KINMEN CIVILIAN OFFICIALS EAGER FOR CLOSER PRC TIES

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000640 SIPDIS E.O. 12958: DECL: 06/01/2019 TAGS: PREL ETRD ECON TW CH SUBJECT: KINMEN CIVILIAN OFFICIALS EAGER FOR CLOSER PRC TIES Classified By: The Director for reasons 1.4(b/d) ¶1. (C) Summary. Kinmen, a group of small islands held by Taiwan but situated just a few kilometers away from the prosperous Chinese city of Xiamen, stands as a symbol both of the decades-long military confrontation between China and Taiwan as well as of a possible future of closer economic integration. In May 27 meetings with the Director, local government and military officials outlined the contradictions between maintaining Kinmen as the traditional front line against possible PRC aggression while, at the same time, deepening the cross-Strait economic integration that is rapidly becoming the backbone of the island's economy. Because of popular and PRC opposition, Kinmen is unlikely to take advantage of a policy allowing casino gambling on Taiwan's outer islands. End Summary. Kinmen Looks (Longingly) to the Mainland -------------- ¶2. (C) Kinmen faces China, not Taiwan, and should be allowed the autonomy to pursue closer ties with the PRC, Kinmen county's free-wheeling magistrate Lee Zhu-feng told the Director during a cordial 30-minute courtesy call on May 27. Still widely popular in the final year of his second (and final, under Taiwan law) four-year term as magistrate, Lee described Kinmen as being naturally much closer to China than to Taiwan. Although a member of the ruling KMT party, Lee was critical of the Ma administration's refusal to allow him to accelerate his pursuit of closer ties. ¶3. (C) The vestiges of cross-Strait confrontation - particularly Taiwan's heavy military presence on the island - are out of step with the times and with Kinmen's economic development needs. In separate conversations, military officials who accompanied the Director, including Vice Minister Zhang Liang-ren and Kinmen garrison commander General Lu Xiao-rong, said Lee made no bones about his view that the military is an obstacle to Kinmen's development. Despite the magistrate's unabashed advocacy for reducing the military profile on Kinmen, however, the military officials said they enjoyed good working relations with Lee and other civilian officials. General Lu also noted that, for reasons unrelated to Kinmen civilian officials' economic development priorities, there are now fewer than 8,000 troops on the island - thousands fewer than when tensions were at their peak. ¶4. (C) Taiwan, Lee stressed, should adopt Chairman Mao's motto that "practice should be the sole criterion" in its approach to cross-Strait engagement. In today's world, ideology is no longer relevant, he said. Kinmen should be an experimental zone, to test the impact closer economic integration with China could have on Taiwan. In particular, Lee suggested that Taiwan should relax restrictions on PRC investment and labor. Tapping into the PRC Labor Market -------------- ¶5. (C) The benefits of partially opening Kinmen's labor market to PRC workers are particularly clear, Lee suggested. Political leaders in Taipei are terrified of relaxing restrictions on Chinese workers, fearful that they would take jobs from ordinary workers on Taiwan. Because few young people want to live in the remote outpost, however, Kinmen faces a labor shortage that has become an obstacle to economic growth and investment. Similarly, roughly 500 foreign caregivers, primarily from Southeast Asia, live in Kinmen (whose total year-round population is roughly 70,000). Allowing residents to hire PRC domestic workers would cut labor costs in half, remove language and cultural barriers, and result in better conditions for the workers themselves. Lee noted that, because Kinmen is only a short 30-minute ferry ride from Xiamen, these caregivers would be able to return home every month, rather than the yearly visits home many foreign from farther afield are able to make. ¶6. (C) Similarly, Lee noted, it would make far better economic sense to reduce barriers to importing PRC-produced food into Kinmen. Despite the high cost of shipping foodstuffs from Taiwan to Kinmen, Lee claimed, Taiwan's current food safety regime and other trade barriers make it impossible to procure a significant part of the island's food supply from China. Noting the problems in the PRC food system brought to light by the recent contaminated milk scandal in China, Lee admitted that there are advantages to the Taiwan system. TAIPEI 00000640 002 OF 002 Only Politics Blocking a Kinmen-Xiamen Bridge -------------- ¶7. (C) Lee voiced enthusiastic support for a proposed bridge between Kinmen and the mainland. From a technical perspective, such a project would be relatively straightforward. "China puts up multi-kilometer bridges every day," the magistrate waxed, "and could finish the one to Kinmen in a couple of years." Similarly, money does not present a major obstacle, he suggested. The total cost of the project would be in the neighborhood of USD 300 million of which China, Lee suggested, would pay half. The problem, Lee said, is politics. At least for now, he lamented, Taiwan's central government shows no sign of being ready to approve the project. Ferry Links Booming -------------- ¶8. (C) Officials at the ferry terminal that, since 2001, has been the primary link between Kinmen and Xiamen, were enthusiastic about the impact that the relaxation of travel restrictions has had on their business and on Kinmen's economy in general. Twenty thousand people took advantage of the "mini-Three Links" in 2001. Since then, as Taiwan has relaxed rules on who can use the ferries, passenger numbers have taken off. Last year, the eight companies (four Taiwan-owned and four PRC-owned) sold more than 900,000 round-trip tickets, officials said. With nearly 450,000 round trip tickets sold in the first four months of 2009, these companies are on track to break the one million mark. Illustrating the economic impact of this traffic, one local official noted that the small duty-free liquor store at the terminal was the single largest seller of Kinmen's famous "kaoliang" white liquor. While most of the passengers are PRC tourists, the Director did see several foreign travelers, including a Canadian student who said flying from Taipei to Kinmen and then taking the ferry cost half what a ticket on a direct Taipei-Xiamen flight would. ¶9. (C) In an indication of the tensions that remain between Taiwan and China - but also of the cooperation between Kinmen military and civilian authorities - the uniformed military personnel who escorted the Director throughout his visit to Kinmen made a discreet exit when the delegation arrived at the terminal. Gen. Lu explained that, as a policy, Taiwan armed forces personnel in uniform stay out of the facility, to avoid "scaring" mainland tourists. Gambling Not in the Cards -------------- ¶10. (C) The proposal to allow gambling on Taiwan's offshore islands would likely have little impact on Kinmen, Lee predicted. Gambling did not have the clear support of Kinmen's people and it is far from certain, Lee said, that a majority of Kinmen residents would vote in favor of the proposal if a referendum were held. While admitting that the results were somewhat dated, Lee noted that a poll taken a few years ago had shown that more than half of the island's people opposed casino gambling. For his part, Lee said he was personally opposed to the idea of casino gambling, since it would detract from Kinmen's image a a quiet, traditional tourist destination. Likewise, he said, the PRC appears unenthusiastic with what he termed "the Macao model" of gambling, in which Chinese officials and businessmen use the former Portuguese enclave's casinos to, in effect, launder money. Comment -------------- ¶11. (C) One is struck by the sharp contrasts found in Kinmen, which for much of the past 60 years was the frontline of a deadly military face-off between the PRC and Taiwan. Following the "Quemoy crisis" of 1958, the island endured alternate-day shelling from PRC-held islands as close as 3 kilometers away for the next 20 years, halted only in 1979. Now, the threatened invasion is of say-traveler tourists from Xiamen city, a mere 8 kilometers away and both more populous and more prosperous than tiny Kinmen. Magistrate Lee would clearly like the remaining Taiwan troops to depart, so he can use their extensive land holdings to further promote ties with his mainland neighbors. While that is not likely to happen right away, the prospects of a Kinmen relying heavily on PRC economic ties is already energizing the island chain's future. YOUNG