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### Viewing cable 07CHENGDU129, CHONGQING SCHOLARS DISCUSS CITY'S DEVELOPMENT CHALLENGES

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07CHENGDU129 | 2007-05-18 10:26 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Chengdu

`

    VZCZCXRO9379
    RR RUEHGH RUEHVC
    DE RUEHCN #0129/01 1381026
    ZNR UUUUU ZZH
    R 181026Z MAY 07
    FM AMCONSUL CHENGDU
    TO RUEHC/SECSTATE WASHDC 2501
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
    RHEFDIA/DIA WASHINGTON DC
    RUEHCN/AMCONSUL CHENGDU 3025

` `

    UNCLAS SECTION 01 OF 02 CHENGDU 000129

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR EAP/CM AND EB
    NSC FOR CHRISTINA COLLINS

    E.O. 12958: N/A
    TAGS: ECON ELAB PGOV SOCI CH
    SUBJECT: CHONGQING SCHOLARS DISCUSS CITY'S DEVELOPMENT CHALLENGES

    REF: A) 06 CHENGDU 1161; B) O6 CHENGDU 1022; C) 06 CHENGDU 1174; D) CHENGDU 36

    CHENGDU 00000129  001.2 OF 002

    ¶1. (SBU) Summary.  In a day of meetings with Chongqing
    academics, Embassy Beijing Econ M/C and Congenoff heard about
    some of the city's most pressing issues: the aftereffects of
    Three Gorges Dam construction, industrial reform, the plight of
    farmers and migrant workers.  In addition, the city serves as a
    pilot for the concept of "urban-rural integration."  The depth
    of the city's problems seems to have attracted extensive
    official attention at least, although the gap between policy and
    practice remains as large as ever.  End summary.

    --------------------------------------------- --------------
    ----------------------
    THREE GORGES: BUILDING IT WAS JUST THE BEGINNING
    --------------------------------------------- --------------
    ----------------------

    ¶2. (SBU) In an unusually frank presentation, Chongqing
    University Academic Commission Director Nei Hengshun (who said
    he had spent 16 years in Three Gorges-related research)
    described the social effects of Three Gorges Dam construction as
    "a long-term problem" that will take "many years to solve."
    Noting that many ancient cities had been flooded by the
    reservoir, he said that Chongqing was unprepared for the
    displacement of such a large number of poorly-educated farmers,
    and that the overall effect had been to increase even further
    China's rich-poor gap.  Said Nei, "If this problem (of displaced
    farmers) is not solved, it will affect social stability."

    ¶3. (SBU) Although Nei stated at one point that the engineering
    behind the dam was the "pride of China," he went on to decry its
    effects on the environment.  According to Nei, the dam itself is
    located in an area of unique geography, with granite outcrops in
    an area largely composed of limestone.  While the granite has
    the effect of stabilizing the dam, the flooding of the reservoir
    in an area of highly porous soil will change water levels, and
    will ultimately result in an increase in landslides, he claimed.
     Even more serious, he said, was the problem of "seasonal
    reversal":  before the dam was constructed, the area downstream
    from the dam was relatively dry in most seasons except for the
    periods of summer floods.  However, the construction of the dam
    will result in increases in water flows during the winter and
    decreases in the summer, leading not only to more summer
    droughts but also to profound changes in the ecology of the
    entire Yangtze River area.

    ¶4. (SBU) Turning briefly to the subject of the South-to North
    Water Diversion Project, Nei said that construction of the
    western line had become "improbable" due in large part to the
    concerted opposition of Southwest China academics.  Nei
    mentioned in particular the book "Nine Questions Concerning the
    Western Line Project," which he said had attracted "strong
    attention" from the Central Government (ref A).  Asked about the
    possibility of a line linking the Yellow River with Tibetan
    water sources, Nei said that such a project was "impossible."

