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C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000895 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/17/2031 
TAGS: ECON PINR PREL TW JP
SUBJECT: ECON VIEW OF TAIWAN FUTURE/U.S. INTERESTS, PART II 
 
REF: TAIPEI 774 
 
Classified By: AIT Acting Director David Keegan, 
Reasons: 1.4 (b/d) 
 
¶1.  (C) Summary: Taiwan Minister-without-portfolio Ho 
Mei-yueh expressed economic-strategic views emphasizing 
China's threat to traditional U.S. allies in East Asia during 
a recent meeting with AIT Acting Director. (Part I, reftel, 
discussed Ho's use of strategic arguments to support a 
U.S.-Taiwan FTA.  Septel will further discuss Taiwan's FTA 
views.)  While we do not share her views, we believe they are 
widely held by top officials of the Chen Administration, and 
reflect a growing frustration by these top officials over 
their limited ability to slow or control Taiwan's economic 
integration into China.  End summary. 
 
Pan-Green Favors Japan Over China 
--------------------------------- 
 
¶2.  (C) Minister Ho argued that the United States needs 
Taiwan to bolster its strategic defense in the western 
Pacific, a view based on a Pan-Green adversarial view of 
cross-Strait economic as well as political relations. 
Right-leaning scholars from Japan at this year's 
U.S.-Japan-Taiwan trilateral strategic dialogue held in 
Taipei in January, however, did warn that a Taiwan tilt 
towards China would create serious strategic vulnerabilities 
for Japan. 
 
¶3.  (C) Attitudes in Taiwan towards Japan and China generally 
reflect political attitudes (Pan-Green being pro-Japan and 
anti-China, Pan-Blue being pro-China and anti-Japan.) 
Pan-Green Taiwan scholars explain that the foundations of 
Taiwan's social, political, and economic achievements were 
laid during the fifty years of Japanese rule 1895-1945, 
during which Taiwan achieved far higher levels of health and 
education than existed even on the coastal provinces of 
China.  Many Japanese, in turn, view Taiwan favorably for 
historical reasons and because of shared values such as 
democracy and rule of law, and many Japanese companies 
partner with Taiwan companies for operations in China. 
 
¶4.  (C) PRC scholars are also aware of the Pan-Green's 
affinity for Japan.  A recent article by Liu Jianfei of the 
PRC Central Party School's Institute of Strategic Studies 
describes "Taiwan independence forces" and "Japanese 
rightists" as the major sources of trouble for East Asian 
peace and stability.  He urges the world to be wary of these 
two "evil forces" forming an alliance. 
 
Rapid Economic Integration 
-------------------------- 
 
¶5.  (C) Chunghua Institute of Economic Research (CIER) 
President Ke Chen-en recently emphasized in conversations 
with AIT that the cross-Strait status quo is not static, but 
dynamic: the two economies are rapidly integrating. 
Economists and analysts have long urged removing barriers 
(i.e., implementing the three links) to cross-Strait trade 
and investment precisely in order to preserve Taiwan's 
prosperity and prevent its "economic marginalization."  Ho's 
sees an inevitable Taiwan "tilt towards China," leading her 
to worry that economic integration will not lead to conflict 
between China and Taiwan, but to political accommodation and 
common interests.  Some in the Pan Blue opposition argue that 
such trends will render the military balance irrelevant. 
Pan-Green supporters like Ho seek a separate identity for 
Taiwan therefore resist the integration trend.  Minister Ho 
told AIT that Taiwan is reluctant to lift restrictions on 
cross-Strait trade and investment because of fear this would 
increase China's influence over Taiwan. 
 
Impact on Region 
---------------- 
 
¶6.  (C) Minister Ho intended her warning to AIT that 
Taiwan-PRC economic integration could bring strategic 
instability to refer to the larger East Asia region, not just 
to the cross-Strait situation.  A Taiwan "tilt" towards China 
 
TAIPEI 00000895  002 OF 002 
 
 
would threaten not only Japan's sea lanes, but also Japan's 
territorial claims.  While Taiwan makes roughly the same 
claims as the PRC in the South and East China Seas, it uses a 
different rationale, and does not discuss or coordinate 
claims with the PRC.  Taiwan political accommodation with the 
PRC would, at a minimum, allow Taiwan and the PRC to 
coordinate strategic territorial claims, including those in 
dispute with Japan, Vietnam, the Philippines, and Malaysia. 
 
¶7.  (C) A recent article in a PRC Ministry of Foreign Affairs 
journal noted that Taiwan is of much higher strategic value 
to Japan than to the United States.  Cross-Strait 
reunification, the article argued, would place China in a 
much more favorable position in its disputes with Japan over 
access to resources in disputed territories in the East China 
Sea and around the Diaoyutai Islands. 
 
Danger and Frustration 
---------------------- 
 
¶8.  (C) There is a danger in Minister Ho's view that the 
current trend of rapid Taiwan-PRC economic integration will 
inevitably lead Taiwan to tilt towards China.  If President 
Chen believes current trends inevitably lead to political 
accommodation with China, he may conclude that he must act 
soon to secure Taiwan's current degree of separateness from 
China.  This may be already happening.  Several local 
contacts have attributed President Chen's New Year's remarks 
on implementing "active control" over economic relations with 
China to his "frustration" over the current trend. 
 
Comment 
------- 
 
¶9.  (C) The Pan-Green view that Taiwan-PRC economic 
integration is a threat to U.S. strategic interests reflects 
a Pan-Green ideological view of the region through Pan-Green 
Taiwan lenses.  We do not know how Japan will respond to 
these Pan-Green arguments. 
KEEGAN