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