C-AL9-00948: HONG KONG-TAIWAN ELEVATE TIES TO NEW

C O N F I D E N T I A L SECTION 01 OF 02 HONG KONG 001140 SIPDIS DEPT FOR EAP/CM, E.O. 12958: DECL: 06/23/2034 TAGS: PGOV PREL HK TW SUBJECT: C-AL9-00948: HONG KONG-TAIWAN ELEVATE TIES TO NEW LEVEL REF: A. TAIPEI 659 ¶B. TAIPEI 637 Classified By: Consul General Joe Donovan for reasons 1.4 (B,D). ¶1. (C) Summary and Comment: Hong Kong and Taiwan exchanged groundbreaking visits the first week of June, elevating ties to a new level. Hong Kong Secretary for Constitutional and Mainland Affairs Stephen Lam became the first principal Hong Kong official to make an official visit to Taiwan since 1997 when he arrived in Taipei June 5 for a two-day visit. Chairman of the cabinet-level Financial Supervisory Commission Sean Chen became the most senior Taiwan official to visit Hong Kong since the handover when he attended an economic forum June 3. Both sides agreed to establish soon semi-official cooperation mechanisms to facilitate regular and closer collaboration in trade, economy tourism and other sectors. One contact expects visa-free privileges to be extended to Taiwan travelers soon. With Beijing's support and encouragement, Hong Kong appears eager to press forward with its Taiwan engagement. The next indicators of the direction and depth of this new relationship will be how soon the new cooperation mechanism becomes operational and any immediate deliverables that result from the increased dialogue. End summary and comment. -------------- -------------- Co-operation Mechanisms to be Formalized, then What? -------------- -------------- ¶2. (C) In the latest sign that Hong Kong-Taiwan ties are entering a new chapter, the two sides exchanged groundbreaking visits in early June. Hong Kong Secretary for Constitutional and Mainland Affairs (CMAB) Stephen Lam visited Taiwan June 5-6, becoming the first ministerial-level official to make an official visit to Taiwan since 1997 (ref A). Two days earlier, Financial Supervisory Commission Sean Chen arrived in Hong Kong for an economic forum and meetings with senior Hong Kong financial officials, making him the most senior Taiwan official to visit Hong Kong since the handover. During Secretary's Lam visit, the two sides agreed to establish soon a semi-official Hong Kong-Taiwan cooperation mechanism to foster closer and more regular cooperation. Taiwan will create a Taiwan-Hong Kong Economic and Cultural Cooperation Council, which will include an Economic Cooperation Committee. Hong Kong will set up a counterpart Hong Kong-Taiwan Business Co-operation Committee under the quasi-official Trade Development Council. While it has not been reported in the press, Chung Hwa Travel Service (CHTS - Taiwan's defacto representative office in Hong Kong) Assistant Manager Chen Chia-Hong told us he believed the new cooperation council, while nominally a non-governmental entity, would in fact report directly to the Mainland Affairs Council. ¶3. (C) Chen told us more high-level exchanges likely will occur this year, but he ruled out Hong Kong Chief Executive (CE) Donald Tsang being one of the visitors. Chen contends both sides need time to "set the foundation" for such a visit. CMAB Assistant Secretary Christina Chong agreed CE Tsang likely will not visit Taiwan this year. Although Secretary Lam did not rule out the possibility of setting up an official or semi-official presence in Taiwan, Chen again sees such a development unlikely to occur "anytime soon." Chen, however, thinks Hong Kong will soon offer visa-free privileges to Taiwan visitors. (Note: Taiwan residents currently need to apply in advance for visas to Hong Kong while Hong Kong passport-holders can obtain entry permits on arrival in Taiwan. End note.) -------------- -- Beijing Sees No Harm, Encourages Improving Ties -------------- -- ¶4. (C) Director of One Country, Two Systems (OCTS - a well-connected and well-funded think-tank whose chairman is C.Y.Leung, an Executive Council member widely touted as a top contender to become Hong Kong's next Chief Executive) Cheung Chi Kong contends Beijing sees no harm in supporting improved Hong Kong-Taiwan ties. On the contrary, it likely sees collateral gain in that Hong Kong can further showcase how well Hong Kong has fared under the "one country, two systems" arrangement. Beijing does not need to blatantly tout the "one country, two systems" model, Cheung argued, when Hong Kong will inadvertently be promoting it in its normal course of engagement with Taiwan. Beyond being a model showcase, Cheung does not see Hong Kong playing a more significant political role in cross-Strait relations. Cheung insisted Hong Kong has never played the "middleman" role; it was just a "third place." HONG KONG 00001140 002 OF 002 ¶5. (C) Regardless whether Beijing has future designs for Hong Kong to play a larger political role in cross-Strait relations, it is for now encouraging Hong Kong to pursue improved ties with Taiwan on economic and cultural fronts. Central Policy Unit (CPU - the Hong Kong government's internal think-tank) Senior Researcher Shui Sin-por told us that during a recent CPU call on the State Council Taiwan Affairs Office Director Wang Yi, Wang spoke positively about the recent improving ties between Hong Kong and Taiwan and encouraged the Hong Kong government to continue on this path. For its part, the Hong Kong government is trying hard to keep up with the larger cross-Strait warming trend. CMAB's Chong acknowledged her staff has had to scramble to develop new protocol to deal with all the "firsts" that have occurred recently. DONOVAN