US embassy cable - 05TAIPEI1592

UNCLAS SECTION 01 OF 02 TAIPEI 001592 
 
SIPDIS 
 
STATE PLEASE PASS AIT/W AND USTR 
 
STATE FOR EAP/RSP/TC, EAP/EP AND EB/IFD/OIA 
 
USTR FOR SCOTT KI 
 
USDOC FOR 4420/USFCS/OCEA/EAP/LDROKER 
USDOC FOR 3132/USFCS/OIO/EAP/ADAVENPORT 
 
SENSITIVE BUT UNCLASSIFIED 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PREL, CH, TW, Cross Strait Economics, Cross Strait Politics 
SUBJECT: Results of 2005 South China Reporting Conference in 
Taipei 
 
1.  (SBU) Reporting officers from Shanghai, Guangzhou, Hong 
Kong, and Kaohsiung joined AIT/T ECON, POL, FAS, FCS, JOs 
and CLASS students at the 2005 South China Reporting 
Conference held in Taipei March 24-25.  After welcoming 
remarks from AIT/T Deputy Director Keegan, the 25-30 
participants in the conference gave 14 separate 
presentations on topics including the shifting patterns of 
Taiwan's overseas investment (presented by Kaohsiung), 
China's anti-secession law (the subject of presentations by 
both Shanghai and Taipei), export controls (Taipei), south 
China's labor supply (Guangzhou), container port rivalry 
(Guangzhou), south China's relations with other countries 
(Taipei), Hong Kong's political climate (Hong Kong), cross- 
straits transportation issues (Taipei), the political and 
economic impact of free trade agreements (Taipei), cross- 
Strait agricultural issues (Taipei), and other issues of 
special interest to posts dealing with south China. 
 
2.  (SBU) AIT/T DDIR Keegan opened the conference with an 
introduction that noted that such conferences were "critical 
to understanding the challenges [that our region faces] so 
that we can better explain them to Washington."  AIT/T/ECON 
Chief Moore gave the first presentation, an overview of the 
Taiwan economy, with emphasis on how Taiwan is developing 
its financial sector.  He noted Taiwan has identified two 
areas for improvement: upgrading infrastructure and 
expanding financial services.  In the discussion it was 
noted how this contrasts with the AIT and foreign business 
community perception that better cross-Strait relations are 
key to Taiwan's continued economic competitiveness. 
 
3.  (SBU) AIT/T/POL Chief Huskey provided the concluding 
presentation on an organizational approach to cross-Strait 
relations.  He described the core government agencies and 
other organizations involved in formulating and implementing 
Taiwan's cross-Strait policy: the Mainland Affairs Council, 
the Straits Exchange Foundation, and the National Security 
Council.  He provided useful insights into the personalities 
of key individuals in each of the organization. 
 
4.  (SBU) Taipei and Shanghai both reported on their 
respective host government's interest in getting past the 
anti-secession law.  There was an interesting debate between 
Kaohsiung and Shanghai on perceptions of a "China threat" in 
Taiwan.  Kaohsiung and several Taipei representatives agreed 
many people in Taiwan discount the reality of China's 
military threat.  Kaohsiung emphasized the important role of 
Taiwan identity.  Someone observed that the anti-secession 
law had caused some people in Taiwan to recognize for the 
first time that China was actually considering "non- 
peaceful" actions against Taiwan. 
 
5.  (SBU) The JOs and CLASS students asked some of the most 
penetrating questions, proving the value of looking at a 
complex issue with fresh eyes.  They wondered about the lack 
of political influence in either Taipei or Beijing wielded 
by the hundreds of thousands of Taiwan business people and 
the billions of dollars they had invested.  The JOs began an 
interesting discussion on the role of Xiamen and Shanghai 
think tanks in formulating China's policies towards Taiwan. 
Some Taiwan JOs were surprised to learn of the difficulty 
China posts have in getting reliable sources of information, 
so different from Taiwan.  Most of the CLASS students will 
take up positions as reporting officers in Taiwan, Hong 
Kong, or China later this year, and they viewed the 
Conference as an efficient way to gain a broad understanding 
of current USG thinking on the issues they will soon be 
reporting.  On several occasions the moderator had to cut 
off discussion of a particular topic lest the Conference 
fall too far behind schedule. 
 
6.  (SBU) Some of the discussions led to interesting and 
unexpected conclusions that will be expanded on in 
subsequent reporting cables from posts in the region.  For 
instance, the discussion of export controls led to a 
discussion of how some Taiwan politicians use the rhetoric 
of export controls to push their political agenda of 
blocking trade and investment in China.  This was a 
completely new aspect of the problem to participants from 
China.  The discussion of shifting patterns of Taiwan 
investment led to a discussion of the business climate in 
different parts of China, and a comparison of China to other 
parts of the world. 
 
7.  (SBU) At the wrap-up session on March 25 participants 
said that the presentations had provided fresh perspectives 
and new insights of immediate, direct application to their 
reporting on regional issues.  Participants identified the 
high-quality presentations, most of which included 
PowerPoint slides and/or handouts as the highlight of the 
Conference.  The discussions after the presentations were 
lively and intense, and provided a valuable opportunity to 
hear south China experts with different sets of high-level 
contacts expand and build on each other's knowledge. 
 
8.  (SBU) On the evening of March 24, AIT/T Director Paal 
hosted a reception for the conference participants and about 
50 local guests including Vice Chair of the Mainland Affairs 
Committee David Hong, China National Federation of 
Industries President Earle Ho, and representatives of 
companies and associations involved in cross-Strait business 
such as Acer, Powerchip, China Petroleum Corporation, Taiwan 
Airlines Association, Taiwan Ship owners Association, and 
the Taiwan Semiconductor Association.  The reporting 
officers from Mainland China posts found this a unique 
opportunity for an open exchange of views with Taiwan 
business representatives on the challenges and hazards of 
doing business in China. 
 
9.  (SBU) Guangzhou offered to host a similar conference 
next year.  AIT/T will post the PowerPoint slides and other 
materials presented on our intranet site: 
(http://taipei.state.gov/ait_s/econ/econ_web/ econhome.htm). 
 
PAAL