TAIWAN'S UN REFERENDUM REMAINS SERIOUS CONCERN,

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 005888

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E.O. 12958: DECL: 09/07/2032
TAGS: PREL PGOV MARR CH TW
SUBJECT: TAIWAN'S UN REFERENDUM REMAINS SERIOUS CONCERN,
BUT USE OF FORCE UNLIKELY, CONTACTS SAY

REF: BEIJING 5326 AND PREVIOUS

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

Summary
--------------


1. (C) Current tensions over Taiwan President Chen
Shui-bian's UN referendum, while serious, have not yet become
a crisis, in part because of careful management by Washington
and Beijing, in part because Chen has yet to cross China's
"red line" of de jure independence, Embassy contacts
commented this past week. Deputy Secretary Negroponte's
public comments opposing the referendum were well received in
China, one contact said, praising the choice of Hong Kong's
Phoenix TV to pass that message. Despite "voices" to the
contrary, Beijing is "highly unlikely" to use force to
respond to the referendum, but conflict over Taiwan is not
entirely out of the question. Under certain conditions,
Chinese leaders might decide that using force and sacrificing
China's economic development is the necessary price to pay
for territorial integrity, or the only means for the Party,
or individual leaders, to remain in power. Taking a
long-term view, one contact warned that the rise in Taiwan of
a non-Chinese "Taiwanese" identity threatens the cross-Strait
status quo and has set both sides on a collision course. End
Summary.

Taiwan's UN Referendum: Not a Crisis, Yet
--------------


2. (C) Embassy contacts continue to voice concern over Taiwan
President Chen Shui-bian's "independence moves," including
the referendum on membership in the UN under the name
"Taiwan," but counterparts this past week emphasized that the
situation has "not yet" become a crisis. Cao Huayin
(strictly protect),Deputy Director General at the China
Reform Forum (CRF),told Poloff on September 3 that careful
management of the cross-Strait situation by Beijing and
Washington has so far yielded results. The current tensions
are "quite serious," because Chen Shui-bian and his "deep
Green" supporters want to "change the status quo" and benefit
from the resultant chaos, primarily by ensuring a DPP victory
and "saving Chen's skin." While the situation has not yet
reached crisis levels, there remains "great potential" for it
to do so, should Chen continue to "push the envelope" on
independence. Nevertheless, in the face of Chen's
provocations, Beijing and Washington have been working
"responsibly" to maintain the status quo and cross-Strait
stability, which has been a stabilizing factor, Cao said.


3. (C) In this context, Beijing is "pleased" with
Washington's public opposition to the DPP referendum, Cao
stated. To date, China's assessment of the U.S. response has
been "so far, so good." In particular, China welcomed Deputy
Secretary Negroponte's comments opposing the referendum that

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were aired on Hong Kong's Phoenix TV, which garnered a great
deal of positive attention on the Mainland. The decision to
have the Deputy Secretary make his comments on Phoenix TV was
a wise one, Cao said. Even though the satellite channel is
not universally available on the Mainland, Cao commented that
it is watched by "the people who matter."


4. (C) Separately, Kang Shaobang (strictly protect),
Executive Deputy Director at the Central Party School (CPS)
Institute for International Strategic Studies, on August 30
said he thought the current cross-Strait situation is
"manageable" as long as Chen Shui-bian does not cross
Beijing's "red line" of de jure independence. Despite Chen
Shui-bian's provocative rhetoric, China will continue to
focus on what Chen does, not what he says. Provided he does
not, for example, do something to officially change Taiwan's
name or revise its constitution, China will continue to show
restraint. The DPP's UN referendum is nevertheless sensitive
because its proposal to use the name "Taiwan" in joining the
UN smacks of a name change and is a "dangerous step" that
leads Taiwan down the path toward de jure independence, even
though it does not itself cross that line. Kang observed
that if the DPP were to change the content of its referendum
by removing the "in the name of Taiwan" language, Beijing's
concerns would be greatly alleviated.


5. (C) Chinese leaders do not desire conflict and believe the
cross-Strait situation will improve in 2008, no matter who
wins Taiwan's presidential election, Kang asserted. Both the
KMT's Ma Ying-jeou and the DPP's Frank Hsieh are "much more
moderate" than Chen Shui-bian. Therefore, Kang said, he is
"optimistic" that we can weather the current "turbulence" in

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cross-Strait relations, again assuming Chen does not cross
one of the PRC's "red lines" prior to his departure from
office.

Military Force over Referendum Unlikely
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6. (C) Chinese use of military force over the referendum is
unlikely, three Embassy contacts separately assessed. The
CPS's Professor Kang, while acknowledging that there are
"voices" calling for military action against Taiwan sooner
rather than later, said they are confined primarily to the
PLA and remain "a minority." Meanwhile, China's political
leadership is relatively "moderate" on the Taiwan issue. The
CRF's Cao conceded that there are "hawkish" elements within
the PLA and academia, such as Tsinghua University's Yan
Xuetong, calling for military action against Taiwan now,
based on the argument that the costs of fighting will only
increase over time. But they are far from being in the
majority. In one sense, China "needs such voices" for the
purposes of "deterring" reckless Taiwanese behavior, Cao
asserted. The PLA's job is to prepare for all contingencies,
and it has done so, which demonstrates to Taipei the possible
costs of its behavior. But Cao underscored that the use of
force would be a political decision, over which President Hu
Jintao would have the largest say. Zhai Zhihai (strictly
protect),a retired PLA intelligence officer who now heads
his own consulting firm, told Poloff on September 5 that even
though many of his former PLA colleagues are "ready to go at
any time," the likelihood of military action against Taiwan
solely over the UN referendum issue is "extremely low."

But Conflict Is Not out of the Question
--------------


7. (C) Although military action based solely on the UN
referendum issue is unlikely, conflict over Taiwan is not
entirely out of the question, our contacts assessed. Cao
Huayin said that, if pressed into a corner, President Hu
Jintao and other top political leaders could be forced to
choose between China's continued economic development or
preserving its territorial integrity. Zhai Zhihai agreed
that, if Chen Shui-bian crosses a red line, Beijing will have
to decide whether it is worth sacrificing its development in
order to prevent Taiwan's (de jure) independence.


8. (C) Chinese top leaders' assessment of their own domestic
political risk would also be a critical calculation in a
decision on the use of force, Zhai said. Any indication of
being "soft" on Taiwan is very dangerous in China. Under
certain conditions, failing to take coercive action against
Taiwan would make the Party vulnerable to public
dissatisfaction and could lead to potential instability.
Moreover, individual senior leaders could be subject to
charges of "betraying" the Chinese motherland. In that
sense, Chinese leaders could be faced with the choice of
adopting non-peaceful means against Taiwan, or being toppled
from power. Under such conditions, from the standpoint of
remaining in power, fighting and even losing a war could be
the most rational choice for China's leaders, Zhai said.

"Time is not on China's Side"
--------------


9. (C) Even if both sides weather the current cross-Strait
tensions, "time is not on China's side," Zhai lamented.
Increasingly, the residents of Taiwan identify themselves as
"Taiwanese," not "Chinese." This change is slowly altering
the status quo and setting both sides on a collision course
as Taiwan's separation from China, and Chinese culture,
increasingly becomes "real." To extricate itself from this
"trap," Zhai said he believes Chinese leaders need to show
political "courage" and "foresight." Even the "radical step"
of recognizing the Republic of China would be better than
simply standing by as Taiwan drifts toward becoming the
"Republic of Taiwan," which would undoubtedly lead to a
conflict in which we will all lose, Zhai concluded.
Randt