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Taiwan's Chen, Wooing Support, Names Hsieh Premier (Update1)
Jan. 25 (Bloomberg) -- Taiwan President Chen Shui-bian named Kaohsiung Mayor Frank Hsieh as his fourth premier since he took office in 2000, betting the popular leader of the island's second- largest city will help the government regain support.
Hsieh, 58, won a second four-year term in December 2002 in Kaohsiung, where he impressed voters with his efforts to gather support from city officials to improve drinking water, clean up the city's polluted Love River and accelerate delayed construction of a mass transit system.
``Hsieh's brilliant record and negotiation capability in dealing with the city council proved he is the best choice,'' Chen said at a briefing in Taipei.
Chen needs an ally who can mend relations with opposition parties, which last month maintained 114 of the 225 seats in legislative elections amid heavy campaigning by Chen. The president also needs to maintain the island's economic recovery and smooth relations with political rival China, the island's biggest trading partner.
``His two challenges ahead surely are cross-Strait relations and the Taiwan economy,'' said Andrew Yang, secretary-general of the Council for Advanced Policy Studies in Taiwan.
Chen, who won a second term in March by a margin of less than 30,000 out of 13 million votes cast, has repeatedly complained the opposition-controlled parliament has slowed the passage of key bills. Taiwan's businesses, with more than $100 billion invested in China, want improved transport links with China, such as direct flights and shipping routes.
Growth Slowing
``I believe in win-win and cooperation,'' Hsieh said after his appointment was announced. ``I'll pursue political stability and cross-Strait stability.''
It won't be easy, say analysts.
The economy probably grew 5.9 percent last year, the fastest in seven years, according to government statistics. Taiwan's economic growth may slow to 4.6 percent this year as exports flag.
Sluggish overseas sales are prompting companies including Taiwan Semiconductor Manufacturing Co. and AU Optronics Corp. to rein in investment.
Exports, which account for almost half of Taiwan's gross domestic product, rose 6.2 percent from a year earlier in December at the slowest pace in 17 months. A weaker U.S. dollar made it more expensive for U.S. customers to buy the island's laptop computers, flat-panel displays and cell phones.
Budget Deficit
Taiwan faces a projected record budget deficit of NT$337.3 billion ($10.6 billion) for 2005. The government has been running deficits every year since Chen's upset election victory in 2000 that ended 50 years of Nationalist Party rule.
Relations with China have worsened under Chen's administration. Beijing, which regards the Taiwan as a renegade province, has said the island may be reunified by force should it move toward independence.
Chen has been pushing to change the constitution, which China perceives as such a move. Chen has drawn criticism from investors, Standard & Poor's and the U.S. for his stance.
``No one can say it's an easy job, given the high difficulty in handling cross-Strait relations and negotiation with opposition parties,'' Yang said.
On Nov. 30, Taiwan's debt outlook was cut to negative by S&P, which cited the island's record budget deficit and tense relations with China.
Taiwan has a rating of AA-, the fourth highest of 10 investment grades at S&P, which last cut the rating in December 2002. Moody's Investors Service gives Taiwan a rating of Aa3, the fourth highest of 10 investment grades.
Presidential Candidate?
A successful stint as premier may lead to bigger things for Hsieh, who is considered one of the four possible presidential candidates when Chen completes his term in 2008. Hsieh was the Democratic Progressive Party's vice presidential candidate in the 1996 presidential election but lost in the election.
Hsieh, Chen and Vice President Annette Lu graduated from the island's top law school, National Taiwan University. He spent eight years as a city councilor in the capital of Taipei and eight years as a Taiwan lawmaker before moving to head the Kaohsiung government.
He's often compared with the 53-year-old Chen. Both were born to poor families and were hard-working students who passed the bar examination with the highest score in their junior year.
Both began their political careers by defending dissidents from the Kaohsiung incident on Dec. 10, 1979, when a rally organized by opposition politicians to commemorate Human Rights Day turned into a riot that injured scores of demonstrators and police.
`Love River Miracle'
Hsieh became Kaohsiung mayor in December 1998, inheriting a council controlled by the opposition Nationalist Party and a city of 1.5 million people known for having one of the island's most polluted rivers.
He introduced programs to transform the Love River from a highly polluted waterway into a source of drinkable water. At the same time, he turned the city into a popular tourist destination boasting riverside pedestrian walkways and restaurant districts.
``The so-called `Love River miracle' and drinking water improvement have won Hsieh high support from Kaohsiung citizens,'' Yang said.
Hsieh also accelerated the construction of the city's long- delayed NT$240 billion mass-rapid transit system, which is set to start operation next year.
A United Daily News poll on Dec. 21 last year showed that 74 percent of Kaohsiung citizens surveyed were satisfied with Hsieh's performance, up from 37 percent one month after he first took office in January 1999. The poll, which surveyed 1,023 people, had a margin of error of 3.1 percentage points.
``It's still too early to say whether Hsieh can succeed,'' said Charles Chen, who manages the equivalent of $150 million at JF Asset Management co. in Taipei. ``Let's wait for his cabinet reshuffle and most important, details of what he plans to do.''
Taiwanese President Chen Shui-bian has chosen Frank Hsieh, a leading member of his pro-independence Democratic Progressive Party, as the new Premier of the Republic of China.

