VZCZCXYZ0019
RR RUEHWEB

DE RUEHIN #0046/01 0120904
ZNR UUUUU ZZH
R 120904Z JAN 10
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 3105
INFO RUEHBJ/AMEMBASSY BEIJING 9620
RUEHHK/AMCONSUL HONG KONG 1004

UNCLAS AIT TAIPEI 000046 
 
SIPDIS 
 
DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/P, EAP/PD - THOMAS HAMM 
DEPARTMENT PASS AIT/WASHINGTON 
 
E.O. 12958: N/A 
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-CHINA-TAIWAN RELATIONS 
 
¶1. Summary:  Taiwan's major Chinese-language dailies focused news 
coverage January 12 on yet another legislative by-election, which is 
slated for the end of February; on the year-end five city and county 
magistrate elections; on developments in cross-Strait relations; and 
on the visit by three-time Pulitzer Prize-winning New York Times 
columnist Thomas Friedman to Taiwan. 
 
¶2. Several editorial and op-ed pieces continued to discuss 
U.S.-China-Taiwan relations in the wake of the U.S. beef row between 
Washington and Taipei and a recent Pentagon announcement that it has 
approved a contract for Patriot Advanced Capability (PAC-3) missiles 
for Taiwan.  An editorial in the China-focused "Want Daily" said 
given the fact that the balance of power in U.S.-China relations is 
quickly tipping in favor of China, Taiwan needs to strengthen its 
trade and economic strength and start political talks with China as 
early as possible.  An editorial in the pro-independence, 
English-language "Taipei Times" said China will unlikely succeed in 
its threats to use trade sanctions against U.S. companies such as 
Raytheon and Lockheed Martin.  Two op-ed pieces in the "Want Daily" 
also discussed how Taiwan should position itself when sandwiched 
between the two big powers -- the United States and China.  End 
summary. 
 
A) "Patriot Advanced Capability Missiles and a People's Liberation 
Army Major General" 
 
The China-focused "Want Daily" [circulation: 10,000] editorialized 
(1/12): 
 
"... Given China's enhanced national strength, the Chinese factor in 
Taiwan-U.S. relations has gradually moved up to become a major 
cause.  Taiwan needs to make preparations prudently in response to 
whether Beijing will beef up its protests [against the United 
States] by 'severing bilateral military exchanges' or other tougher 
measures in an attempt to influence the Obama administration [to 
not] agree to sell F-16 C/D fighter jets to Taiwan, or further, to 
fix a sunset clause [in terms of U.S. arms sales to Taiwan].  But 
how should Taiwan cope with such a development?  In the short term, 
Taiwan must make best use of its trade and economic strength and 
turn it into a bargaining chip as it pursues balance in the 
triangular relationship between Washington, Beijing and Taipei.  In 
the long term, the Ma administration must accelerate its pace in the 
progress of cross-Strait political negotiations so as to establish a 
truly stable cross-Strait relationship. 
 
"Let's talk about the bargaining chip first.  Both sides of the 
Taiwan Strait will soon sign an 'Economic Cooperation Framework 
Agreement' (ECFA), under which businesses from Taiwan and mainland 
China will deepen their cooperation in areas such as information 
electronics, retail trade, telecommunications, finance, energy and 
environmental protection -- a move which will greatly advance their 
competitiveness in the world.  On the other hand, Taiwan must also 
open its market to mainland China.  When U.S. businesses no longer 
enjoy the edge, U.S. interests in the markets of Taiwan and China 
will surely be impacted, and this is something Washington will 
surely take into consideration. 
 
"Regarding the issues that Washington is concerned with -- 
management of beef, rice, and the Bureau of National Health 
Insurance's-related pharmaceutical pricing system; those that are 
closely related to the interests of U.S. firms in Taiwan 
--telecommunications, finance, energy and environmental protection; 
as well as the issues that the United States and Taiwan have been 
working on in the Chinese market, Taiwan can come up with a 
'negotiation package' and quickly ask Washington to agree to hold 
the talks under the 'Trade and Investment Framework Agreement 
(TIFA).'  That way both sides can negotiate to resolve the dispute 
over [U.S.] beef [imports] and other issues of common interest under 
the TIFA structure. 
 
"In the long term, the balance of power in U.S.-China relations is 
quickly tipping in favor of China, and the foundation on which 
[National Security Council Secretary-General] Su Chi's doctrine of 
keeping the triangular balance between Washington, Beijing and 
Taipei is based is getting weaker and weaker.  Taiwan is quickly 
losing its ground for pursuing a balanced relationship.  There are 
only two strategies for Taiwan to deal with [such a development]: 
namely, to strengthen its trade and economic strength so as to 
increase its bargaining chips toward the United States and China, 
and to speed up cross-Strait political talks so as to stabilize 
cross-Strait relations as early as possible." 
 
B) "PRC Barks Sanctions, But Can It Bite?" 
 
