PRC TAIWAN WATCHERS PRAISE ARATS-SEF MEETINGS,

C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 004328

SIPDIS

E.O. 12958: DECL: 11/25/2033
TAGS: PREL PGOV APEC CH TW
SUBJECT: PRC TAIWAN WATCHERS PRAISE ARATS-SEF MEETINGS,
COMMENT ON INTERNATIONAL SPACE, APEC

REF: A. BEIJING 4199

B. BEIJING 4153

C. BEIJING 4085

D. TAIPEI 1610

E. SHANGHAI 503

Classified By: Acting DCM Aubrey Carlson. Reasons 1.4 (b) and (d).

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


1. (C) Beijing's Taiwan watchers called Association for
Relations Across the Taiwan Strait (ARATS) Chairman Chen
Yunlin's November 3-7 meetings in Taipei "historic," and not
just for superficial reasons. They highlighted Beijing's
significant steps, including implementing economic measures
advantageous to Taiwan (the three links) while deferring
political issues important to Beijing; not denying mutual
non-denial; accepting a high-profile political figure like
honorary KMT Chairman Lien Chan as Taiwan's APEC delegation
head; and overlooking the rough treatment Chen and his deputy
received from rowdy DPP crowds. Scholars said Beijing is
going to have to go slow on the international space question
(beyond Lien Chan's role at APEC) until there can be "more
consultation" between ARATS and Taiwan's Straits Exchange
Foundation (SEF). They said that Beijing is still worried
about making concessions that could be exploited by a DPP
administration were Ma to be upset in 2012. End Summary.

CHEN YUNLIN'S VISIT "A SUCCESS"
--------------


2. (C) Beijing's Taiwan experts continue to praise the
"success" of the visit by Association for Relations Across
the Taiwan Strait (ARATS) President Chen Yunlin to Taipei
November 3-7, despite the protests he encountered. They
praised the visit's focus on concrete achievements with
direct benefits for the people of Taiwan. On November 12,
Zhu Lei (protect),a researcher at the Chinese Academy of
Social Sciences (CASS) Institute of Taiwan Studies (ITS),
told PolOff the visit was a "major breakthrough" akin to the
first cross-Strait charter flights in 2003 and the 2005
visits to the Mainland by then-KMT Chairman Lien Chan and
People First Party Chairman James Soong. Zhu noted that the
agreements signed during Chen Yunlin's visit focus on issues
that are "important to the Taiwan people," with polls showing
80 percent of Taiwan residents support direct flights and 60
percent support Mainland tourism. Jia Qingguo (protect),a
Peking University professor and member of the Chinese
People's Political Consultative Conference (CPPCC),echoed
this sentiment, stating to PolOff on November 12 that the
"main purpose" of Chen Yunlin's trip was to "be nice" to the
Taiwan people and "do things in their interest." Despite the
demonstrations, polls show that the Taiwan people support the
agreements signed, Jia argued.

THREE LINKS: STILL ROOM TO GROW
--------------


3. (C) In comments carried in the official Chinese media,
Taiwan Affairs Office (TAO) Director Wang Yi stated on
November 16 that the long-sought "three links" between the
Mainland and Taiwan have been "basically realized." Zhou
Zhihuai (protect),Secretary General of the National Society
for Taiwan Studies, emphasized to PolOff November 17 that
Wang Yi chose his words carefully, stating that the links
have only "basically" been achieved, given that interaction
between the two sides is not yet "completely normal." For
example, the cross-Strait flights are still charters rather
than regularly scheduled direct flights, and investment is
still in only one direction: from Taiwan to the Mainland.
Sun Shengliang (protect),Director of the Economic Department
at CASS ITS, told PolOff November 12 that the Mainland is
looking for "full normalization" of cross-Strait exchanges
that will be "deep and lasting." Sun noted that the next
round of ARATS-SEF talks in early 2009 will focus on issues
such as capital markets, financial services, a free trade
arrangement and investment guarantees to help remedy the
investment imbalance.

AGREEMENTS FACILITATE "PEACEFUL DEVELOPMENT FRAMEWORK"
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4. (C) The ARATS-SEF agreements will promote economic
integration between the two sides, furthering President Hu
Jintao's goal of establishing a "peaceful development

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framework" across the Taiwan Strait while deferring sensitive
political issues, contacts say. CASS's Sun predicted that
over the next two to three years these most recent agreements
will prove "very beneficial" for Taiwan. Taiwan has mostly
used the Mainland as a manufacturing platform for exports,
but the ease and efficiency of transportation and shipping
resulting from the new agreements will increase Taiwan's
reliance on the China market as an end destination for Taiwan
products, which will make Taiwan businesses more competitive
with South Korean firms in the IT sector, Sun asserted.
NSTS's Zhou Zhihuai predicted that within five years, the
political sensitivity of cross-Strait exchanges will have
"dissipated." The "normalcy" of this interaction will
increase mutual trust and "inevitably" result in Taiwan
"feeling" more like a part of China. Peking University's Jia
Qingguo described Hu Jintao's peaceful development framework
as an effort to "increase economic integration while kicking
political issues down the road."

