VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #1182/01 1490938
ZNR UUUUU ZZH
R 290938Z MAY 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 5399
INFO RUEHBJ/AMEMBASSY BEIJING 6836
RUEHHK/AMCONSUL HONG KONG 8087

UNCLAS AIT TAIPEI 001182 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - LLOYD NEIGHBORS 
DEPARTMENT PASS AIT/WASHINGTON 
 
E.O. 12958: N/A 
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-CHINA STRATEGIC ECONOMIC DIALOGUE, 
U.S.-TAIWAN RELATIONS 
 
 
¶1. Summary:  Taiwan's major Chinese-language dailies focused news 
coverage May 26-29 on the 2008 presidential election; on the 
Pentagon's release of its "Military Power of the People's Republic 
of China 2007" report Saturday; on a female Taiwan cadet who 
graduated from West Point on May 26; and on local issues.  In terms 
of editorials and commentaries, DPP's Chinese Affairs Department 
Director Lai I-chung discussed the U.S.-China Strategic Economic 
Dialogue (SED) in an op-ed in the pro-independence "Liberty Times" 
and said the results of this year's SED have proved that the United 
States' logic behind its request that Taiwan further open up to 
China is hardly convincing.  Lai said in a separate op-ed piece 
published by the pro-unification "United Daily News" that pushing 
China to move toward an open market economy is the fundamental way 
for the normalization of cross-Strait trade relationship, and it 
will help improve Taiwan-U.S. relations.  An editorial in the 
limited-circulation, pro-unification, English-language "China Post" 
said the "successful" conclusion of the SED in Washington shows that 
Beijing's strategy of "playing the U.S.' game, albeit by its own 
rules" is effective.  A separate "China Post" editorial said the 
creation of the SED "underlines the fact that China has become a 
major player in the world arena."  An editorial in the 
limited-circulation, pro-independence, English-language "Taipei 
Times" discussed the United States' interests in Taiwan.  The 
article said "the island's democratization has stiffened the US' 
resolve to protect it."  End summary. 
 
¶2. U.S.-China Strategic Economic Dialogue 
 
A) "U.S.-China Economic Dialogue vs. KMT-CPC Empty Talks on Trade 
and Economics" 
 
Lai I-chung, director of the DPP's Department of Chinese Affairs, 
opined in the pro-independence "Liberty Times" [circulation: 
500,000] (5/27): 
 
"... A few points in this year's U.S.-China Strategic Economic 
Dialogue (SED) are worth contemplating:  First, the focus of the 
U.S.-China SED lies in how to resolve the trade issues concerning 
the two countries caused by China's opaque economic structure.  This 
explains why such issues as the exchange rate between the renminbi 
and the dollar and market access were listed on the agenda.  The 
'U.S.-China SED' has thus provided a platform for the United States 
to raise these 'structural' issues with China. ... 
 
"Second, it is a fact that the manufacturing business in the U.S. 
has been suffering from China's mercantilist operation.  Despite the 
superior status of the United States, it still failed to achieve 
positive results in terms of China's market opening and economic 
transparency.  But while China continues its protection of its 
internal market and keeps on strengthening its exports -- giving 
Taiwan businessmen a hard time in entering the Chinese market -- the 
United States, contrarily, requested that Taiwan further open [its 
market] to China, believing that this will improve Taiwan-U.S. 
economic relations.  The results of this year's SED have proved that 
such logic is not convincing at all. 
 
"Finally, China's behavior in the U.S.-China SED was not unexpected, 
as it reflected Beijing's fundamental attitude of having no interest 
in facing the structural issues. ...  As a result, if one views 
China's economy and Taiwan's strategy [toward China] under the 
framework of global strategy, [one will know that] how Taiwan should 
open up itself to China is just a fake agenda.  What really matters 
instead is how to strengthen Taiwan's economic constitution and how 
to work with other countries to push for China's market opening and 
economic transparency, so as to construct a free economic 
environment in which it will be favorable for Taiwan to engage in 
fair competition, without being politically interfered with by the 
Chinese government. ..." 
 
B) "Opening of China Will Certainly Be Conducive to Taiwan-U.S. 
Relations" 
 
Lai I-chung, director of the DPP's Department of Chinese Affairs, 
opined in the pro-unification "United Daily News" [circulation: 
400,000] (5/29): 
 
"The second U.S.-China Strategic Economic Dialogue (SED) has 
concluded amid a lot of noise.  Most observers believe that it 
yielded only meager results.  Controversial issues that have 
received widespread attention, such as the exchange rate between the 
renminbi and dollar, the adherence to the World Trade Organization 
regulations, and intellectual property rights, have not been dealt 
with.  Obviously, this dialogue has not only failed to mitigate the 
trade disputes between the United States and China but may likely 
also further intensify conflicts between the two because of its 
limited results. ... 
 
"[Most people] view China as a market, so China's economic 
U.S.-TAIWAN RELATIONS 
 
environment has become the focus of their concern.  The many issues 
raised by Washington during the SED did not conflict with Taiwan's 
interests, and it will benefit the normalization of cross-Strait 
trade and economic relations should any progress be made [during the 
dialogue]. 
 