    --------------------------------------------- --------------
    -----------
    INDUSTRIAL REFORM STILL A WORK IN PROCESS
    --------------------------------------------- --------------
    -----------

    ¶5. (SBU) For Chongqing University Sustainable Economic
    Development Research Institute (SEDRI) Director Chen Deming, the
    restructuring of Chongqing's industrial base has become an
    "unavoidable challenge."  Two of the most urgent priorities are
    (1) an increase in the production of motorcycles and automobiles
    (he cited the Changan-Ford joint venture specifically) as a
    stimulus to the development of other businesses in Chongqing,
    and (2) the movement of old-line industries such as iron and
    steel production from the city center to outlying areas, and the
    promotion of the chemical industry, aluminum production,
    clothing industry, light manufacturing, and high-tech firms as
    substitutes.  He cited the Chongqing Iron and Steel Company as
    exemplifying the city's antiquated and inefficient
    "production-based economy," and said that due to environmental
    protection concerns it would be moved to Changshou (about 80
    kilometers from downtown Chongqing).  Chen foresaw a gradual
    decline in the percent of the city's GDP coming from industrial
    production, and a concomitant rise in the service sector.

    --------------------------------------------- --------------
    --------------------
    MIGRANT FARMERS AND URBAN-RURAL INTEGRATION
    --------------------------------------------- --------------
    --------------------

    CHENGDU 00000129  002.2 OF 002

    ¶6. (SBU) Chongqing Industrial and Business University President
    Wang Chongju outlined the city's strategy for "urban-rural
    integration," which he said was driven by Central Government
    directives.  Claiming that Chongqing's urbanization rate (the
    percentage of the population living in urban areas) was now 45
    percent, he saw the rate increasing to 55 percent over the next
    ten years, and eventually peaking at 60 percent.

    ¶7. (SBU) The conceptual model used by Chongqing's planners is
    called "one circle and two wings."  The circle refers to those
    areas within a one-hour drive of the city's center, covering 23
    districts and counties, and accounting for 78 percent of
    Chongqing's GDP.  Wang foresaw per capita GDP in the "circle
    area" rising to USD 8000 by the year 2020.

    ¶8. (SBU) The two wings are swaths of especially poor rural
    territory flanking the urban core.  The first "wing" consists of
    eight counties centered on Wanzhou in the Three Gorges Dam
    reservoir area.  The second "wing" is centered on Qianjiang in
    southeastern Chongqing, an area with heavy minority populations
    and per capita incomes only one-eighth to one-sixth of those in
    Chongqing's urban core.  The residents of those two "wings" will
    be urged to move to urban areas as part of the urban-rural
    integration process.

    ¶9. (SBU) Another important part of urban-rural integration will
    be hukou reform, said Wang.  Claiming that rural hukous had
    already been abolished in some areas, Wang acknowledged in
    response to Econ M/C's question that many farmers and migrant
    workers still faced major challenges in obtaining social
    benefits such as education and medical care.  However, he
    claimed that the hukou problem was "less and less important,"
    since school enrollment fees had decreased or been eliminated
    altogether and the health insurance system (especially the Rural
    Cooperative Medical System) had improved.  He said that the
    municipal government planned to offer more vocational training
    to migrant workers, and pointed to the construction and light
    processing industries as well as to the service sector
    (especially household servant and restaurant industries) as
    providing the bulk of employment opportunities.

    ---------------
    COMMENT
    ---------------

    ¶10. (SBU) As Chongqing prepares to celebrate its tenth
    anniversary as a centrally-administered municipality, Central
    Government officials may see the city as something of a test bed
    for national economic and social strategies, as in the case of
    the "urban-rural integration" project.  After all, Chongqing is
    in many respects a microcosm of the myriad economic and social
    problems afflicting inland China (refs B-D):  during an
    after-dinner stroll around Chongqing's brightly-lit and
    attractive Jiefangbei area, Econ M/C and Congenoff were set upon
    by numerous beggars and pimps.  And just outside one shopping
    mall in the same area, police had massed in an apparent attempt
    to stave off unrest in connection with the eviction of a tenant
    (this was shortly after the resolution of the "Nail House"
    incident between a recalcitrant property holder and a
    construction firm).  How will the best efforts of policymakers
    and academics all turn out?  Watch this space.

    ¶11. (U) This cable has been cleared by Embassy Beijing Economic
    Minister-Counselor.
    BOUGHNER

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