MEDIA REACTION: PENTAGON'S REPORT ON PRC

UNCLAS SECTION 01 OF 03 TAIPEI 003116

SIPDIS

DEPARTMENT FOR INR/R/MR, EAP/RSP/TC, EAP/PA, EAP/PD -
ROBERT PALLADINO
DEPARTMENT PASS AIT/WASHINGTON

E.O. 12958: N/A
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: PENTAGON'S REPORT ON PRC
MILITARY POWER, RENMINBI REVALUED


1. Summary: The major Chinese-language dailies in
Taiwan July 22 focused on the appreciation of China's
Renminbi (RMB) and the Pentagon's annual report on the
PRC's military power. The pro-independence "Liberty
Times" (Taiwan's biggest daily),the centrist "China
Times," and the pro-unification "United Daily News" all
reported under banner headlines on their front pages
that the RMB has for the first time in about a decade
appreciated by two percent. These newspapers also spent
their first few inside pages discussing the reasons
behind China's move to revalue the RMB and its impact
on Taiwan's currency and stock market. The pro-
independence "Taiwan Daily," in addition to carrying
the news story on the Chinese currency, also printed a
banner headline on its front page that said "Bian:
China's rise poses threats to world peace." The
newspaper also spent its whole page three on news
stories related to the Pentagon's report on China's
military power, and the top news story on the page
carried the following headline: "The United States will
go to war to protect Taiwan? Rumsfeld: Of course we
are capable of doing that." The "United Daily News,"
however, covered this wire service news story from a
different angle with the headline: "[The United States]
is willing to fight for Taiwan? Rumsfeld dodged
[talking about] war but talked about peace." The sub-
headline added: "Following the release of the report on
PRC military power, U.S. Defense Secretary replies to
journalists that `we are capable of doing what we have
indicated we have the capability of doing.'"


2. Several newspapers continued to editorialize on the
Pentagon's report on the PRC's military power while
only one news analysis discussed the appreciation of
the RMB. A "Liberty Times" news analysis said the
Pentagon's report has accidentally cut into the
achievements KMT Chairman Lien Chan claimed he had made
during his trip to China. An "United Daily News"
editorial said the report revealed that the United
States believes China's `rise' is a fixed fact, but it
is really up to Washington to tell whether it is a
`peaceful' rise or not. An editorial in the limited-
circulation, conservative, pro-unification, English-
language "China Post" said for Taiwan, an independence
ideology is more dangerous than an arms shortage. An
editorial of the limited-circulation, pro-independence,
English-language "Taiwan News," however, said the DPP
administration's call on the Taiwan Legislature to
approve the special arms procurement bill is a
responsible action to prevent a rapid and dangerous
imbalance in the cross-Strait military equation. With
regard to the appreciation of the RMB, a "United Daily
News" news analysis said the U.S. reaction to this move
by Beijing is worth further observation. End summary.


1. Pentagon's Report on PRC Military Power

A) "U.S. Report Accidentally Slashes the Achievements
Lien Chan Made during His China Trip"

Journalist Tsou Jiing-wen noted in a news analysis of
the pro-independence "Liberty Times" [circulation:
800,000] (7/22):

"Following the release of the U.S. Department of
Defense's annual report on China's military power, the
reactions of two sets of people [to the report] are
especially notable: The first is that of [the Chinese
authorities accused in the report] whose [reaction] was
that of outrage and [who] turned to criticize
Washington for intervening and sowing discord [in the
Taiwan Strait]. The other are some Pan-Blue members in
Taiwan, who claimed in reaction that the report is
Washington's best packaging for its arms sales to
Taiwan. .

"The old [leadership] in the KMT that is to step down
in August has [attempted to] create a scene . . That
is, during the recent meeting between members of the
International Democracy Union and U.S. President George

W. Bush, [KMT Chairman] Lien Chan claimed that Bush had
expressed approval of his China trip. To Lien's
surprise, Washington's reference in the Pentagon's
report to the special arms procurement bill which is
currently stuck in the Legislative Yuan was in reality
a move to vote against the KMT's boycott action, which
was done under Lien's leadership. ."

B) "`Rising' in China, But Whether It Is `Peaceful' Or
Not Is up to the United States?"

The pro-unification "United Daily News" [circulation:
600,000] editorialized (7/22):

"The U.S. Department of Defense's `2005 Annual Report
on the Military Power of the People's Republic of
China' was finally released. In general, this report
gives people the core impression that the United States
believes China's `rise' is a fixed fact, but it is
really up to the United States' evaluation to tell
whether it is `peaceful' rising or not. .