The pro-independence, English-language "Taipei Times" [circulation: 
30,000] editorialized (1/12): 
 
"... One thing that Beijing did differently this time, however, was 
up the ante by hinting that the sale could result in trade sanctions 
 
 
against the US firms involved. This unprecedented threat -- 
ostensibly targeting Lockheed Martin Corp, which was awarded a 
contract to sell Taipei an unspecified number of Patriot missiles -- 
was yet another sign that China now perceives itself as a "Great 
Power" and that it can now threaten countermeasures that hitherto 
had mostly been the remit of leading states like the US, or groups 
like the EU.  For years, the US, the EU and a handful of Western 
countries have relied on targeted trade sanctions against 'rogue 
regimes,' such as North Korea and Iran, as well as China, to punish 
their leadership, encourage a change in behavior, exact an economic 
price and prevent those states from acquiring certain technologies 
with military applications. ... 
 
"After years of being on the receiving end of sanctions, China now 
believes it has enough clout to enter the game. On paper, the threat 
could make Lockheed Martin, which, among other items, sells 
commercial aircraft engines, sit up and pause, given that outside 
the US, China is the biggest market for commercial aircraft. If 
Beijing were to act on its threat and impose trade sanctions on the 
US firm, the result could be billions of dollars in losses.  Closer 
scrutiny of trade sanctions, however, quickly reveals the 
limitations in China's threat, especially when the targeted entity 
happens to be a US company. The effectiveness of trade sanctions, 
especially when they are meant as economically punitive measures, is 
highly dependent on a state's dependence on exports for its economic 
growth. World Bank data for 2008 shows that 35 percent of China's 
GDP depends on exports (32 percent for Iran), while it is about 11 
percent for the US. 
 
"Therefore, China's trade sanctions as a means to bring about a 
change in government behavior are far less likely to succeed than 
vice-versa. Furthermore, as China does not have technologies that 
the US does not possess, it cannot rely on sanctions to deny the US 
technology that it seeks.  Furthermore, if Beijing were to resort to 
such countervailing measures to punish Lockheed, or the US, for 
selling weapons to Taiwan, the US could -- and likely would -- hit 
back with sanctions of its own, which could quickly escalate into a 
trade war that export-dependent China is ill-equipped to wage. As a 
last resort, Washington could also go to the WTO and accuse China of 
breaking international trade laws. ...  This said, the fact that 
China now sees trade sanctions as part of its arsenal should be 
alarming to Taipei, which is much more vulnerable than the US to 
such measures and will only become more so as it increases its 
economic dependence on China by signing memorandums of understanding 
and an economic cooperation framework agreement (ECFA)." 
 
 C) "[Sandwiched] between the Two Powers -- the United States and 
China, How Is Taiwan Going to Position Itself?" 
 
Professor Edward Chen from Tamkang University's Graduate Institute 
of American Studies opined in the China-focused "Want Daily" 
[circulation: 10,000] (1/11): 
 
"... The international situation is changing in the blink of an eye, 
yet the Ma administration knows that the strategic option that can 
best serve the interests of the Republic of China is to 'harmonize 
with China, befriend Japan, and maintain a close relationship with 
the United States,' which should be upheld firmly.  Scholars like 
Bruce Gillery are unaware that in the wake of China's rise, more and 
more countries are coming to Taiwan in an effort to obtain a better 
understanding of the developments in cross-Strait relations, or to 
build cooperative ties with our country that are more intimate than 
before.  Judging from the fact that Washington still decides to 
continue arms sales to Taiwan following the [controversy over the] 
U.S. beef issue, one can tell that the United States' cross-Strait 
policy continues to stand on the foundation of the three 
[U.S.-China] communiqus and the Taiwan Relations Act.  This is 
because only in doing so can U.S. interests best be served.  As a 
result, the Republic of China not only does not need to revise its 
current policy of 'harmonizing with China, befriending Japan and 
maintaining a close relationship with the United States' but should 
also further strengthen it." 
 
D) "It Is Not the Time to Conclude [That the United States] Is 
Breaking away from Taiwan and tilting toward China" 
 
Liang Wen-chieh, Director for the "New Society for Taiwan" 
thinktank, opined in the China-focused "Want Daily" [circulation: 
10,000] (1/11): 
 
"... It goes without saying that it is a result of the economic 
strength of two countries drawing closer that the relations between 
the United States and China have changed from an adult against a 
child thirty years [ago] to the current state of the two countries 
standing almost on an equal footing.  Yet Washington's foreign 
policy has never been leaning lopsided on one side; instead, 'engage 
and hedge' is close to becoming a deeply-rooted idea among the 
Americans.  In the face of the rise of a big country whose ideology 
is quite different from its own, it will be even more unlikely for 
 
the United States to totally abandon its hedge measures. ... 
 
"Same with the Taiwan issue.  Given its double-faced strategy of 
'engaging and hedging' with China, it is unlikely that Washington 
will openly oppose both sides of the Taiwan Strait engaging in 
political negations.  Nor is it likely that it will sell F16 C/D 
fighter jets to Taiwan.  Nonetheless, Washington may not be too 
happy to see both sides of the Taiwan Strait walking closely 
together in a very short period of time.  As a result, it will still 
sell Taiwan the weapons it plans to sell, including the 
anti-ballistic missile system, Blackhawk helicopters and 
diesel-fueled submarines. ..." 
 
STANTON