TAIWAN: CHINESE CONTINUE TO EXPRESS CONCERN OVER

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 005326

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/14/2032
TAGS: PREL PGOV CH TW
SUBJECT: TAIWAN: CHINESE CONTINUE TO EXPRESS CONCERN OVER
CHEN SHUI-BIAN'S UN REFERENDUM

REF: A. BEIJING 5238


B. BEIJING 4813 AND PREVIOUS

Classified By: Political Minister Counselor
Aubrey Carlson. Reasons 1.4 (b) and (d).

SUMMARY
--------------


1. (C) Beijing continues to hope that Washington can block
Taiwan President Chen Shui-bian's plan to hold a referendum
on membership in the UN under the name "Taiwan." In an
August 7 meeting with a visiting U.S. Congressman, the
Chairman f the National People's Congress (NPC) Foreign
Affairs Committee referred to former Deputy Secretary
Zoellick's comment that Taiwan indepndence "means war,"
arguing that to avoid suc an outcome, the United States
should oppose Chen's actions "even more clearly, openly and
firmly." Separately, a well-connected scholar told Poloff
that Beijing is counting on Washington to "control" Chen
Shui-bian, lest he "force Beijing into a corner," leaving
China no choice but to "overreact." Two other contacts
discussed the role of public opinion, stressing that Taiwan
is a domestic stability issue for Mainland leaders.
Meanwhile, two Taiwan contacts with solid Mainland
connections sounded a contrasting note, downplaying the level
of PRC concerns and arguing that China knows the referendum
issue will "fade away," together with Chen, in 2008. End
Summary.

NPC Official Stresses PRC Concern over Referendum
-------------- --------------


2. (C) Chinese counterparts, both official and unofficial,
continue to voice concern over Taiwan President Chen
Shui-bian's plan to hold a referendum on membership in the UN
under the name "Taiwan," while emphasizing Beijing's hope
that Washington can rein Chen in. Delivering the official
line on Taiwan, Jiang Enzhu, Chairman of the National
People's Congress (NPC) Foreign Affairs Committee, on August
7 told a visiting U.S. Congressman Wexler that the coming
year is a period of "high danger" and that we are headed
"toward the brink" of a "very serious situation." Chen
Shui-bian's recent actions show that he is trying to "alter
the status quo." Chen has no credibility and will make the
"most reckless moves" for the sake of next year's
presidential election. If Chen's moves go unchecked, China's
"sovereignty and territorial integrity will be damaged,"
which would threaten cross-Strait peace and stability and
destabilize the entire region. China will do its utmost for
peace and stability, but in the face of these moves, China
must make preparations to forestall Taiwan independence,
Jiang warned.


3. (C) Beijing appreciates Washington's reiteration of its
one China policy, but China hopes the United States will
oppose "even more clearly, openly and firmly" Chen
Shui-bian's "reckless provocations" and avoid sending "wrong
signals," Jiang stated. Chen has turned a "deaf ear" to the
strong opposition of the international community. If he is
allowed to have his way, there will be "serious
consequences," both for the United States and for China.
Former Deputy Secretary Zoellick previously said that Taiwan
independence "means war." To avoid such an outcome, the
United States and China should work "all out" to oppose
Taiwan independence, Jiang said. China hopes that the U.S.
Government and Congress will also avoid sending "wrong
signals" to Chen Shui-bian, such as the recent House
resolution calling for the lifting of restrictions on
meetings with Taiwan officials. Such moves only encourage
Chen to go further down the "wrong path," eventually causing
the situation to "spin out of control," at which point it
might be too late to avoid conflict, Jiang asserted.


4. (C) China fears that Chen Shui-bian has miscalculated,
believing that no matter the provocation, the United States
will support him, Jiang said. Based on this misperception,
Chen has taken a series of provocative actions and will
continue to do so. According to Jiang, Chen Shui-bian hopes
to "drag the United States into the water." Beijing wants to
focus on economic development and improvement of the people's
livelihood as its main tasks. For that reason alone, it
hopes to maintain cross-Strait stability. Nevertheless, if
Chen takes any moves to damage the sovereignty and
territorial integrity of China, the PRC will be "cornered."
If that happens, PRC leaders will "have to be responsible to
the Chinese people." There is no room for Chinese leaders to
compromise on issues of sovereignty and territorial
integrity. If Chen Shui-bian harms cross-Strait stability,
he will damage Sino-American common interests and our
bilateral relations. We should take all possible measures to

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prevent this from happening, Jiang implored.

Think Tanker Stresses U.S. Role
--------------


5. (C) In a separate meeting, Cao Huayin (strictly protect),
the well-connected Deputy Secretary General at Zheng Bijian's
China Reform Forum, stressed that Beijing hopes Washington
can control Chen Shui-bian. Beijing's worries extend well
beyond the referendum to other, more provocative, possible
actions by Taiwan, Cao explained. Beijing has therefore
decided that it would be better to stop Chen now, before he
does something more radical like using the referendum results
to "overcome" constitutional and legislative impediments to
independence. To counter our "common enemy" Chen Shui-bian,
China needs the assistance of the United States. Though
"satisfied" with the U.S. reaction to date, Cao said China
still hopes to see Washington increase its public opposition
to Chen's moves. The PRC is also concerned over the
"consistency" of Washington's message to Taipei, especially
on arms sales.


