YES, CHEN SHUI BIAN WILL STEP DOWN, XIAMEN UNIVERSITY TAIWAN

UNCLAS GUANGZHOU 030123

SIPDIS

SENSITIVE


SIPDIS

STATE FOR EAP/CM, EAP/RSP/TC
STATE PASS USTR STRATFORD
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE
USPACOM FOR FPA

E.O. 12958: N/A
TAGS: PREL PGOV ECON PINR TW CH
SUBJECT: YES, CHEN SHUI BIAN WILL STEP DOWN, XIAMEN UNIVERSITY TAIWAN
EXPERTS SAY, BUT NOT UNTIL AFTER 2008 ELECTION

REFERENCE: GUANGZHOU 11045

(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT
ACCORDINGLY. NOT FOR RELEASE OUTSIDE U.S. GOVERNMENT CHANNELS. NOT
FOR INTERNET PUBLICATION.


1. (SBU) SUMMARY: DESPITE RUMORS OF RESIGNATIONS AND CONSTITUTIONAL
SHENANIGANS, XIAMEN UNIVERSITY TAIWAN RESEARCH INSTITUTE ACADEMICS
BELIEVE THAT THERE IS LITTLE LIKELIHOOD TAIWAN PRESIDENT CHEN SHUI-BIAN
WILL STEP DOWN BEFORE HIS TERM IS UP. THEIR FOCUS IS NOT ON THE SHORT-
TERM OF DEMONSTRATIONS LED BY CHEN?S DPP BETE-NOIR SHI MING-TE OR
CHEN?S OWN ATTEMPTS TO SHORE UP HIS BELEAGUERED POSITION, BUT ON POST-
2008 TAIWAN. THEY EXPECT TAIWAN RESIDENTS TO CAST THEIR VOTES FOR
PRACTICAL REASONS THAT HAVE MOTIVATED VOTERS IN OTHER COUNTRIES: PARTY
IDEOLOGY AND POLICY PROMISES. THEY ALSO BELIEVE THAT THE MAJOR PARTIES
? DPP AND KMT - ARE EVENLY SPLIT PROVIDING AN OPPORTUNITY FOR A THIRD
PARTY TO DETERMINE THE FINALLY OUTCOME. ONE SCHOLAR NOTED THAT THE
CENTRAL GOVERNMENT IN BEIJING CONTINUES TO COMMUNICATE REGULARLY WITH
THE TAIWAN RESEARCH INSTITUTE AND PAYS CLOSE ATTENTION TO EVEN THE
FAINTEST WHISPER OF ANY MOVEMENT TOWARD TAIWAN INDEPENDENCE. ON THE
ECONOMIC SIDE, ACADEMICS SAY TAIWAN?S ECONOMY IS CONTINUING TO HOLLOW
OUT AS TAIWAN INVESTMENT MIGRATES TO CHINA. WHILE FUJIAN LEADERS SPEAK
WELL OF THE BENEFIT OF THEIR PROVINCE?S RELATIONSHIP WITH TAIWAN ? AS
DID MAYORS AND VICE MAYORS IN MEETINGS WITH THE CONSUL GENERAL THE WEEK
OF SEPTEMBER 10 - THE ACADEMICS? VIEWED TAIWAN?S ECONOMIC REALITIES
MORE CAUTIOUSLY, THOUGH THEY DID CITE SOME POTENTIALLY HELPFUL
REGULATORY EFFORTS TO IMPROVE TRADE BETWEEN TAIWAN AND MAINLAND CHINA.
END SUMMARY.

