Results of 2005 South China Reporting Conference in

UNCLAS SECTION 01 OF 02 TAIPEI 001592

SIPDIS

STATE PLEASE PASS AIT/W AND USTR

STATE FOR EAP/RSP/TC, EAP/EP AND EB/IFD/OIA

USTR FOR SCOTT KI

USDOC FOR 4420/USFCS/OCEA/EAP/LDROKER
USDOC FOR 3132/USFCS/OIO/EAP/ADAVENPORT

SENSITIVE BUT UNCLASSIFIED

E.O. 12958: N/A
TAGS: EFIN ECON PREL CH TW
SUBJECT: Results of 2005 South China Reporting Conference in
Taipei


1. (SBU) Reporting officers from Shanghai, Guangzhou, Hong
Kong, and Kaohsiung joined AIT/T ECON, POL, FAS, FCS, JOs
and CLASS students at the 2005 South China Reporting
Conference held in Taipei March 24-25. After welcoming
remarks from AIT/T Deputy Director Keegan, the 25-30
participants in the conference gave 14 separate
presentations on topics including the shifting patterns of
Taiwan's overseas investment (presented by Kaohsiung),
China's anti-secession law (the subject of presentations by
both Shanghai and Taipei),export controls (Taipei),south
China's labor supply (Guangzhou),container port rivalry
(Guangzhou),south China's relations with other countries
(Taipei),Hong Kong's political climate (Hong Kong),cross-
straits transportation issues (Taipei),the political and
economic impact of free trade agreements (Taipei),cross-
Strait agricultural issues (Taipei),and other issues of
special interest to posts dealing with south China.


2. (SBU) AIT/T DDIR Keegan opened the conference with an
introduction that noted that such conferences were "critical
to understanding the challenges [that our region faces] so
that we can better explain them to Washington." AIT/T/ECON
Chief Moore gave the first presentation, an overview of the
Taiwan economy, with emphasis on how Taiwan is developing
its financial sector. He noted Taiwan has identified two
areas for improvement: upgrading infrastructure and
expanding financial services. In the discussion it was
noted how this contrasts with the AIT and foreign business
community perception that better cross-Strait relations are
key to Taiwan's continued economic competitiveness.


3. (SBU) AIT/T/POL Chief Huskey provided the concluding
presentation on an organizational approach to cross-Strait
relations. He described the core government agencies and
other organizations involved in formulating and implementing
Taiwan's cross-Strait policy: the Mainland Affairs Council,
the Straits Exchange Foundation, and the National Security
Council. He provided useful insights into the personalities
of key individuals in each of the organization.


4. (SBU) Taipei and Shanghai both reported on their
respective host government's interest in getting past the
anti-secession law. There was an interesting debate between
Kaohsiung and Shanghai on perceptions of a "China threat" in
Taiwan. Kaohsiung and several Taipei representatives agreed
many people in Taiwan discount the reality of China's
military threat. Kaohsiung emphasized the important role of
Taiwan identity. Someone observed that the anti-secession
law had caused some people in Taiwan to recognize for the
first time that China was actually considering "non-
peaceful" actions against Taiwan.


5. (SBU) The JOs and CLASS students asked some of the most
penetrating questions, proving the value of looking at a
complex issue with fresh eyes. They wondered about the lack
of political influence in either Taipei or Beijing wielded
by the hundreds of thousands of Taiwan business people and
the billions of dollars they had invested. The JOs began an
interesting discussion on the role of Xiamen and Shanghai
think tanks in formulating China's policies towards Taiwan.
Some Taiwan JOs were surprised to learn of the difficulty
China posts have in getting reliable sources of information,
so different from Taiwan. Most of the CLASS students will
take up positions as reporting officers in Taiwan, Hong
Kong, or China later this year, and they viewed the
Conference as an efficient way to gain a broad understanding
of current USG thinking on the issues they will soon be
reporting. On several occasions the moderator had to cut
off discussion of a particular topic lest the Conference
fall too far behind schedule.


6. (SBU) Some of the discussions led to interesting and
unexpected conclusions that will be expanded on in
subsequent reporting cables from posts in the region. For
instance, the discussion of export controls led to a
discussion of how some Taiwan politicians use the rhetoric
of export controls to push their political agenda of
blocking trade and investment in China. This was a
completely new aspect of the problem to participants from
China. The discussion of shifting patterns of Taiwan
investment led to a discussion of the business climate in
different parts of China, and a comparison of China to other
parts of the world.


7. (SBU) At the wrap-up session on March 25 participants
said that the presentations had provided fresh perspectives
and new insights of immediate, direct application to their
reporting on regional issues. Participants identified the
high-quality presentations, most of which included
PowerPoint slides and/or handouts as the highlight of the
Conference. The discussions after the presentations were
lively and intense, and provided a valuable opportunity to
hear south China experts with different sets of high-level
contacts expand and build on each other's knowledge.


8. (SBU) On the evening of March 24, AIT/T Director Paal
hosted a reception for the conference participants and about
50 local guests including Vice Chair of the Mainland Affairs
Committee David Hong, China National Federation of
Industries President Earle Ho, and representatives of
companies and associations involved in cross-Strait business
such as Acer, Powerchip, China Petroleum Corporation, Taiwan
Airlines Association, Taiwan Ship owners Association, and
the Taiwan Semiconductor Association. The reporting
officers from Mainland China posts found this a unique
opportunity for an open exchange of views with Taiwan
business representatives on the challenges and hazards of
doing business in China.


9. (SBU) Guangzhou offered to host a similar conference
next year. AIT/T will post the PowerPoint slides and other
materials presented on our intranet site:
(http://taipei.state.gov/ait_s/econ/econ_web/ econhome.htm).

PAAL