6. (C) Cao took on board Poloff's point that China should not
overreact to the referendum, which itself would have no
practical impact on Taiwan's status. Cao nonetheless
countered that the United States needs to act to rein Chen
in, lest Chen force China "to overreact." Beijing has been
restrained and relatively skillful in its handling of the
referendum issue thus far, Cao assessed. In the past few
years, Beijing has shifted from a focus on "reunification" to
simply preventing Taiwan independence and "not losing" the
island. Nevertheless, Beijing "has its limits," Cao warned.
Conflict is still a possibility, and the PRC has made "all
necessary preparations" for "every potential outcome."
Regardless, Cao emphasized that nothing has been decided yet
and dismissed the notion that the referendum itself would
"automatically" equal conflict or require a response under
the Anti-Secession Law.

Divisions in Leadership over Taiwan?
--------------


7. (C) Cao Huayin repeatedly emphasized the "great unity" of
opinion among Chinese elites on the danger posed by Chen and
the need to oppose him actively. Separately, however, Ma
Licheng (strictly protect),former senior editor at the
People's Daily, recently told Poloffs that there are
divisions among the Chinese leadership over precisely how to
respond to Chen's provocations. Although a majority of the
leadership is "moderate" on Taiwan, Ma said there are more
"hardline" elements, especially among the PLA. Meanwhile, a
small minority are relatively "relaxed" on the Taiwan issue.
With moderates in the majority, Ma said he is "relatively
optimistic" that conflict can be avoided and the status quo
maintained, as long as China does not "lose" Taiwan. Ma
emphasized that arguments claiming the referendum itself
would require a Chinese reaction under the Anti-Secession Law
represent "hardline" thinking, most likely within the PLA.

Taiwan as a PRC Domestic Stability Issue
--------------


8. (C) Two contacts argued that Taiwan is an important
"domestic stability issue" for China. Ma Licheng dismissed
the role of public opinion in shaping the details of PRC
Taiwan policy but warned that it does determine "red lines,"
arguing that if Taiwan "achieves independence," the Chinese
public will demand an attack on Taiwan. Nevertheless, Ma
thought it would likely take "extreme action" on the part of
Taiwan to constitute crossing one of Beijing's "red lines."
Separately, Chen Tao (strictly protect),an official at the
Ministry of Civil Affairs, told Poloff that Taiwan is a "life
or death" matter for the Chinese leadership. Were Beijing to
"lose" Taiwan, the Chinese Communist Party would then "lose
its qualification" for ruling China. History shows that any
Chinese government that allowed Taiwan to slip away "did not
last long." The domestic social stability dimension of the
Taiwan issue is never far from the minds of Chinese
policymakers, Chen observed.

Taiwan Contacts Downplay PRC Concerns
--------------


9. (C) Meanwhile, two Taiwan contacts with ties to Mainland
officials and solid Blue (pro-KMT) backgrounds recently
downplayed the level of PRC concerns over the referendum and
thought it unlikely that Beijing would invoke the
Anti-Secession Law over the issue. Beijing-based Taiwan
businessman (and former aide to Koo Chen-fu) Koh Boluo
(strictly protect) believes the current situation is less
serious than China would like the United States to believe.

BEIJING 00005326 003 OF 003


Koh, currently the Beijing representative for Taiwan Cement,
claims to have many contacts in the PRC government, including
the State Council's Taiwan Affairs Office (TAO). The PRC
knows the referendum is going nowhere, as do the DPP and KMT,
Koh said. The issue that everyone is interested in is how
the United States will react. Beijing knows that the
referendum, and any other Chen Shui-bian initiatives, will
fade away after May 2008 (the inauguration of Chen's elected
successor). The Chinese are not planning any precipitous
action and will not invoke the Anti-Secession Law over the
referendum, Koh argued. In fact, the pace of cross-Strait
social, cultural and business exchanges is actually
increasing. If Beijing were serious about saber-rattling,
one of the first things it would turn off are the so-called
"soft" exchanges, all of which are currently proceeding
apace, Koh observed.


10. (C) Shih Chih-wei (strictly protect),a Taiwan journalist
and scholar on U.S.-China-Taiwan relations who frequently
travels to Beijing, separately told Poloff that, during his
most recent trip to China last month, PRC contacts in Beijing
were aware that Chen Shui-bian's referendum is designed to
strengthen the position of Deep Green (pro-independence Chen
supporters in the DPP),ensure Chen a future political role
and provoke China at a time when Chen's advisors feel that a
PRC overreaction would be most damaging to China and generate
the most sympathy for Taiwan. In Shih's opinion, Beijing
will not go so far as to invoke the Anti-Secession Law. The
referendum cannot succeed and is an aberration, not a
precedent, Shih said, a fact that he claimed his contacts at
Peking University and various Chinese think tanks said they
understand.
RANDT