ACADEMICS ANALYZE 2008 ELECTION LANDSCAPE
--------------


2. (SBU) THE CONSUL GENERAL AND CONGENOFFS MET WITH REPRESENTATIVES OF
XIAMEN UNIVERSITY?S TAIWAN RESEARCH INSTITUTE, INCLUDING DIRECTOR LIU
GUOSHEN ON SEPTEMBER 10 TO REVIEW THE LATEST DEVELOPMENTS IN CROSS-
STRAITS TIES. THE OTHER GUESTS INCLUDED PROFESSOR CHEN KONGLI,
ASSISTANT TO DIRECTOR LI PENG, CHIEF OF POLITICAL DEPARTMENT SUN YUN,
DEPUTY CHIEF OF POLITICAL DEPARTMENT ZHANG WENSHENG, AND DEPUTY CHIEF
OF ECONOMIC DEPARTMENT SHI ZHENGFANG.


3. (SBU) ACCORDING TO THE ACADEMICS, CHEN SHUI-BIAN IS UNLIKELY TO
RESIGN, THOUGH THEY REFRAINED FROM SAYING RULING IT OUT ALTOGETHER. IN
FACT, THEY OFFERED THREE SCENARIOS IN WHICH HE WOULD HAVE NO
ALTERNATIVE BUT TO STEP DOWN:
-- IF HIS WIFE WERE CHARGED WITH FRAUD (ALTHOUGH THE COMPLEX PROCESS IN
TAIWAN COULD DRAW OUT THIS PROCESS BEYOND 2008);,
-- IF CHEN BELIEVED THE DEMOCRATIC PROGRESSIVE PARTY (DPP) WOULD BE
HURT POLITICALLY WERE HE WERE TO STAY, OR
-- IF SOCIAL TURMOIL OVER THE SCANDALS RELATING TO HIS SON-IN-LAW, HIS
WIFE AND HIS OWN INVOLVEMENT IN THE SECRET DIPLOMATIC FUND MATTER TOOK
AN UNEXPECTED AND DRAMATIC TURN.


4. (SBU) IN THE VIEW OF MOST OF THE PROFESSORS, THOSE WHOSE FAMILIES
MIGRATED TO TAIWAN FROM THE MAINLAND AT THE END OF THE CIVIL WAR IN THE
LATE 1940?S STRONGLY SUPPORT TAIPEI MAYOR AND KMT CANDIDATE MA YING-
JEOU FOR PRESIDENT. THE SCHOLARS TOOK NOTE OF THE EMPHASIS MA IS
PLACING ON COURTING THE ETHNIC TAIWAN POPULATION. SEVERAL OF THE TRI
ACADEMICS THOUGHT THAT MAINLANDERS AND TAIWANESE MIGHT HAVE QUESTIONS
ABOUT MA?S GOVERNING ABILITY BECAUSE OF HIS LACK OF FOREIGN POLICY
EXPERIENCE.


5. (SBU) TRI DIRECTOR LIU SAID THAT POLITICAL IDEOLOGY, PERSONALITY,
COMPETENCE AND PUBLIC POLICY PROPOSALS WERE MORE IMPORTANT THAN WHETHER
A CANDIDATE FOR PRESIDENT OR OTHER OFFICES IS FOREIGN-BORN (MA WAS BORN
IN KOWLOON) OR HIS ORIGINS CAN BE TRACED BACK MANY GENERATIONS IN
TAIWAN. IN OTHER WORDS, A POLITICAL CAMPAIGN APPEALING TO THOSE WHO
DID NOT WANT A MAINLANDER TO BE PRESIDENT WAS LIKELY TO FAIL. PARTY
AFFILIATION IS TOO STRONG FOR THE NEXT ELECTION TO BE PLAYED OUT AS
PART OF ANY MAINLANDER-TAIWAN DYNAMIC. PROFESSOR CHEN KONGLI, A FORMER
DIRECTOR OF THE INSTITUTE, DISAGREED WITH LIU, SAYING THAT MANY IN
TAIWAN WOULD VOTE AGAINST A MAINLANDER SIMPLY BECAUSE HE WAS A WAI-
SHENG REN (LITERALLY SOMEONE FROM OUTSIDE THE PROVINCE) AND THAT WOULD
TURN THE ELECTION TOWARD THE DPP. LIU NOTED THAT THE 2008 WOULD BE A
TEST OF THE SOPHISTICATION OF THE TAIWAN POPULATION ? WHETHER THEY
WOULD USE MORE REALISTIC CRITERIA IN CHOOSING THEIR LEADER OR BASE
THEIR VOTE ON PARTY AFFILIATION OR PLACE OF HIS BIRTH.

