VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #1784/01 3650721
ZNR UUUUU ZZH
R 300721Z DEC 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 0630
INFO RUEHBJ/AMEMBASSY BEIJING 8818
RUEHHK/AMCONSUL HONG KONG 0279

UNCLAS AIT TAIPEI 001784 
 
SIPDIS 
 
DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - NIDA EMMONS 
DEPARTMENT PASS AIT/WASHINGTON 
 
E.O. 12958: N/A 
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-CHINA RELATIONS 
 
Summary:  Taiwan's major Chinese-language dailies gave significant 
coverage on December 30 to former President Chen Shui-bian, who was 
detained again for corruption charges based on a Taipei District 
Court ruling early Tuesday morning.  News coverage also focused on 
KMT Legislator Diane Lee's U.S. citizenship controversy.  In terms 
of editorials and commentaries, a column in the centrist, 
KMT-leaning "China Times" discussed the financial crisis and future 
U.S.-China relations.  The article said in the wake of the financial 
tsunami, the open market model as represented by Europe and the 
United States has become less attractive than the Chinese style of 
state-controlled market economy, which will be a real challenge to 
the values of U.S. hegemony.  An editorial in the pro-independence, 
English-language "Taipei Times" also discussed U.S.-China relations 
from the perspective of the recent Israeli assault on Hamas.  The 
article concluded by saying that "the growing interdependence 
between China and Israel, combined with a weakened U.S., means that 
China's leverage on Israel will likely grow, which could be the 
first good news Palestinians have had in decades."  End summary. 
 
A) "Renminbi Gets Tough under Internal and External Pressure" 
 
Deputy Editor-in-Chief Kuo Chen-lung wrote in the "International 
Column" of the centrist, KMT-leaning "China Times" [circulation: 
200,000] (12/30): 
 
"... It is conceivable that when Barack Obama takes over the helm 
the next year, he will certainly attempt to pressure Beijing to work 
with Washington [in terms of the exchange rate of the Renminbi]. 
Beijing, on the other hand, will surely strongly resist any moves 
that will have implications for China's economic growth and social 
stability.  Even if both sides do not sink to the level of casting 
aside mutual respect, Beijing will definitely not spend time on a 
gradual breaking-in period with the new U.S. [Obama] administration, 
as it did with the Clinton and Bush administrations.  Should neither 
side refuse to compromise, the United States will not necessarily 
gain the upper hand [in its interaction with China]. ... 
 
"... Currently Beijing is trying out a Renminbi settlement system in 
Hong Kong, Macau and in ASEAN in an attempt to establish its own 
sphere of economic influence without having to rely on the U.S. 
currency.  Also, traditionally the United States' China policy has 
been swinging between the Department of Defense and the Department 
of State.  But during extraordinary times [such as the financial 
crisis], military and human rights issues both lose their 
significance, and now it is the Treasury Department that is taking 
the lead, while the U.S. Trade Representative Office and the 
Department Commerce merely play second fiddle.  As long as China 
continues to buy [U.S.] Treasury bonds and provide financial aid to 
the U.S. economic stimulus and bailout plans, the Treasury 
Department will naturally step in to straighten out all internal 
disputes.  China's hopes to lower the Renminbi exchange rate and 
continue exports to the United States also meet the U.S. interests 
-- the U.S. public will continue enjoying low-priced commodities, 
which will help suppress inflation and make people feel less 
miserable. 
 
"Consequently, the battlefield that determines the final outcome is 
ideology.  Between the 'market economy with Chinese characteristics' 
and the model of open market represented by Europe and the United 
States, the latter no longer appears attractive in the wake of the 
financial tsunami.  By contrast, state-controlled economic style 
that emphasizes businesses has become a model that most counties 
want to imitate.  In addition to China in Asia, we also see Russia 
in East Europe and Venezuela in Latin America following suit, 
turning it into common practice.  Only this is the real threat -- a 
challenge to the values of U.S. hegemony." 
 
B) "China's Growing Leverage on Israel" 
 
The pro-independence, English-language "Taipei Times" [circulation: 
30,000] editorialized (12/30): 
 
"... As Israel readies to widen its campaign in Gaza, most countries 
have called for a halt to hostilities while putting the onus on 
Israel to restrain itself.  One country, however, has gone against 
the grain: the US, Israel's longstanding backer, whose statements in 
the past few days indicated that the 150:1 death ratio in this 
latest Middle East flare-up was entirely Hamas' fault.  As has 
happened countless times since the first Intifada, with full US 
backing, Israel feels no compunction in razing neighborhoods or 
killing innocent people in its efforts to defend itself.  All the UN 
Security Council can muster is "deep concern" about the situation, a 
feeble slap on the wrist rendered all the more painless by a US 
veto. 
 
"Aside from morally backing its Middle Eastern ally, the US remains 
its principal source of weapons. ...  In the current economic 
climate, however, there are reasons to question the sustainability 
of the US' security agreement with Israel, or even the ability to 
come to its assistance, given its operational requirements 
elsewhere. ...  Should the downturn continue in the next few years, 
Israel could soon find itself dealing with a poorer and therefore 
far-less generous Washington, which could prompt it to look 
elsewhere for security guarantees.  That elsewhere could very well 
be China. While Beijing has historically sided with the Palestinians 
in the Middle East conflict, it has in recent years built up its 
relations with Israel, mostly in the purchase of military 
technology. ... 
 
"Should an embattled US ever feel the need to change its MOU with 
Israel and decrease the amount of military assistance it gives, 
Israel could feel compelled to compensate by further tapping into 
its lucrative weapons exports sector, with China as its likely 
principal client.  Aside from the implications this would have for 
Taiwan's security, the growing interdependence between China and 
Israel, combined with a weakened US, means that China's leverage on 
Israel will likely grow, which could be the first good news 
Palestinians have had in decades." 
 
YOUNG