US embassy cable - 05TAIPEI2690

UNCLAS SECTION 01 OF 02 TAIPEI 002690 
 
SIPDIS 
 
DEPARTMENT FOR EAP/RSP/TC, EAP/PA, EAP/PD - ROBERT 
PALLADINO 
DEPARTMENT PASS AIT/WASHINGTON 
 
E.O. 12958: N/A 
TAGS: PREL, KPAO, TW 
SUBJECT: "CHINA TIMES" COMMENTARY DISCUSSES THE 
PEACEFUL DECLINE OF THE UNITED STATES 
 
 
Summary: The centrist newspaper "China Times" carried a 
commentary June 20 by Professor Chu Yun-han of the 
National Taiwan University's Department of Political 
Science, in which he discussed and predicted the 
peaceful decline of the United States in the next ten 
to fifteen years.  An excerpt of the commentary 
follows. 
 
"Peaceful Decline of the United States" 
 
Professor Chu Yun-han wrote in the "Weekly Commentary" 
of the centrist, pro-status quo "China Times" 
[circulation: 600,000] (6/20): 
 
". This deteriorating state of the huge trade imbalance 
[in the United States] did not merely reflect the 
constant weakening of the United States' export 
competitiveness; nor did it simply indicate the United 
States' worsening problems of excessive consumption and 
insufficient saving or imply that the U.S. exchange 
rate has been severely overestimated due to the offset 
of short-term cash flow.  The deeper significance of 
the United States' huge deficit of balance of payments 
shows that the economic, political and military 
foundations of the U.S. hegemony are weakening and that 
the global order established by the United States 
single-handedly after the war [in Iraq] will face a 
series of tremor and adjustment.  Such a process of 
order re-organization will certainly not be smooth or 
peaceful. 
 
"The four major pillars that support the United States' 
exclusive superpower position are: the United States' 
particular wealth in territory, natural resources and 
economic size; its long-term leadership regarding 
productivity and its international competitive edge; 
its superiority in legitimacy and ideological 
structures; and its absolute supremacy in military and 
security areas.  These four pillars have propped up the 
United States' dominant position over global affairs 
and the greenback's status as the international reserve 
currency.  Over the past few years, the phenomenon that 
these four pillars are sinking day by day has been 
getting clearer and clearer.  Among the four pillars, 
[the one consisting relating to] productivity and 
international competitiveness is the one that has lost 
its leading edges the quickest, and it happens to be 
the most critical cornerstone holding up the U.S. 
hegemony. . 
 
"The rapid swelling of U.S. expenses related to arms 
procurements over the past few years has put the whole 
new weapon research and development mechanism on the 
brink of decomposition.  Part of the reason is because 
of man-made errors - the problem that certain interest 
groups have manipulated the Pentagon's weapon 
procurement process is getting more and more serious. 
Part of the reason is due to the fact that the U.S. 
defense industry is lacking a solid and broad daily 
necessities industry to back it up. . 
 
"What is even more worrisome is that the United States' 
democracy seems to have gradually lost its capability 
to respond to challenges.  During the five-year term of 
the Bush administration, serious errors occurred in the 
administrative objectives and distribution of national 
resources.  Over the past five years, the United 
States' accumulated national defense expenses have 
reached USD1940 billion, and its accumulated national 
debts have also soared to the benchmark 75 percent of 
its GDP.  In the meantime, the gap between the rich and 
the poor inside the United States is widening; social 
security protection for middle- and low-income families 
has shrunk greatly; and [incidents of] social discord 
and conflicts are increasing.  The unprecedented 
humongous military expenses, however, has failed to 
help the United States to get obtain better security 
protection, nor has it helped the United States redeem 
its international image and prestige of leadership that 
have both hit rock bottom. . 
 
"In the face of the rapid rising of China and India, 
however, conscientious policy debates are hardly heard 
in the U.S. Congress; instead, it is filled with 
populist appeals that attempt to find a scapegoat for 
the aged economic problems or with corny statements 
that fostered the protectionism sentiments.  When 
facing the industrial hollowness, an imbalanced trade 
structure, out-of-controlled financial deficit and the 
United States' heavy dependence on the capital input of 
the Asia central bank, the attitude of the executive 
and legislative branches are basically procrastinating. 
Even the usually wise Federal Reserve can only maintain 
a highly loose currency policy to barely support the 
U.S. economic prosperity. 
 
"All these indicated that in a short period of time 
(three to five years) the world economics will undergo 
an exchange rate storm that will be more serious than 
the `Nixon shock' in 1971.  In the mid-range period of 
time (five to ten years), the accelerating process of 
global production bases shifting will lead to 
deteriorating bilateral trade conflicts or even 
endanger the global free trade system.  In a certain 
period of time (ten to fifteen years), the United 
States' dominance over the global affairs will markedly 
decline.  This severe structural adjustment process 
will definitely not come quietly; we can only pray that 
at the least the process will be peaceful.  For the 
international community, whether China can `rise 
peacefully' and whether the United States can `decline 
peacefully' are in fact a pair of questions that are 
closely linked." 
 
PAAL