DARK HORSE COULD UPSET A TWO-PARTY RACE
--------------




6. (SBU) SINCE THERE WERE GROWING DISSATISFACTIONS OVER THE ACTIONS OF
CANDIDATES IN THE DPP AND KMT CAMPS, THE SCHOLARS THOUGHT THAT A THIRD
PARTY HAD GREAT POTENTIAL FOR DETERMINING THE OUTCOME OF THIS RACE.
LIU GUO-SHEN SUGGESTED THAT THE CURRENT ANTI-CHEN SHUI-BIAN CAMPAIGN
MIGHT PRODUCE A ?THIRD COLOR? TO GO ALONG WITH THE PAN-BLUE KMT AND THE
PAN-GREEN DPP. LIU OPINED THAT MANY WHO WOULD LIKE TO SEE THE END OF
THE CHEN PRESIDENCY COULD END UP DISAPPOINTED WITH BOTH THE DPP AND MA
YING-JEOU, AND MIGHT BE PERSUADED TO VOTE FOR A NEW ENTITY THAT WOULD
CLEAN HOUSE.


7. (SBU) THE ACADEMICS TOOK NOTE OF DEBATES OVER WHETHER CHEN MIGHT
TRY TO AMEND THE CONSTITUTION IN ORDER TO RETAIN HIS POWER. HOWEVER,
THEY ALL AGREED THAT CHEN WOULD NOT RISK THE POTENTIAL DAMAGE COULD
HAVE ON TAIWAN?S RELATIONSHIP WITH THE UNITED STATES. IN ANY CASE, HE
LACKED PARLIAMENTARY SUPPORT FOR SUCH A MOVE. IN ADDITION, IF CHEN
ATTEMPTED TO AMEND THE CONSTITUTION UNILATERALLY AND WITHOUT
PARLIAMENTARY SUPPORT, HIS ACTION WOULD BE CONSIDERED ?TREASONOUS?
UNDER TAIWAN LAW AND THE MILITARY MIGHT TRY TO OUST HIM.

CHEN?S CONCILIATORY ATTITUDE IS LIKELY AN ?ACT?
-------------- --


8. (SBU) THE ACADEMICS ALSO CONTINUE TO BELIEVE THAT CHEN HAS A STRONG
AGENDA THAT IS ESSENTIALLY PRO-INDEPENDENCE. THEY CLAMED HIS
CONCILIATORY ATTITUDE TOWARDS BEIJING IS MERELY AN ?ACT.? HOWEVER, AS
MUCH AS THEY DOUBT CHEN?S OCCASIONAL WILLINGNESS TO HEW A MORE MODERATE
LINE ON CROSS-STRAIT ISSUES, THEY HARBOR EVEN STRONGER RESERVATIONS
ABOUT VICE-PRESIDENT LU HSIULIEN (ANNETTE LU),WHOM THEY CONSIDER EVEN
MORE NATIONALIST.


9. (SBU) IN RESPONSE TO A QUESTION ABOUT RELATIONS WITH TAIWAN
SCHOLARS WHO VISIT THE MAINLAND, THE ACADEMICS SAID THAT THEY WERE
GENERALLY SURPRISED AT HOW INTERESTED THEIR VISITORS WERE IN ALL
ASPECTS OF LIFE IN THE MAINLAND, WHICH LED THEM TO BELIEVE THAT A
NUMBER OF TAIWAN ACADEMICS WERE INVOLVED IN INTELLIGENCE. (ACCORDING TO
LIU, TAIWAN INTELLIGENCE AGENTS APPROACH INSTITUTE SCHOLARS UNDER
ACADEMIC TITLES AND ASK THE LATTER ALL MANNER OF QUESTIONS ABOUT
CURRENT EVENTS IN THE MAINLAND, TRYING, FOR EXAMPLE, TO GAIN
INFORMATION ON LAND DISPUTES OR CORRUPTION.)