Frank Hsieh replaces Yu Shyi-kun, who served as Taiwan's premier for three years. Mr. Yu and the entire 20-member cabinet resigned Monday to allow President Chen Shui-bian to reshuffle the cabinet, after his party's coalition lost parliamentary elections last month.

Mr. Hsieh, the 59-year-old mayor of Taiwan's second largest city, Kaohsiung, is a close ally of Mr. Chen and will be expected to closely carry out the president's agenda. Mr. Hsieh served as Chairman of the Democratic Progressive Party from 2000 to 2002.

President Chen praised Mr. Hsieh as "the best person" to help open a new era of negotiations with both the opposition and with Mainland China. 

Analysts suggest that Mr. Chen's appointment may signal President Chen's preference for a successor. Mr. Chen's second term ends in 2008 and Mr. Hsieh has had previous experience as a vice presidential candidate in 1996.

In ways, the two men are alike. Both grew up in poor families, graduated from Taiwan's most prestigious National Taiwan University, and passed the bar with the highest score in their junior years in college. Like President Chen, Mr. Hsieh rose to prominence defending the dissidents of the Kaohsiung Incident and went on to serve as a Taipei city councilor and a legislator.

Mr. Hsieh is expected to announce a new cabinet in two days. The cabinet must be endorsed by the new parliament, which convenes February 1. 

Analysts believe that many key ministers, including those responsible for foreign affairs, defense, and mainland affairs, are likely to retain their posts.

Mr. Hsieh on Tuesday promised to seek co-existence and "cross-strait peace" through dialogue with the People's Republic of China. He said the new cabinet must maintain cross-strait stability. He will also need to smooth the economic recovery.

He will have to face a parliament in which the opposition holds 114 of the 225 seats. Mr. Chen has complained that passage of his key bills have been slowed by the parliament.

The pro-independence policies of President Chen and his Democratic Progressive Party have angered Beijing, which considers Taiwan a breakaway province. Beijing has threatened a military attack if the Taiwan independence is declared. The two sides split amid civil war in 1949 when the Communists established the People's Republic and the Nationalist Party, or Kuomintang, moved the original government to Taiwan where they maintained the Republic of China, which Beijing regards as defunct. President Chen maintains there are two countries.

The Kuomintang favors maintaining the status quo. Party leaders say the question of whether Taiwan should be independent or reunited with mainland China should be decided by future generations. The Kuomintang, citing its parliamentary victory, had sought to name its own premier and government.

Philip Yang, an associate professor of political science at National Taiwan University, says the recent election's message was that the president and his new premier will have to pay serious attention to relations with Beijing.

"A new message from the people is demanding the government to pay more attention to enhance cross-straits interaction," he said.