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C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000257 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/01/2032 
TAGS: PGOV PREL CH TW
SUBJECT:  KMT'S CROSS-STRAIT DIALOGUE: ECONOMICS NOW, 
POLITICS LATER 
 
 
Classified By: AIT Acting Director Robert S. Wang, 
Reasons: 1.4 (b/d) 
 
¶1.  (C) Summary: The KMT plans to continue focusing on 
economic issues in its engagement with the Chinese Communist 
Party (CCP) for the near term, hoping to benefit politically 
by serving as an intermediary between Taiwan's business and 
agricultural interests and Beijing.  If KMT Chairman Ma wins 
the presidential election in 2008, many KMT cross-Strait 
experts predict he will work to build cross-Strait relations 
on the basis of the "1992 consensus," which the KMT defines 
as consensus on "one China, separate interpretations," with 
the KMT's "one China" being the Republic of China (ROC). 
While these KMT experts are optimistic that Beijing will show 
greater flexibility toward a KMT-ruled Taiwan, some pro-DPP 
academics doubt that Beijing will accept the KMT's "separate 
interpretation" of "one China."  End Summary. 
 
KMT-CCP Dialogue on Economics but not Politics 
--------------------------------------------- - 
 
¶2. (C) Since the historic visit to Beijing in April-May 2005 
by then-Kuomintang (KMT) Chairman Lien Chan, who met and 
issued a joint press communique with PRC President Hu Jintao, 
the KMT has engaged the Chinese Communist Party (CCP) in a 
broad dialogue on economic issues.  While this economic 
dialogue pressures the ruling Democratic Progressive Party 
(DPP) to further liberalize its cross-Strait policy, KMT 
Director for Mainland Affairs Chang Jung-kung told AIT, the 
KMT-CCP exchanges also help Taiwan's business interests in 
China.  The KMT is able to raise the concerns of Taiwan 
business people in China with PRC officials, Chang explained, 
a role the DPP government cannot play as Beijing refuses to 
deal directly with the pro-independence DPP.  Chang told AIT 
that the KMT is working to expand its role as an intermediary 
between Beijing and Taiwan businesses via another joint 
conference and communique planned for this spring. 
 
¶3.  (C) Growing cross-Strait economic ties and exchanges do 
not give the CCP substantial political leverage over the KMT, 
Chang argued.  No political party in Taiwan, especially one 
that seeks to become the ruling party, can afford to appear 
to "sell out" Taiwan.  Chang noted that he was considering 
broaching the idea of a KMT-CCP political dialogue with the 
KMT leadership, adding that two possible topics of interest 
to Taiwan would be reducing the PRC missile threat and 
expanding Taiwan's "international space."  Despite the 
progress on economic dialogue, however, Chang acknowledged 
the possibility of discussing more sensitive political issues 
with Beijing appeared low in the near term.  Chang surmised 
the CCP might prefer to wait until the KMT is the ruling 
party before addressing sensitive political issues on which 
the KMT, as an opposition party, now has only limited 
influence. 
 
¶4.  (C) Chang said he did not agree with KMT Chairman Ma 
Ying-jeou's recent suggestion that the KMT could serve as an 
intermediary between the CCP and the DPP, a suggestion the 
DPP immediately rejected.  Chang, who told AIT that Ma's 
comments were poorly chosen, emphasized it is unrealistic for 
his party to serve as a "broker" between the two sides. 
Especially when it comes to political issues, the CCP has no 
interest in engaging the ruling DPP directly since it 
advocates Taiwan independence.  (Comment: A number of DPP 
members have told AIT that Beijing is, in fact, reaching out 
gingerly to "light Green" DPP leaders, in order to wean them 
toward improved cross-Strait relations in the event the DPP 
wins the 2008 presidential election.  Former DPP legislator 
Shen Fu-hsiung, for example, told AIT that Beijing had 
several times approached him with invitations to visit 
Mainland China, which Shen had turned aside in order not to 
handicap his own chances in upcoming legislative elections. 
End Comment.) 
 