TAIWAN ECONOMY FACING CHALLENGES
--------------


10. (SBU) SEVERAL OF THE TRI ACADEMICS TOOK NOTE OF THE CONTINUING
?HOLLOWING OUT? OF TAIWAN?S ECONOMY. TAIWAN HAS HIGH COSTS, A SMALL
MARKET, AND LIMITED NATURAL RESOURCES, WHICH HAS LED TAIWAN BUSINESS
PEOPLE TO CONTINUE MOVING THEIR OPERATIONS ? SOMETIMES IN THEIR
ENTIRETY - TO THE MAINLAND. IN A DISCUSSION WITH THE CONSUL GENERAL ON
SEPTEMBER 11, XIAMEN MAYOR ZHANG CHANGPING TOOK NOTE, WITH SOME PRIDE,
ON HOW EXTENSIVE THE TAIWAN PRESENCE IN HIS CITY WAS - 60,000 TAIWAN
CITIZENS NOW LIVE AND WORK IN XIAMEN, 20 BOATS TRAVEL DAILY FROM JINMEN
TO XIANMEN, TAIWAN BUSINESSES SEE XIAMEN AS A PLACE OF OPPORTUNITY A
TIME WHEN TAIWAN CAN NO LONGER SUPPORT LIGHT INDUSTRIAL GROWTH. ZHANG
SAID THAT CHINA?S PRESIDENT HU JINTAO?S POLICY OF ENCOURAGING DUTY-FREE
IMPORTS OF TAIWANESE FRUIT WAS BENEFICIAL TO BOTH XIAMEN AND TAIWAN AND
IT WAS INCUMBENT ON TAIWAN TO RELAX BARRIERS ON TRADE WITH THE MAINLAND


11. (SBU) SOME OF THE ACADEMICS NOTED POSITIVELY TAIWAN?S STRATEGY OF
FOCUSING ON RETAINING KEY SERVICE JOBS, WHILE LETTING GO OF
MANUFACTURING JOBS. THEY SAID TAIWAN WOULD BE ABLE TO MAINTAIN THE
MACHINE TOOL INDUSTRY IF THE THREE LINKS WERE OPENED BETWEEN CHINA AND
TAIWAN. WITHOUT THE THREE LINKS, HOWEVER, THE INDUSTRY?S SURVIVAL IN
TAIWAN WOULD BE IN DOUBT, AS CIRCUMSTANCES MIGHT FORCE IT TO MOVE TO
THE MAINLAND.

COMMENT
--------------


12. (SBU) WHILE THE TRI ACADEMICS EXPECT CHEN TO WEATHER THE CURRENT
SCANDALS AND MISSTEPS THAT HAVE BESET HIS ADMINISTRATION, NONE WAS
WILING TO VENTURE A GUESS ON THE OUTCOME OF THE 2008 ELECTIONS.
CHINESE ACADEMICS ? AND GOVERNMENT OFFICIALS ? HAVE BEEN BURNED BEFORE
FOR WISHING FOR AN ABC OUTCOME (?ANYBODY BUT CHEN?). THEIR CAUTION IS
UNDERSTANDABLE ? CHEN MAY BE DOWN AND HIS FUTURE IS SIMPLY AS A
PLACEHOLDER PRESIDENT, BUT MA?S IS NOT ASSURED AND TWO YEARS IS A LONG
TIME IN THE POLITICAL LIFE OF ANY CANDIDATE, ESPECIALLY ONE WHO AT
TIMES, IN THE VIEWS OF THE SCHOLARS, HAS SEEMED AS CAUTIOUS AS MA YING-
JEOU.




GOLDBERG