"UNEXPECTED" LEVEL OF CHAOS
--------------


5. (C) The security challenges Chen faced during his visit
may dampen future cross-Strait exchanges held in Taiwan.
Professor Jia Qingguo said the "degree of chaos" during Chen
Yunlin's trip was "unexpected," as was the preceding October
21 "attack" on ARATS Deputy Zhang Mingqing. Jia said the
Mainland probably should not have been surprised because of
the "rough-and-tumble nature" of Taiwan politics as well as
the fact that Taiwan politicians often use such incidents to
generate publicity for themselves. In one respect, the
assault on Zhang Mingqing was "good" because it resulted in
increased security for Chen Yunlin during his subsequent
trip, Jia concluded. Even though the TAO spokesperson on
November 12 claimed that the protests will not affect future
cross-Strait exchanges, Jia predicted that they will likely
have a "deterrent effect," especially on high-level Mainland
travelers to Taiwan. Jia expressed concern that his own
plans to attend a conference in Taiwan, his first visit in
nearly 10 years, may be put on hold by "TAO bureaucrats" who
could be blamed for approving the trip if anything untoward
should happen to Jia as a CPPCC member. CASS's Sun
Shengliang separately said the pan-Green demonstrations could
have a "psychological" effect on future cross-Strait
exchanges in Taiwan and may even affect Mainland tourism to
the island.

PROTESTS REINFORCE NEGATIVE VIEWS OF TAIWAN
--------------


6. (C) The protests against Chen Yunlin have also resulted in
"mixed" views on the Mainland of Taiwan's political system.
Ma Ying-jeou's March election and the peaceful transfer of
power in May swung Mainland public opinion in a "very
positive direction," but the Zhang Mingqing incident and the
protests against Chen have "made Taiwan look bad," Jia said.
Chen Shui-bian's detention, however, has grabbed the
Mainland's attention and begun to increase more "positive"
views of Taiwan. Senior Chinese leaders have been brought
down on corruption charges before, but never the "top
leader," Jia explained. Jia opined that Chen's detention was
"long overdue," but he praised Ma Ying-jeou's handling of the
case by allowing the judiciary to act independently.

EFFECT ON MAINLAND'S CROSS-STRAIT POLICY?
--------------


7. (C) Asked whether Taiwan's internal security situation
would affect Mainland debate on China's broader Taiwan
policy, Sun said the "mainstream view" is that China must do
something to "help Ma against the DPP." Some in China hold
the view that the DPP is still strong and could take power
again, so the Mainland should not make any concessions
related to sovereignty that could be later used by the DPP to
assert Taiwan's independence, but, Sun asserted, this is the
"minority view." He assessed that the DPP will be "even more
marginalized" by its actions before and during Chen Yunlin's
visit. The DPP does not have a coherent cross-Strait policy
but simply "opposes everything the KMT does," Sun concluded.
Jia Qingguo worried that if Ma Ying-jeou loses the next
election, any concessions the Mainland makes now will be used
against it in the future. Jia admitted that the PRC is
"likely to be more liberal" if it looks like Ma is strong and
will be re-elected.

THE MA-CHEN MEETING AND "MUTUAL NON-DENIAL"

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8. (C) Asked about the proposal made in the Hong Kong media
by Peking University Professor Peng Zhenhuai (ref B) for Chen
Yunlin to address Ma Ying-jeou as "President" during their
meeting, Jia Qingguo said the idea had "no following" among
Mainland policymakers. Saying he personally does not know
Peng, Jia insisted that the idea was the professor's own and
not a "trial balloon" that reflected leadership thinking.
Chinese professors increasingly have more freedom to publish
"unorthodox views," even though doing so is "still risky."
If Peng's views garner too much publicity or result in
pressure on the Chinese Government, Peng could lose his job,
Jia commented. CASS's Sun was aware of Peng's article, but
he dismissed it as demonstrating a "lack of understanding"
about PRC Taiwan policy.