KMT Looks to 2008... 
-------------------- 
 
¶5. (C) KMT-affiliated National Policy Foundation (NPF) 
Research Fellow Kao Koong-liang told AIT that the KMT's 
 
TAIPEI 00000257  002 OF 003 
 
 
mainland policy guidelines, published in the party's 2004 
white paper, along with Chairman Ma's "five dos" announced 
early last year, will serve as a blueprint for the KMT's 
cross-Strait policy should the party come into power in the 
2008 presidential election.  Kao argued that Taiwan's 
acceptance of the "1992 consensus" is the key to any 
breakthrough in cross-Strait relations, including resumption 
of the cross-Strait dialogue, which the PRC suspended in 1999 
following President Lee Teng-hui's announcement of his 
"two-state theory."  While the KMT under Ma Ying-jeou accepts 
the 1992 consensus, the DPP has opposed it and is unlikely to 
accept it in the future, Kao suggested.  (Note: Ma's "five 
dos" call on Beijing and Taipei to resume talks on the basis 
of the 1992 consensus, conclude a peace agreement, work 
toward building a common market, seek a modus vivendi for 
Taiwan's international participation, and expand cultural and 
educational exchanges. End Note.) 
 
¶6. (C) KMT Director of Overseas Affairs Ho Szu-yin, a close 
advisor to Ma, told AIT that Ma acceptance of the "1992 
consensus," means "one China, separate interpretations," with 
one China being the Republic of China (ROC).  However, Ma 
does not support rapid unification, Ho emphasized, 
characterizing the party's stance as more a policy of 
anti-Taiwan independence than pro-unification.  Chang 
Jung-kung explained that the "1992 consensus" is the only 
framework ambiguous enough to allow the CCP and KMT to return 
to the negotiating table, adding that the party does not 
accept the "special state-to-state relations" framework put 
forth in 1999 by President Lee Teng-hui, who was then leader 
of the KMT.  Other KMT leaders have in recent weeks taken 
pains to publicly assert that the KMT does not support 
unification in the foreseeable future.  Deep-Blue legislator 
Ting Shou-chung told AIT that he and his close (read: 
deep-Blue) colleagues have no desire to unify with a 
"non-democratic" PRC, and that only eventual changes in the 
PRC itself would warrant support for eventual unification. 
 
¶7. (C) The KMT's acceptance of the "1992 consensus" and its 
willingness to engage with the CCP does not mean the party 
will weaken its relations with the U.S., Kao Koong-liang 
hastened to add.  He contrasted the KMT's policy of 
maintaining balanced relations with Beijing and Washington 
with the DPP's policy aimed at keeping Beijing at arms 
length.  An improved relationship with the mainland is 
imperative for Taiwan's economic growth, Kao argued, adding 
that the KMT understands that Taiwan businesses need to 
invest in China in order to survive. 
 
...And to Beijing for Flexibility 
--------------------------------- 
 
¶8. (C) KMT cross-Strait experts are generally optimistic that 
Beijing will demonstrate increased flexibility on 
cross-Strait issues should the KMT regain power in the 2008 
presidential election.  Chang Jung-kung, who has frequent 
dealings with PRC officials, suggested that Beijing's growing 
self-confidence has made it more accommodating in its 
approach toward Taiwan.  Asked how Beijing would respond to 
Ma's "one China, separate interpretations" formula, Chang 
said he thought Beijing would show some flexibility and 
exercise patience.  To date, Beijing has not commented 
publicly or rejected Ma's formulation.  This indicates that 
while China cannot endorse Ma's position, it can tacitly and 
grudgingly accept it as a basis for resuming cross-Strait 
dialogue. 
 
Green Skepticism 
---------------- 
 
¶9.  (C) Some pro-DPP academics have told AIT they do not 
expect Beijing to give ground to the KMT on the "1992 
consensus" issue.  Hsu Szu-chien, an assistant research 
fellow at Academia Sinica, predicted that the PRC will not 
allow room for differing interpretations of "One China."  Lo 
Chih-cheng, head of Soochow University's political science 
department, expressed doubt that Beijing would allow Ma to be 
vague on this point or give him the leeway to interpret one 
China as the ROC.  Lo predicted that cross-Strait policy will 
 
TAIPEI 00000257  003 OF 003 
 
 
be the main issue in the upcoming presidential election, as 
other issues such as economic development and constitutional 
reform are directly tied to cross-Strait policy.  The DPP 
will try to keep Ma on the defensive by pressing him to 
provide details regarding his vision for future relations 
with the mainland. 
 
Comment 
------- 
 
¶10.  (C) The KMT dialogue with the CCP is a double-edged 
sword.  It appeals to those who think Taiwan's future, 
especially its economic future, requires closer relations 
with the PRC, while at the same time it fuels the DPP's 
political rhetoric that the KMT is all too ready to "sell 
out" Taiwan to the PRC for its own interests and to further a 
policy of "ultimate unification."  The KMT hopes that the 
economic benefits of cross-Strait relations will outweigh 
arguments against improved relations, convincing the 
electorate that voting KMT rather than DPP will bring 
increased prosperity to Taiwan. 
WANG