MEDIA REACTION: U.S.-CHINA STRATEGIC ECONOMIC DIALOGUE,

UNCLAS AIT TAIPEI 001182

SIPDIS

SIPDIS

DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - LLOYD NEIGHBORS
DEPARTMENT PASS AIT/WASHINGTON

E.O. 12958: N/A
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-CHINA STRATEGIC ECONOMIC DIALOGUE,
U.S.-TAIWAN RELATIONS



1. Summary: Taiwan's major Chinese-language dailies focused news
coverage May 26-29 on the 2008 presidential election; on the
Pentagon's release of its "Military Power of the People's Republic
of China 2007" report Saturday; on a female Taiwan cadet who
graduated from West Point on May 26; and on local issues. In terms
of editorials and commentaries, DPP's Chinese Affairs Department
Director Lai I-chung discussed the U.S.-China Strategic Economic
Dialogue (SED) in an op-ed in the pro-independence "Liberty Times"
and said the results of this year's SED have proved that the United
States' logic behind its request that Taiwan further open up to
China is hardly convincing. Lai said in a separate op-ed piece
published by the pro-unification "United Daily News" that pushing
China to move toward an open market economy is the fundamental way
for the normalization of cross-Strait trade relationship, and it
will help improve Taiwan-U.S. relations. An editorial in the
limited-circulation, pro-unification, English-language "China Post"
said the "successful" conclusion of the SED in Washington shows that
Beijing's strategy of "playing the U.S.' game, albeit by its own
rules" is effective. A separate "China Post" editorial said the
creation of the SED "underlines the fact that China has become a
major player in the world arena." An editorial in the
limited-circulation, pro-independence, English-language "Taipei
Times" discussed the United States' interests in Taiwan. The
article said "the island's democratization has stiffened the US'
resolve to protect it." End summary.


2. U.S.-China Strategic Economic Dialogue

A) "U.S.-China Economic Dialogue vs. KMT-CPC Empty Talks on Trade
and Economics"

Lai I-chung, director of the DPP's Department of Chinese Affairs,
opined in the pro-independence "Liberty Times" [circulation:
500,000] (5/27):

"... A few points in this year's U.S.-China Strategic Economic
Dialogue (SED) are worth contemplating: First, the focus of the
U.S.-China SED lies in how to resolve the trade issues concerning
the two countries caused by China's opaque economic structure. This
explains why such issues as the exchange rate between the renminbi
and the dollar and market access were listed on the agenda. The
'U.S.-China SED' has thus provided a platform for the United States
to raise these 'structural' issues with China. ...

"Second, it is a fact that the manufacturing business in the U.S.
has been suffering from China's mercantilist operation. Despite the
superior status of the United States, it still failed to achieve
positive results in terms of China's market opening and economic
transparency. But while China continues its protection of its
internal market and keeps on strengthening its exports -- giving
Taiwan businessmen a hard time in entering the Chinese market -- the
United States, contrarily, requested that Taiwan further open [its
market] to China, believing that this will improve Taiwan-U.S.
economic relations. The results of this year's SED have proved that
such logic is not convincing at all.

"Finally, China's behavior in the U.S.-China SED was not unexpected,
as it reflected Beijing's fundamental attitude of having no interest
in facing the structural issues. ... As a result, if one views
China's economy and Taiwan's strategy [toward China] under the
framework of global strategy, [one will know that] how Taiwan should
open up itself to China is just a fake agenda. What really matters
instead is how to strengthen Taiwan's economic constitution and how
to work with other countries to push for China's market opening and
economic transparency, so as to construct a free economic
environment in which it will be favorable for Taiwan to engage in
fair competition, without being politically interfered with by the
Chinese government. ..."

B) "Opening of China Will Certainly Be Conducive to Taiwan-U.S.
Relations"

Lai I-chung, director of the DPP's Department of Chinese Affairs,
opined in the pro-unification "United Daily News" [circulation:
400,000] (5/29):

"The second U.S.-China Strategic Economic Dialogue (SED) has
concluded amid a lot of noise. Most observers believe that it
yielded only meager results. Controversial issues that have
received widespread attention, such as the exchange rate between the
renminbi and dollar, the adherence to the World Trade Organization
regulations, and intellectual property rights, have not been dealt
with. Obviously, this dialogue has not only failed to mitigate the
trade disputes between the United States and China but may likely
also further intensify conflicts between the two because of its
limited results. ...

"[Most people] view China as a market, so China's economic
U.S.-TAIWAN RELATIONS

environment has become the focus of their concern. The many issues
raised by Washington during the SED did not conflict with Taiwan's
interests, and it will benefit the normalization of cross-Strait
trade and economic relations should any progress be made [during the
dialogue].