9. (C) Asked about Taiwan assertions (ref D) that Chen
Yunlin's meeting with Ma Ying-jeou demonstrated China's tacit
acceptance of Ma's "mutual non-denial" proposal, Mainland
contacts insisted that there has been no "formal" acceptance
of the concept. Peng Weixue (protect),Chief Editor of
CASS-ITS's Taiwan Weekly magazine, nevertheless conceded to
PolOff November 18 that the Ma-Chen meeting does in some
sense demonstrate Beijing's "tacit acceptance" of the "mutual
non-denial" concept. But the issue still remains a
"sensitive political topic" in China that is best dealt with
"later." Therefore, for now, China is simply "not denying
mutual non-denial," Peng asserted. NSTS's Zhou Zhihuai also
declined to deny mutual-denial. He noted that even a
"relatively simple" issue such as the three links took 30
years to complete, so it follows that "difficult political
issues," such as sovereignty, international space and
security issues, as well as "mutual non-denial," will take a
"long time" to resolve.

OVERLOOKING "SLIGHTS"
--------------


10. (C) Despite the security problems, Beijing is focusing on
the "big picture" and the long-term positive outcomes of
Chen's visit, contacts emphasized. CASS's Sun Shengliang
commented that even though Chen Yunlin may have been
"personally offended" by being trapped in the Formosa Regent
Hotel and not being able to make a statement during his
meeting with Ma Ying-jeou, Chen would not put his personal
concerns ahead of the larger mission to improve cross-Strait
relations. If Chen were to complain or take offense over any
"slights" suffered during the trip, Sun asserted, that would
only help "DPP efforts to harm cross-Strait relations." Even
ARATS Deputy Zhang Mingqing expressed hope that the violence
he encountered personally in Taiwan will not affect broader
cross-Strait relations, Sun pointed out. Similarly, the TAO
spokeswoman's refusal on November 12 to comment on the
quality of the security arrangements in Taiwan was designed
to avoid playing into DPP hands. If China publicly were to
praise the efforts of Taiwan security forces, the DPP could
claim the Mainland "colluded" with the KMT to "suppress human
rights" in Taiwan. On the other hand, Sun noted, if China
were to express displeasure with the security arrangements,
it could lead to "strain" in cross-Strait relations and
overshadow the many positive accomplishments of Chen's trip.

INTERNATIONAL SPACE REQUIRES FURTHER CONSULTATIONS
-------------- --------------


11. (C) China's approach to Taiwan's participation in the
activities of the World Health Assembly/World Health
Organization (WHA/WHO) next May remains a hot topic of
conversation in Beijing (ref C),with contacts emphasizing
that any possible progress on the matter will require further
consultation between the two sides. CASS's Sun Shengliang
said that even though ARATS-SEF discussions have so far
avoided the issue of international space, it has been a topic
of conversation in KMT-CCP party-to-party talks as well as in
academic exchanges and other "unofficial and
non-governmental" channels. Sun expressed hope that a
breakthrough will be made by next May, noting that Ma
Ying-jeou is pushing for progress on the issue. Sun argued
that the United States and Japan should not pressure China on
the issue but rather should allow the two sides the space and
time to work out a solution on their own. By contrast,
NSTS's Zhou Zhihuai hoped that Washington could play a
"helpful" role in resolving the international space issue,
arguing that American involvement would help Beijing and
Taipei draw "closer together" on the subject. Zhou

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emphasized, however, that both sides of the Strait should be
encouraged to reach a solution on the international space
issue, rather than just pushing the Mainland to make a
"unilateral concession." CASS-ITS's Peng Weixue told PolOff
that any progress on such a "significant issue" as Taiwan's
international space would have to be made through the
SEF-ARATS channel and could not simply be decided through a
"unilateral concession" by Beijing.

LIEN CHAN AT APEC A "BIG DEAL"
--------------


12. (C) Embassy contacts have argued that China's
acquiescence to KMT Honorary Chairman Lien Chan's
participation at the APEC Summit in Peru is a "significant
concession" on cross-Strait relations, as well as on Taiwan's
international space. A visiting U.S. expert told PolOff
October 31 that during a meeting his delegation attended
earlier that day with TAO Minister Wang Yi, Wang specifically
pointed to the approval of Lien Chan as Taiwan's APEC envoy
in response to a charge that the PRC had done nothing on the
international space issue. Peking University's Jia Qingguo
told PolOff that Lien's participation in APEC is a "big
deal." Jia expressed concern that a future DPP
administration would demand similar treatment, quipping that
the prospect of former Taiwan Vice President Annette Lu
attending APEC is "not a pleasant thought." Even if China
insisted that Taiwan accept some sort of annual approval of
its envoy, Lien's participation still sets a precedent, Jia
commented. CASS-ITS's Peng Weixue opined that the approval
of Lien Chan was due to the "comfort level" Chinese leaders
have with him personally, as well the general improvement in
cross-Strait relations. Because of frequent contacts since
2005, Chinese leaders have built up a sufficient level of
trust in Lien Chan, making him an acceptable candidate. That
may not have been the case had Ma Ying-jeou nominated someone
else, Peng said.
RANDT