Lee Teng-hui: 'We Will Influence China'

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Besides guiding Taiwan to democracy, former president Lee Teng-hui presided over the island¡¦s stupendous transformation from a traditional manufacturing economy into a high-tech powerhouse. But some business people are not content; they blame Lee¡¦s cautious attitude toward mainland investment for hampering their growth. Lee, who stepped down from office in May, now worksin his new policy institute in the instant Taipei suburb of Tamsui. With spectacular ocean view in the background, he recently discussed the future of cross-strait business with Newsweek¡¦s Dorinda Elliott and Mahlon Meyer. Exerpts:

Newsweek: What do you think of Taiwanese business people being forced to bow to Beijing¡¦s political views?

Lee: The old Taiwan used to be that way, the old KMT party was the same way. The Taiwanese businessmen understand. On the surface, the Taiwanese businessmen are duhh-duhh-duhh [pretending to be stupid] but down deep they are not [so naive] ¡K They¡¦re all clear that if they go [to the mainland] and invest, they will be treated in detrimental ways. The Chinese leadership will use business for politics.

Many high-tech industries, especially the semiconductor business, are moving to the mainland. Is this a concern?

The semiconductor manufacturing process is not simple. Will it be easy to take it to the mainland and train technicians? Some people say that high tech needs the right conditions to develop. You must understand the development of Taiwan¡¦s economy; there was a structural change to capital-intensive industries. Also, Taiwan IT [information technology] firms and Silicon Valley have a close relationship. China doesn¡¦t have these conditions.

How do you view dual WTO membership for China and Taiwan?

After we enter WTO, our trade [policies] must be adjusted. [Take] Taiwan¡¦s agricultural products, for example. Mainland China¡¦s are one half or one third the price of ours. But can we [other countries] not accept them? Or maybe we can accept their cheap agricultural products and add value to them. You can¡¦t just stay with the old thinking. After joining WTO, the ¡§go slow, be patient [policy]¡¨ would have to be adjusted. We still need to consider how to do it.

Do you support direct transportation links with the mainland?

We don¡¦t have direct links, but a lot of boats go via the Liuqiu [Ryukyu Islands] --- 1,300 every year. The mainland is the mainland, and Taiwan is Taiwan. Otherwise, Taiwan will become a part of mainland China if there is direct shipping. [We] are a different area, otherwise we become a part of China. We must have international relations. Taiwan must be an authority, [and] China must be an authority. You must set up mutual barriers, otherwise you become a part of China.

Are labor laws, which have led to higher manufacturing costs, driving businesses to China?

They say it¡¦s cheaper to go to the mainland. The mainland does not have an overtime system. But you can¡¦t just consider it from this angle. A lot of people went to Vietnam [in the mid-¡¥90s] and should have earned money. But they miscalculated. [They went] to make autobikes and they lost a lot of money.

How do you feel about the future of China?¡@

The up-and-coming leaders of China at the second level are all from the Cultural Revolution. But the lower level has Western education. I feel China more or less will get better. I don¡¦t necessarily feel they are so formidable. China¡¦s historical view [is that] everyone has 5,000 years of history. But the second part is that we¡¦ve has 100 years of repression. The older generation --- soldiers, government --- on the outside appear very strong. They say: ¡§During the Ching dynasty all of Asia was ours.¡¨ But when they face someone stronger, they quail.

How will China reform?

I heard three years ago you couldn¡¦t talk about globalization [in China]. Now they have just started. China needs time. The U.S. engagement policy is very important to bring them into the world community. [We are] making a new culture in Taiwan to influence China. Taiwan is a small place, but we will influence China. Maybe it takes two or three generations.

Does Hong Kong offer a lesson for Taiwan?

In Hong Kong, after the transfer, the situation has not been good. Its economy must now depend on sightseeing and tourists. It¡¦s not the same as before. A lot of financial people from the mainland have gone into Hong Kong, so it is very complicated with legal problems. During the negotiations they [the British] were cheated. It was too fast. It is really a shame.

In our views; how to prevent mainland China become to be a new hegemony that could link to Russia¡¦s military power on the near future, it needs deep concern over Asia-Pacific region¡¦s stability.

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