MEDIA REACTION: US AUTO INDUSTRY; DIRECT LINKS BETWEEN

UNCLAS HONG KONG 002248 DEPT FOR INR/R/MR, INR/IC/CD, I/FW DEPT FOR EAP/PD, EAP/CM, EAP/P DEPT FOR VOA/BRF, TV-WPA WHITE HOUSE FOR NSC PRC POSTS FOR PA AIT USPACOM FOR FOR CIS PD ADVISER E.O. 12958: N/A TAGS: OPRC KMDR SUBJECT: MEDIA REACTION: US AUTO INDUSTRY; DIRECT LINKS BETWEEN MAINLAND CHINA AND TAIWAN TOPIC: ¶1. US auto industry ¶2. Direct links between mainland China and Taiwan HEADLINES AND EXCERPTS: ¶1. US auto industry "Next time, put both hands on wheel of the economy" The independent English-language South China Morning Post said in an editorial (12/14): "Hard-line Republicans in the United States have succeeded in blocking, for now, a US$14 billion rescue for the Detroit carmakers. This is likely to be the free-market dogmatists' last stand....The financial crisis has not only forced Washington, but other western governments, to decide which industries to save and which to get to. When the dust settles, many will own a portfolio of nationalized financial institutions. They will, in many cases reluctantly, have extended their tentacles into large segments of their economies. And having completed the bailouts, they will have appointed powerful 'Tsars' and imposed tough regulations on the industries they have decided to save. This is industrial policy by default. "Throughout the go-go years that have just ended, free-market ideologues derided state-directed industrial policies as the misguided efforts of developing countries to expand their economies. Now, as a result of the financial crisis, it has become the economic policy of choice in the west-but it dares not speak its name....Many developing nations have tried to build their way into an economic boom, often with bridges to nowhere and buildings vacant. India and the mainland are still doing it now. It looks like the US will join their ranks. Any why not, considering the US banking industry, and its lax regulation, have begot an epic financial crisis which has infected key economies? This has long been a specialty of boom-and-bust economies of the developing world. But there is a silver lining. The history of economic success in Asia and elsewhere has usually involved the highly visible hand of the state, rather than the much-touted invisible hand of the free market. In reality, it rarely ever works with just one or the other. Success usually involves the judicious use of both hands. After this crisis, the rule book of economic development will have to be rewritten for the 21st century." ¶2. Direct links between mainland China and Taiwan "New era in ties" The pro-Beijing English-language China Daily Hong Kong Edition had this editorial (12/15):"The launch of the three direct links has again demonstrated that putting differences aside, both sides can build mutual trust....The results are the efforts of almost 30 years of talks by both sides, and most importantly, of trust and goodwill. "The launch of regular direct transport and postal services across the Straits has again demonstrated that putting differences aside, both sides can build mutual trust, offer goodwill to each other and solve long-standing dispute in cross-Straits relations....The benefit is more than that, as both the mainland and Taiwan are fighting to minimize the effects of the global financial crisis. "Smoother movement of cargoes and people will further integrate the two economies and create more jobs....With the establishment of the direct links as a beginning, the mainland and Taiwan should expand mutual trust and good will to other sectors and put aside political and ideological differences to ensure long-term stability." MARUT