DPP PRESIDENTIAL CANDIDATE FRANK HSIEH WORKS TO

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000035 SIPDIS SIPDIS STATE PASS USTR, STATE FOR EAP/TC,USTR FOR STRATFORD AND KATZ, TREASURY FOR OASIA/TTYANG, COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN E.O. 12958: DECL: 01/08/2018 TAGS: ECON ETRD PGOV PREL SENV TW SUBJECT: DPP PRESIDENTIAL CANDIDATE FRANK HSIEH WORKS TO DIFFERENTIATE HIS ECONOMIC PLATFORM FROM KMT COMPETITOR REF: 07 TAIPEI 2295 TAIPEI 00000035 001.2 OF 002 Classified By: Economic Chief Hanscom Smith for reasons 1.4 (b) and (d) . ¶1. (C) SUMMARY. Responding to criticism that DPP presidential candidate Frank Hsieh's economic policies are too close to those of his KMT opponent Ma Ying-jeou, the Hsieh campaign is developing an economic policy White Paper that will maintain support for cross-Strait economic opening while placing additional emphasis on job-creation and environmental issues. Hsieh's economic policy is designed to appeal to small- and medium-sized business owners, the young, and those worried about a perceived rise in social inequality. END SUMMARY. ¶2. (C) In a January 8 meeting with economic chief, Frank Hsieh economic advisor and National Taiwan University economics professor Kenneth Lin said that Hsieh's economic policy White Paper, originally scheduled for release around the New Year, has been delayed and will now be published sometime between the January 12 Legislative Yuan (LY) elections and Chinese New Year in early February. Lin explained that the broad focus of Hsieh's economic policy (reftel) has not changed, but added that some DPP supporters have complained that Hsieh's economic platform is too similar to that of Ma Ying-jeou, his KMT opponent. As a result, said Lin, the White Paper is being revised to place additional emphasis on job creation and environmental policy, two areas in which the DPP hopes to distinguish its priorities from those of the KMT. He clarified that there has been no change in Hsieh's policy on enhancing cross-Strait economic links, including support for increased charter flights, a rise the number of Chinese tourists to 1,000/day, and eased restrictions on mainland investment by Taiwan firms (reftel). ¶3. (C) After the January 12 LY election, noted Lin, President Chen will continue to focus on "Taiwan identity" issues, while Hsieh plans to increase his emphasis on economic issues and his performance as mayor of Kaohsiung. According to Lin, Hsieh's strategy will stress support for Taiwan's small- and medium-sized enterprises (SMEs),including investment incentives and a scheme to improve efficiency by allowing small factory owners that employ foreign workers to run three, rather than two, shifts a day. Lin explained that the Hsieh campaign plans to ramp up its outreach to small business-owners, less-skilled laborers, young people, and residents of relatively economically disadvantaged central and southern Taiwan. ¶4. (C) Lin said Hsieh's campaign also plans to highlight what he characterized as Taiwan's increasing social stratification. Although the Gini coefficient and other statistical indicators do not necessarily reveal a dramatic rise in inequality, he explained, Taiwan's richest residents are reaping disproportionate gains from economic globalization, while many middle-income voters feel insecure. Lin stressed, however, that Hsieh does not plan to advocate significant new infrastructure projects or other major state spending initiatives. Government should not play an active role in job creation, he stated, but should instead create a favorable business environment. Hsieh's White Paper is likely to include taxes on carbon dioxide emissions as a partial substitute for personal and corporate income taxes, noted Lin. ¶5. (C) Turning to the overall campaign, Lin expressed concern that DPP failure to win more than 40 seats in the January 12 LY election could lead to a "domino effect" against the DPP in the March presidential election. The people of Taiwan are exasperated by ongoing partisan gridlock, he observed, and desire a more unified political system. Regardless of the LY election results, he added, President Chen will remain DPP Chairman. According to Lin, the DPP is trying to increase its resonance with younger voters. Young people are relatively strong supporters of "Taiwan identity," he noted, TAIPEI 00000035 002.2 OF 002 but tend not to support the DPP. ¶6. (C) COMMENT. Reflecting widespread business community concerns, Hsieh and Ma have relatively similar policies on cross-Strait economic integration. As outlined by Lin, Hsieh's revised White Paper seems calculated to preserve Hsieh's mainstream appeal on cross-Strait issues while consolidating the DPP base by offering more traditionally "Green" policies on the environment and jobs. END COMMENT. YOUNG