VZCZCXRO8384
RR RUEHCHI RUEHDT RUEHHM
DE RUEHBK #3743/01 1740848
ZNY CCCCC ZZH
R 230848Z JUN 06
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 9674
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBJ/AMEMBASSY BEIJING 2609
RUEHIN/AIT TAIPEI 8647

C O N F I D E N T I A L SECTION 01 OF 02 BANGKOK 003743 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 06/22/2016 
TAGS: PREL PGOV ECON ASEAN TH XE
SUBJECT: THAI-TAIWANESE ON CHINA AND CHINA'S NEW PARADIGM 
 
Classified By: Political Counselor Susan M. Sutton, Reasons 1.4 (B, D) 
 
¶1.  (C) Summary.  Thai-Taiwanese business representatives in 
Bangkok are very cognizant of the growing PRC presence in 
Thailand yet do not believe their business interests are 
threatened in the foreseeable term.  Taiwan remains the third 
largest source of Foreign Direct Investment in Thailand, 
after Japan and the United States.  Thai-Taiwanese 
representatives claim that most PRC business representatives 
do business in Thailand to work around import quotas aimed at 
China or to feather their own nests away from anti-corruption 
watchdogs on the Mainland.  Our pro-Taiwan interlocutors 
acknowledge the effectiveness of political pressure brought 
to bear by Beijing which makes it impossible for Taiwanese 
firms to bid on large Thai government contracts.  They also 
see PM Thaksin as facilitating Chinese business interests in 
Thailand.  End Summary. 
 
 
REASONS FOR INVESTING ABROAD 
---------------------------- 
 
¶2.  (SBU) On June 19, Poloff met with six business leaders in 
the Thai-Taiwanese community at the Thai-Taiwan Business 
Association (TTBA), an association consisting of fifteen 
subsidiary ethnic Taiwanese business associations at the 
local level.  Preston Cheng, Chief Supervisor of TTBA, 
believes that PRC businesses are investing abroad because: 
1) by dealing in other currencies, they can avoid any 
problems caused by future appreciation of the RMB; 2) they 
can avoid import quotas imposed on Chinese goods by other 
countries; and 3) managers of some State-owned enterprises 
(SOEs) can engage in corrupt practices far from the eyes of 
mainland watchdogs. 
 
 
WE'RE NOT THREATENED, JUST POLITICALLY MARGINALIZED 
--------------------------------------------- ------ 
 
¶3.  (C)  For now, PRC investment is primarily focused on 
large concerns.  Vincent Chiu, Secretary General of TTBA, 
explained that the "biggest difference between us (the 
Thai-Taiwanese) and China is that we are mainly comprised of 
small and medium enterprises (SMEs) owned by individuals who 
have immigrated to Thailand while the Chinese tend to be 
opportunists within larger enterprises looking to make 
short-term profit without seriously considering taking up 
roots in Thailand."  Chiu added that even when interests 
overlap (such as in the manufacturing sector), his group is 
not concerned because Thai-Taiwanese products adhere to 
quality while the Mainland Chinese products are "cheap and 
break easily." 
 
¶4.  (C) China is using political pressure to marginalize 
Taiwan's ability to compete on large projects.  Preston Cheng 
noted that "when big businesses in Taiwan are interested in 
investing in Thailand, 'political considerations' keep the 
Thai government from considering their bids.  He cited 
Taiwanese telecommunications giant China Telecom's failed 
attempt to break into the Thai market as an example.  In that 
case, senior officials in the Royal Thai Government (RTG) 
"did not even give its chairman a meeting," he said. 
However, the group unequivocally agreed that the RTG is 
"extremely supportive of Taiwanese investors" at the SME 
level, citing that Taiwan remains the third largest source of 
FDI in Thailand, behind the U.S. and Japan. 
 
 
CONSPIRACY THEORY? 
------------------ 
 
¶4.  (C) Andy Huang, Chief Consultant for TBBA, laid out what 
he believed to be a new paradigm for the Chinese -- expanding 
Chinese influence in the region while limiting U.S. 
participation.  He believes that China is seizing the 
opportunity to expand and cement existing influence in 
Southeast Asia "while the U.S. is tied up in Iraq and 
Afghanistan."  Since China remains a one-party system under 
which political, economic and commercial interests are 
linked, Chinese leaders look at foreign investment as a 
political tool.  Huang warned that "China's objective is more 
than just business - it's in furthering national interests." 
 
¶5.  (C/NF) Huang used China's "keen interest" in Thailand 
Shin Corp's Telecommunications activities as an example. 
Huang is convinced that China is "looking to gain access to 
more base stations" to add to its already growing satellite 
network elsewhere in Southeast Asia.  He suggested that, by 
investing in the Thai telecommunications sector, China is 
expanding its influence throughout ASEAN.  Huang linked this 
investment with Chinese diplomatic and political moves in the 
 
BANGKOK 00003743  002 OF 002 
 
 
region.  He believes that China's more active and collegial 
participation in ASEAN in recent years is yet another 
indicator of China's policy of expanding its influence in the 
region.  He went on to say that China is using international 
organizations that do not include U.S. membership -- such as 
the Shanghai Cooperative Organization (SCO) and Conference on 
Interaction and Confidence Building Measures in Asia (CICA) 
-- to "act as cells" to politically link and incorporate its 
members into a "world system" with minimal U.S. involvement. 
 
 
AN OPPORTUNIST THROUGH AND THROUGH 
---------------------------------- 
 
¶6.  (C/NF) Huang commented that, ironically, former Deputy 
Secretary Zoellick's call for China to become a "responsible 
 
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stakeholder" in the region gave what he perceived as a 
"green-light" for Beijing to more actively participate in 
multi-lateral organizations.  Huang also claimed that 
Caretaker PM Thaksin Shinawatra has facilitated China's 
policy.  By helping to change Thai government policy from one 
of mistrust to one openly embracing China, Thaksin has helped 
China reach its goal in Thailand. 
 
 
COMMENT 
------- 
 
¶7.  (C) Hearing Taiwanese express fear and mistrust of 
China's intentions in Thailand and the region is nothing new. 
 Nonetheless, the Taiwanese are uniquely placed to observe 
PRC business practices and contrast them with their own. 
Their description of PRC business representatives as "carpet 
baggers" not interested in remaining in Thailand would seem 
to fly in the face of their theory that Beijing has a master 
plan linking business investment with diplomatic and 
political strategies.  We will be visiting pro-Taiwan and 
pro-PRC businesses in other parts of the country in coming 
months in the hopes of better analyzing our Taiwanese 
interlocutor's conclusions.  END COMMENT. 
 
ARVIZU