"The PRC believes that to handle the Taiwan issue, it
requires the heightened and international level of
military attentiveness [of the People's Liberation
Army] and that without such preparedness, China can not
possibly maintain a deterrence force that is capable of
`attacking [Taiwan] the moment it declares
independence.' The U.S. side, however, believes that
military preparedness by the PRC has posed an
international threat. Washington thus reminded the
Beijing authorities that China is now standing at a
`strategic crossroad' in an attempt to turn [China's
military buildup] into a matter that is beyond `Taiwan
independence.' Thus, in terms of the `Taiwan
independence' issue, Beijing [believes that it] can
remain peaceful as long as it maintains [its principle
of] `attacking [Taiwan] the moment it declares
independence,' but for the United States, it also
enjoys the liberty of which it could seize a pretext to
make it [i.e. China's rise] not so peaceful.

"It is noteworthy that the `National Security Report'
that President Chen Shui-bian is currently working on
also focuses on China's `peaceful rise.' In the
report, [Chen] also seeks to expound China's rise as a
threat to the Asia-Pacific region and to the world, and
[he even attempts] to imply that the rise of China will
pose a threat to the United States' position as a sole
superpower. Such a perception is obviously the one
that is generally held by the Western hegemonies toward
China, and it is also a perception that treats Taiwan
as a foot soldier attendant going before these Western
hegemonies. This perception may not really meet the
true reality . of China's rise and it may even fail to
meet the strategic views of Taiwan's multiple
interests. ."

C) "Independence Ideology More Dangerous Than Arms
Shortage"

The conservative, pro-unification, English-language
"China Post" [circulation: 30,000] commented in an
editorial (7/22):

". Observers in Taiwan indicated that one of the
purposes of the Pentagon report is to lure Taiwan into
purchasing more U.S.-made weapons and to force Taiwan's
lawmakers to approve the Chen Shui-bian
administration's plan to buy NT$618 billion in military
equipment from the U.S. .

"In fact, a fundamental reason that Taiwan faces a
grave threat from the mainland is the ruling Democratic
Progressive Party's independence ideology. . This
tendency [to make Taiwan an independent state] is the
main contributing factor to the tensions in the Taiwan
Strait.

"As long as Taiwan is ruled by independence-minded
politicians, the island will continue to face a serious
military threat from across the strait, regardless of
how much it spends on improving its military arsenal."

D) "Facing the Reality of PRC Armed Threat"

The pro-independence, English-language "Taiwan News"
[circulation: 20,000] editorialized (7/22):

". We believe that the reality of the PRC's rising
military clout and its declared willingness to even its
nuclear capabilities to prevent what it defines as a
`Taiwan independence event' cannot be ignored. The
people of Taiwan cannot blithely assume that either
Washington or Tokyo will risk - or will be allowed by
their citizens to risk - their lives for the sake of
defending Taiwan form PRC attack for any reason
whatsoever.

"Therefore, any Taiwan government must place the
defense of our democracy and autonomy as the highest
priority, exercise considerable caution in dealing with
cross-strait relations and should refrain from
unnecessarily provoking Beijing's Chinese Communist
Party regime while working to strengthen Taiwan's
political, economic, social, culture, diplomatic and
defense fundamentals. .

"While we do not believe that more weapons offer
absolute protection, we also believe that the DPP
administration's call on the opposition-dominated
Legislature to approve the draft special law for
defensive military procurements is also a responsible
action to prevent a rapid and dangerous imbalance in
the cross-strait military equation. ..."


2. Renminbi Revalued

"[Renminbi] Slightly Appreciates Two Percent in
Response to the United States' Call"

Journalist Wang Li-chuan wrote in a news analysis of
the pro-unification "United Daily News" [circulation:
600,000] (7/22):

". Since the beginning of 2005, the international
community, especially the United States, has been
demanding for the appreciation of renminbi. At last,
Beijing was no longer able to withstand the pressure
and let renminbi appreciate for a small percentage.
This move can be accounted as giving `a response' to
the United States. It is also meant to express China's
sincerity in improving the U.S.-China trade deficit.
On the surface, China has to demonstrate that it is not
succumbing to U.S. pressure. The reevaluation is
taking the `Chinese pace.' It is following the
principle of `proactiveness, controllability, and
gradualism,' as instructed by Premier Wen Jiabao. The
scale of the appreciation is quite small. Whether the
United States will accept this or will continue to
exert pressure is the focus for observation. ."

PAAL