INDUSTRY ASSOCIATION CHAIRMAN TED HUANG ON PRC,

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001282

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SIPDIS

DEPT FOR EAP/TC

E.O. 12958: DECL: 04/11/2016
TAGS: ECON EINV PREL CH TW
SUBJECT: INDUSTRY ASSOCIATION CHAIRMAN TED HUANG ON PRC,
JAPAN AND TAIWAN'S FUTURE


Classified By: AIT Director Stephen M. Young, Reason 1.4 d


1. (C) Summary: Chinese National Association of Industry
and Commerce Chairman Ted Huang told AIT Director Stephen
Young during an April 7 meeting that Taiwan businessmen
believe the Taiwan government's cross-Strait policies are
too restrictive. However, Huang supports efforts to
diversify Taiwan's investments to other countries,
especially Southeast Asia. He observed that Japan's
investment in the PRC has given Beijing leverage against
Tokyo. He remarked that Taiwan is not very competitive as
a regional hub for East Asia. Huang also commented that if
the PRC becomes more like Taiwan, reunification is possible
in as little as 20 years. Director Young told Huang that
the U.S. has committed to helping preserve Taiwan's ability
to decide its own future and expressed confidence that
Taiwan will develop new strategies to help it continue to
prosper. End summary.


2. (U) AIT Director Stephen Young met with Chinese National
Association of Industry and Commerce (CNAIC) Chairman Ted
Huang (Mao-hsiung) on April 7 to discuss the challenges
facing Taiwan firms and Taiwan's economic prospects. CNAIC
is one of Taiwan's largest business associations with
members from a wide range of industries. Huang is also
chairman of TECO Group, which started business as a
manufacturer of industrial motors but has since diversified
into home appliances, commercial air conditioning,
construction, telecommunications, IT systems, flat panel
displays, electronics components, and restaurants.

More Opening with PRC and Diversification of Investment
-------------- --------------


3. (C) Huang told Director Young that most businessmen are
more sympathetic to the pan-Blue camp and believe that the
government's cross-Strait policies are too restrictive.
Although Taiwan firms have ignored restrictions on PRC
investment in the past, Huang argued that this approach was
becoming too risky. He said it makes Taiwan firms more
vulnerable to pressure from the PRC and noted that the
Taiwan government has recently cracked down, citing the
example of the United Microelectronics Corp. (UMC) case.


4. (C) Huang supports efforts to encourage Taiwan firms to
diversify their foreign investment to other countries. He
explained TECO's efforts to develop an industrial park at
the site of the former U.S. naval base in Subic Bay, the
Philippines. He said the project had been successful
initially but had later suffered from electricity shortages
and problems with labor unions. Huang added that TECO is
also building a plant in Vietnam and finds conditions there
very promising. However, he believes that the investment
environment in India is not as favorable for Taiwan
businesses.

PRC Pushing Japan toward the U.S.
--------------


5. (C) Huang pointed out that Beijing has used Japan's
investment in the PRC as leverage against Tokyo. He
described how PRC President Hu Jintao had urged Japanese
businessmen to find a resolution to the Yasukuni Shrine
problem. AIT Director Young noted that the PRC's
manipulation of historical issues was not effective and had
only served to make Japan angrier. Huang agreed that the
PRC's attempts to "play tough" with Japan's Prime Minister
Junichiro Koizumi had been totally unsuccessful. He
speculated that Japan would move closer to the United
States as a result.

Taiwan Not Competitive as East Asia Hub
--------------


6. (C) Huang was pessimistic on the prospects for the
Taiwan government's efforts to promote the island as a
regional hub in East Asia. He observed that Taiwan can't
compete with the PRC's large and growing harbors. Huang
also remarked that Taiwan could not compete with Hong Kong
as a financial center, noting that the scale of Taiwan's

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financial market is too small and that government
regulations are too tight. He argued that even Tokyo can't
compete with Hong Kong as a financial center.

Taiwan Needs 20 Years of Peaceful Coexistence
--------------


7. (C) Huang said that he had had the opportunity to get to
know KMT Chairman Ma Ying-jeou during a recent trip to
Europe and that he agrees with Ma's vision for Taiwan's
future. Huang argued that Taiwan needs to maintain the
status quo with the PRC, but not necessarily for very long.
According to Huang, 20 years should be enough time for
Taiwan to survive and consolidate a role as a world player.
If the PRC can transform itself in that time and become
more like Taiwan, then Huang believes reunification is
possible. If not, he believes that Taiwan will have to go
its own way. However, Huang also commented that the PRC
was nave if it believed that all cross-Strait problems
would go away if the KMT wins Taiwan's presidential
election in 2008.


8. (C) Huang asked Director Young what the United States
would do in the event of a cross-Strait conflict. The
Director explained that under the Taiwan Relations Act the
United States has a long-term commitment to helping
preserve Taiwan's ability to control its own fate.
However, the United States needs an active relationship
with the PRC and wants it to become a responsible
stakeholder in the international community. He praised
Taiwan's history of success in business and in building
democracy. He expressed confidence that Taiwan's talented
people would continue to develop new strategies that would
help it prosper in the future.
YOUNG