    Prof, TRI, Xiamen University
    Fang Yao       GM, Xiamen International Port Co. Ltd
    Hong Lijuan    Board Secretary, Xiamen International Port
                   Co. Ltd
    Miu Luping     Chief Economist, Xiamen International Port
                   Co. Ltd
    Chen Aijing    Director, Foreign Affairs Office (FAO),
    Xiamen Government

    DONG

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