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

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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,

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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