"Stephen Young said recently that Taiwan's further opening up to 
China will help to improve Taiwan-U.S. economic relationship.  But 
an average of sixty percent of the Taiwan people believe that more 
stringent restrictions should be imposed on [the island's] 
investments in China, and seventy percent of the Taiwan people are 
worried about [the island's] dependence on China economically. 
Given the current trend in which China's economic nature is not 
moving toward market opening, Young's logic can hardly convince the 
Taiwan people.  To push China to move toward an open market economy 
instead is the fundamental way for the normalization of cross-Strait 
trade and economic relations.  Taiwan and the United States share 
common interests in urging China to undergo nonstructural economic 
reforms.  As a result, the answer is quite obvious as to which will 
be conducive to the Taiwan-U.S. economic relationship: Taiwan's 
further opening up itself to China, or the request that China open 
up itself?" 
 
C) "U.S.-PRC Trade Ties Smooth" 
 
The conservative, pro-unification, English-language "China Post" 
[circulation: 30,000] editorialized (5/29): 
 
"The People's Republic of China, like its former mentor, the 
now-defunct USSR, remains an ideological rival to the United States. 
 But unlike the USSR, today's China is playing the U.S.' game, 
albeit by its own rules.  The Soviet Union never tangoed with the 
U.S., but today's PRC dances with it easily on bilateral trade, 
nuclear proliferation and regional issues, including the Taiwan 
question.  Last week's 'successful' conclusion of the second 
U.S.-China Strategic Economic Dialogue in Washington shows Beijing's 
strategy is effective.  The biggest U.S. concern, the undervalued 
Chinese currency, was papered over.  As long as the U.S. stands by 
its one-China policy opposing Taiwan independence, the PRC will not 
invade the 'Chinese, self-ruled, non-state island.'  But Beijing's 
missiles targeting Taiwan have increased to 1,000, making defense of 
the island an almost impossible task, even for the U.S.  And 
Beijing's enactment of the Anti-Secession Law in March 2005 has 
effectively rendered the 1979 U.S. Taiwan Relations Act almost 
meaningless.  ... 
 
"Beijing has paid lip service to the U.S. anti-terrorist campaign. 
But on trade, it is bent on gaining from the U.S. as much and for as 
long as possible.  China is already the world's third largest 
trading nation and seems destined to become the largest.  On its 
present course, it threatens to wreck the entire post-World War II 
trading system. ..." 
 
D) "Chinese Money Talks" 
 
The conservative, pro-unification, English-language "China Post" 
[circulation: 30,000] editorialized (5/26): 
 
"... The economic relationship between Washington and Beijing is 
complex.  It is only natural that there are sources of friction and 
disputes.  The inception of the Strategic Economic Dialogue provides 
a useful channel of discussion and communication between the two 
most important economies of the world.  The meeting is arguably the 
most important of its kind besides Group of Seven annual talks among 
the world's richest developed nation.  The creation of the Strategic 
Economic Dialogue underlines the fact that China has become a major 
player in the world arena.  By the end of this year, the mainland is 
expected to become the world's second largest trading country, after 
the United States.  As of the end of March this year, its foreign 
exchange reserves reached US$1.2 trillion, an increase of 37 percent 
over the year-earlier period, mostly from a trade surplus of US$46 
billion in the first three months of this year.  Money talks.  With 
an economy, a market, and productivity of that size and potential, 
mainland China is something to be reckoned with.  Of course, there 
are also pundits who have predicted the impending collapse of the 
regime.  But before then, when Beijing talks, the world listens." 
 
¶3. U.S.-Taiwan Relations 
 
"What Taiwan Means to the US" 
 
The following editorial in the pro-independence, English-language 
"Taipei Times" [circulation: 30,000], written by Dennis V. Hickey, 
the director of the graduate program in International Affairs at 
Missouri State University, noted (5/27): 
 
"For more than 50 years, the US has enjoyed a remarkably close 
relationship with Taiwan.  Arguably, no other country maintains as 
U.S.-TAIWAN RELATIONS 
 
many ties with Taiwan.  What lies behind US interest and how has it 
changed over time? ...  Unlike strategic and economic interests, the 
US' political stake in Taiwan has grown exponentially with the 
passage of time.  Taiwan has long served as visible evidence that 
the US stands by its friends and honors it commitments.  But most 
important is Taiwan's peaceful evolution into a democracy. 
 
"Taiwan's feisty democracy is far from perfect.  But the island's 
democratization has stiffened the US' resolve to protect it.  This 
is because most of the US supports the central propositions of 
'democratic peace theory.'  The US believes that democracies tend to 
be more reliable partners in trade and diplomacy and seldom threaten 
peace.  Furthermore, democracies do not attack other democracies, 
engage in terrorism, wreak environmental damage or unleash waves of 
refugees on the world.  It is for these reasons that the US will 
remain committed, as it has for more than half a century, to Taiwan. 
 Indeed, the US' stated interest in Taiwan's democracy makes as much 
(or more) sense today as it did in the past." 
 
YOUNG