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Cablegate: Media Reaction: U.S.-China Relations

VZCZCXYZ0000
RR RUEHWEB

DE RUEHIN #1784/01 3650721
ZNR UUUUU ZZH
R 300721Z DEC 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 0630
INFO RUEHBJ/AMEMBASSY BEIJING 8818
RUEHHK/AMCONSUL HONG KONG 0279

UNCLAS AIT TAIPEI 001784

SIPDIS

DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - NIDA EMMONS
DEPARTMENT PASS AIT/WASHINGTON

E.O. 12958: N/A
TAGS: OPRC KMDR KPAO TW
SUBJECT: MEDIA REACTION: U.S.-CHINA RELATIONS

Summary: Taiwan's major Chinese-language dailies gave significant
coverage on December 30 to former President Chen Shui-bian, who was
detained again for corruption charges based on a Taipei District
Court ruling early Tuesday morning. News coverage also focused on
KMT Legislator Diane Lee's U.S. citizenship controversy. In terms
of editorials and commentaries, a column in the centrist,
KMT-leaning "China Times" discussed the financial crisis and future
U.S.-China relations. The article said in the wake of the financial
tsunami, the open market model as represented by Europe and the
United States has become less attractive than the Chinese style of
state-controlled market economy, which will be a real challenge to
the values of U.S. hegemony. An editorial in the pro-independence,
English-language "Taipei Times" also discussed U.S.-China relations
from the perspective of the recent Israeli assault on Hamas. The
article concluded by saying that "the growing interdependence
between China and Israel, combined with a weakened U.S., means that
China's leverage on Israel will likely grow, which could be the
first good news Palestinians have had in decades." End summary.

A) "Renminbi Gets Tough under Internal and External Pressure"

Deputy Editor-in-Chief Kuo Chen-lung wrote in the "International
Column" of the centrist, KMT-leaning "China Times" [circulation:
200,000] (12/30):

"... It is conceivable that when Barack Obama takes over the helm
the next year, he will certainly attempt to pressure Beijing to work
with Washington [in terms of the exchange rate of the Renminbi].
Beijing, on the other hand, will surely strongly resist any moves
that will have implications for China's economic growth and social
stability. Even if both sides do not sink to the level of casting
aside mutual respect, Beijing will definitely not spend time on a
gradual breaking-in period with the new U.S. [Obama] administration,
as it did with the Clinton and Bush administrations. Should neither
side refuse to compromise, the United States will not necessarily
gain the upper hand [in its interaction with China]. ...

"... Currently Beijing is trying out a Renminbi settlement system in
Hong Kong, Macau and in ASEAN in an attempt to establish its own
sphere of economic influence without having to rely on the U.S.
currency. Also, traditionally the United States' China policy has
been swinging between the Department of Defense and the Department
of State. But during extraordinary times [such as the financial
crisis], military and human rights issues both lose their
significance, and now it is the Treasury Department that is taking
the lead, while the U.S. Trade Representative Office and the
Department Commerce merely play second fiddle. As long as China
continues to buy [U.S.] Treasury bonds and provide financial aid to
the U.S. economic stimulus and bailout plans, the Treasury
Department will naturally step in to straighten out all internal
disputes. China's hopes to lower the Renminbi exchange rate and
continue exports to the United States also meet the U.S. interests
-- the U.S. public will continue enjoying low-priced commodities,
which will help suppress inflation and make people feel less
miserable.

"Consequently, the battlefield that determines the final outcome is
ideology. Between the 'market economy with Chinese characteristics'
and the model of open market represented by Europe and the United
States, the latter no longer appears attractive in the wake of the
financial tsunami. By contrast, state-controlled economic style
that emphasizes businesses has become a model that most counties
want to imitate. In addition to China in Asia, we also see Russia
in East Europe and Venezuela in Latin America following suit,
turning it into common practice. Only this is the real threat -- a
challenge to the values of U.S. hegemony."

B) "China's Growing Leverage on Israel"

The pro-independence, English-language "Taipei Times" [circulation:
30,000] editorialized (12/30):

"... As Israel readies to widen its campaign in Gaza, most countries
have called for a halt to hostilities while putting the onus on
Israel to restrain itself. One country, however, has gone against
the grain: the US, Israel's longstanding backer, whose statements in
the past few days indicated that the 150:1 death ratio in this
latest Middle East flare-up was entirely Hamas' fault. As has
happened countless times since the first Intifada, with full US
backing, Israel feels no compunction in razing neighborhoods or
killing innocent people in its efforts to defend itself. All the UN
Security Council can muster is "deep concern" about the situation, a
feeble slap on the wrist rendered all the more painless by a US
veto.

"Aside from morally backing its Middle Eastern ally, the US remains
its principal source of weapons. ... In the current economic
climate, however, there are reasons to question the sustainability
of the US' security agreement with Israel, or even the ability to
come to its assistance, given its operational requirements
elsewhere. ... Should the downturn continue in the next few years,
Israel could soon find itself dealing with a poorer and therefore
far-less generous Washington, which could prompt it to look
elsewhere for security guarantees. That elsewhere could very well
be China. While Beijing has historically sided with the Palestinians
in the Middle East conflict, it has in recent years built up its
relations with Israel, mostly in the purchase of military
technology. ...

"Should an embattled US ever feel the need to change its MOU with
Israel and decrease the amount of military assistance it gives,
Israel could feel compelled to compensate by further tapping into
its lucrative weapons exports sector, with China as its likely
principal client. Aside from the implications this would have for
Taiwan's security, the growing interdependence between China and
Israel, combined with a weakened US, means that China's leverage on
Israel will likely grow, which could be the first good news
Palestinians have had in decades."

YOUNG

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