VZCZCXRO2159
RR RUEHCN RUEHGH
DE RUEHGH #0158/01 0810900
ZNY CCCCC ZZH
R 220900Z MAR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5616
INFO RUEHBJ/AMEMBASSY BEIJING 0892
RUEHCN/AMCONSUL CHENGDU 0497
RUEHGZ/AMCONSUL GUANGZHOU 0480
RUEHHK/AMCONSUL HONG KONG 0602
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHSH/AMCONSUL SHENYANG 0504
RUEHIN/AIT TAIPEI 0405
RUEHGH/AMCONSUL SHANGHAI 5988

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000158 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM 
NSC FOR WILDER 
 
E.O. 12958: DECL:  3/22/2017 
TAGS: PGOV CH TW
SUBJECT: SHANGHAI THINK TANK ON CROSS-STRAITS RELATIONS 
 
REF: SHANGHAI 110 
 
CLASSIFIED BY: Simon Schuchat , Deputy Principal Officer,  , 
U.S. Consulate Shanghai. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary.  During a March 21 lunch with DPO, Pol/Econ 
Chief and Poloff, Shanghai Institute for East Asian Studies 
(SIEAS) Director Zhang Nianchi said Taiwan President Chen 
Shui-bian now frequently crossed the Mainland's "red lines" 
without penalty, making cross-strait relations more dangerous. 
The so-called "status quo" had eroded seriously over the last 
few years.  The Mainland should not over-react to Chen's 
statements, it was also important for both it and the USG to 
respond appropriately when warranted.  Meanwhile, Chen's 
statements helped the PLA to increase its budget.  Zhang 
expected that an academic paper he would publish in early April 
would spark debate by detailing the cumulative results of the 
last 20 years of cross-strait relations.  Zhang expected 
cross-strait relations to be difficult through 2008, but 
positive long-term.  Ties were strengthening, both economically 
and politically, at a high level between the Mainland and 
Taiwan. There was no real successor for either Wang Daohan or 
Koo Chen-fu, but neither was one needed.  SIEAS had edited three 
books of Wang Daohan's works, the latest of which was published 
in Hong Kong in February.  Zhang lamented SIEAS' lack of contact 
with U.S. Taiwan scholars, but didn't appear to be taking any 
steps to reach out.  End Summary. 
 
¶2.  (C) DPO hosted a lunch for SIEAS Director Zhang Nianchi on 
March 21 to discuss recent cross-Straits development.  SIEAS 
Deputy Director Hu Lingwei, SIEAS Department for Cross-Strait 
Relationship Director Chen Yinghua, Pol/Econ Chief and Poloff 
also attended the lunch.  Zhang was the assistant of recently 
deceased cross-Straits guru Wang Daohan and a prominent Shanghai 
Taiwan expert in his own right.  See Reftel for a February 
discussion on Taiwan with SIEAS. 
 
------------------------------------ 
Not Reacting Condones Chen's Actions 
------------------------------------ 
 
¶3.  (C) Zhang was very concerned about the state of 
cross-Straits relations.  According to Zhang, Chen Shui-bian 
appeared to have crossed several of Mainland China's red lines 
without penalty.  He alluded to Chen's recent "4 Wants, 1 No" 
statements, as well as calls for referenda and 2006 
announcements to "abolish" the National Unification Council and 
the National Unification Guidelines, and the name changes of 
Taiwan entities, particularly its postal system.  Although, it 
was clear that Chen was pushing this agenda for his own reasons 
and did not have strong support among the Taiwan people, the 
cumulated effect of these actions had eroded the "status quo" 
and created a dangerous environment for cross-strait relations. 
 
¶4.  (C) While it was important for Beijing not to overreact to 
Chen's statements as it had in the past, thus helping his cause, 
the recent muted or lack of response by Beijing and Washington 
seemed to condone Chen's actions.  Perhaps, opined Zhang, the 
Mainland should stop trying to treat Taiwan as a brother and 
instead act more like a parent.  Zhang expected to spark debate 
on the issue with a paper to be published in early April 
documenting the effects of the last 20 years of cross-strait 
relations.  He acknowledged that Chen's statements also had the 
result of providing justification for an increase in China's 
defense budget. 
 
------------- 
Bright Spots? 
------------- 
 
¶5.  (C) Turning to the future of cross-strait relations, Zhang 
was far less gloomy. The economic relationship continued to be a 
bright spot in cross-Straits relations.  There had been great 
progress on the three-direct links issue; in reality, there were 
already direct transportation links between Taiwan and the 
Mainland. (Comment:  Zhang appeared to be referencing the 
periodic cross-Straits charter flights. End comment.)  There 
continued to be a large number of Taiwan businesses and 
investors in the Mainland.  In addition, the Mainland's economic 
influence on Taiwan has grown significantly a growing mainland 
economic presence on the island.  This economic relationship 
would have a positive effect on the overall relationship.  Zhang 
 
SHANGHAI 00000158  002 OF 002 
 
 
said while he was pessimistic about the near term, he believed 
that issues would be resolved in the long term as the economic 
relationship grew and both sides become more integrated. 
 
-------------------------------------------- 
No Wang Daohan Successor Available or Needed 
-------------------------------------------- 
 
¶6. (C) When asked whether there was anyone on the Mainland who 
would take up Wang Daohan's role in facilitating an unofficial 
cross-strait dialogue, Zhang said there was no one who could 
replace either the Mainland's Wang or Taiwan's Koo Chen-fu. 
Furthermore, there was no need to replace them.  High-level 
officials were now directly engaged on Taiwan issues.  For 
example, President Hu Jintao had met with former KMT Chairman 
Lian Zhan during his visit to China.  Preparations were underway 
now for LY Speaker Wang Jing-pyng's April visit to Beijing and 
Hu Jintao would probably also be involved.  On lower levels, 
business associations and technical agencies such as airlines 
were in direct contact.  Zhang noted that SIEAS had recently 
edited and published three books containing collected works on 
Wang Daohan, the most recent published in Hong Kong in February. 
 (Tongji University Professor Peng Yun-O (aka Frank Peng) was 
also working on memoirs of Wang, although his perspective dealt 
more with domestic economic issues.) 
 
--------------------------------------------- ------- 
SIEAS Remains Cut Off From Many U.S. Taiwan Scholars 
--------------------------------------------- ------- 
 
¶7. (C)  Although SIEAS appears to have close ties with academics 
in Taiwan, Hong Kong and Japan, Zhang said it no longer had the 
regular contact it once did with U.S. Taiwan scholars.  Zhang 
had no plans to travel to the United States and didn't seem to 
encourage travel there by Hu or Chen.  He said previously SIEAS 
had met with many U.S. scholars referred by the Shanghai 
Institute of International Studies (SIIS), but that had fallen 
off in recent years.  He hoped that the expected departure of 
SIIS President Yu Xintian would change this situation.  Zhang, 
who said he was three years from the mandatory retirement age of 
an academic of 65, appeared to maintain tight control over his 
institute; he did not provide any opportunity for his colleagues 
to participate in the discussion. 
JARRETT