"Stephen Young said recently that Taiwan's further opening up to
China will help to improve Taiwan-U.S. economic relationship. But
an average of sixty percent of the Taiwan people believe that more
stringent restrictions should be imposed on [the island's]
investments in China, and seventy percent of the Taiwan people are
worried about [the island's] dependence on China economically.
Given the current trend in which China's economic nature is not
moving toward market opening, Young's logic can hardly convince the
Taiwan people. To push China to move toward an open market economy
instead is the fundamental way for the normalization of cross-Strait
trade and economic relations. Taiwan and the United States share
common interests in urging China to undergo nonstructural economic
reforms. As a result, the answer is quite obvious as to which will
be conducive to the Taiwan-U.S. economic relationship: Taiwan's
further opening up itself to China, or the request that China open
up itself?"

C) "U.S.-PRC Trade Ties Smooth"

The conservative, pro-unification, English-language "China Post"
[circulation: 30,000] editorialized (5/29):

"The People's Republic of China, like its former mentor, the
now-defunct USSR, remains an ideological rival to the United States.
But unlike the USSR, today's China is playing the U.S.' game,
albeit by its own rules. The Soviet Union never tangoed with the
U.S., but today's PRC dances with it easily on bilateral trade,
nuclear proliferation and regional issues, including the Taiwan
question. Last week's 'successful' conclusion of the second
U.S.-China Strategic Economic Dialogue in Washington shows Beijing's
strategy is effective. The biggest U.S. concern, the undervalued
Chinese currency, was papered over. As long as the U.S. stands by
its one-China policy opposing Taiwan independence, the PRC will not
invade the 'Chinese, self-ruled, non-state island.' But Beijing's
missiles targeting Taiwan have increased to 1,000, making defense of
the island an almost impossible task, even for the U.S. And
Beijing's enactment of the Anti-Secession Law in March 2005 has
effectively rendered the 1979 U.S. Taiwan Relations Act almost
meaningless. ...

"Beijing has paid lip service to the U.S. anti-terrorist campaign.
But on trade, it is bent on gaining from the U.S. as much and for as
long as possible. China is already the world's third largest
trading nation and seems destined to become the largest. On its
present course, it threatens to wreck the entire post-World War II
trading system. ..."

D) "Chinese Money Talks"

The conservative, pro-unification, English-language "China Post"
[circulation: 30,000] editorialized (5/26):

"... The economic relationship between Washington and Beijing is
complex. It is only natural that there are sources of friction and
disputes. The inception of the Strategic Economic Dialogue provides
a useful channel of discussion and communication between the two
most important economies of the world. The meeting is arguably the
most important of its kind besides Group of Seven annual talks among
the world's richest developed nation. The creation of the Strategic
Economic Dialogue underlines the fact that China has become a major
player in the world arena. By the end of this year, the mainland is
expected to become the world's second largest trading country, after
the United States. As of the end of March this year, its foreign
exchange reserves reached US$1.2 trillion, an increase of 37 percent
over the year-earlier period, mostly from a trade surplus of US$46
billion in the first three months of this year. Money talks. With
an economy, a market, and productivity of that size and potential,
mainland China is something to be reckoned with. Of course, there
are also pundits who have predicted the impending collapse of the
regime. But before then, when Beijing talks, the world listens."


3. U.S.-Taiwan Relations

"What Taiwan Means to the US"

The following editorial in the pro-independence, English-language
"Taipei Times" [circulation: 30,000], written by Dennis V. Hickey,
the director of the graduate program in International Affairs at
Missouri State University, noted (5/27):

"For more than 50 years, the US has enjoyed a remarkably close
relationship with Taiwan. Arguably, no other country maintains as
U.S.-TAIWAN RELATIONS

many ties with Taiwan. What lies behind US interest and how has it
changed over time? ... Unlike strategic and economic interests, the
US' political stake in Taiwan has grown exponentially with the
passage of time. Taiwan has long served as visible evidence that
the US stands by its friends and honors it commitments. But most
important is Taiwan's peaceful evolution into a democracy.

"Taiwan's feisty democracy is far from perfect. But the island's
democratization has stiffened the US' resolve to protect it. This
is because most of the US supports the central propositions of
'democratic peace theory.' The US believes that democracies tend to
be more reliable partners in trade and diplomacy and seldom threaten
peace. Furthermore, democracies do not attack other democracies,
engage in terrorism, wreak environmental damage or unleash waves of
refugees on the world. It is for these reasons that the US will
remain committed, as it has for more than half a century, to Taiwan.
Indeed, the US' stated interest in Taiwan's democracy makes as much
(or more) sense today as it did in the past."

YOUNG