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CNBC Interview with President Chen Shui-bian

  • Date:2007-09-22

Office of the President
Republic of China (Taiwan)
September 17, 2007

President Chen Shui-bian gave an interview this morning to CNBC. Following is the complete transcript of the interview.

CNBC: Mr. President, let me start by asking you what is most topical. And that is, over the weekend, while I was here—I arrived on Friday—there were thousands of people on the streets demonstrating, supporting Taiwan's push to join the United Nations. Talk to me about why this is happening now, at this point in time.

President Chen: The main reason is that this is a sign of the times. In particular, what we are seeing is the consolidation of Taiwan-centric consciousness, which is the inevitable result [of what Taiwan has been through]. While there is great diversity within Taiwan's society [and politics], when it comes to the issue of gaining UN membership, the ruling and opposition parties actually overlap in their views and share a consensus. We are very pleased that so many people came out on the weekend to give voice to Taiwan's 23 million people that Taiwan can become a member of the UN family. It was wonderful to see this happen.

Taiwan is a very unusual country. First, it was under authoritarian rule and martial law for decades before it forged ahead toward democratization. Moreover, in the longer term, there has been the issue of China, which has meant that Taiwan's democracy and opposition movements have often become closely bound up with elections. In other words, come election time, the desire to deepen and consolidate democracy often turns into a movement involving the entire nation. So, in the past, even though the [Kuomintang] government opposed reform and democratization, ultimately they were forced to yield to the power of the people. This is what distinguishes Taiwan from so many other countries and regions in the world.

Thus, by connecting the bid for UN membership with the presidential election of March 2008, we may be able to hold a national referendum concurrent with the election. In this way, the issue of UN membership will become the issue of a UN membership referendum, which will also be a theme of the election. So, as the election begins to heat up, you can expect the topic of Taiwan's UN membership, and with it the national referendum, to become the overarching themes of the whole election.

CNBC: May I ask the President—we know it's tied to the presidential elections next March—the referendum about joining the United Nations as Taiwan. But there has already been doubt expressed by the US about the wisdom of doing it either in this way, or at this time. Washington's, I suppose, main concern is that it will disturb the status quo with regards to relations with China. How is he responding to Washington's doubts? Especially when it is very easy to look at—especially the advertising I've seen—the phrase I've seen used is "political apartheid." Those are very, very, very strong words.

President Chen: The 23 million people of Taiwan have been deprived of and limited in their collective human rights, whether in terms of public health or politics. In the past few decades, there has been no major change in or improvement to this situation. Therefore, when we say that the rights of the 23 million people of Taiwan are being suppressed, boycotted, or blocked, what we are saying is that we are like a race that is suffering apartheid. We use an expression like this because we want the international community to understand more fully the helplessness and despair felt by the 23 million people of Taiwan.

Of the two large rallies that were held last week, the one in Kaohsiung was attended by more people and was a more lively rally, so what we can tell most is that the appeal we are making is a single, simple, very clear one, that is, a referendum to protect Taiwan, to enter the UN. However, at the [Kuomintang] rally in Taichung, they spoke with little conviction, without confidence, and about other issues on top of the UN referendum topic. Therefore, it is very clear that their appeal to "return to the UN under the name the Republic of China" (ROC) via a referendum is a bogus topic. It was not their true intention to promote the referendum. Their concern was only for the election. It must be said that such a stance will not become the mainstream, majority position in Taiwan's society.

Next year, I am very confident that our referendum on joining the UN under the name "Taiwan" will pass with a greater than 50-percent support rate. That is, it will obtain the unwavering support of over eight million citizens of Taiwan. This is why the other camp is worried and so has no choice but to follow suit. That is the main reason. However, those who try to imitate us or follow suit will always be a minority and will always lose.

We maintain that "the Republic of China is Taiwan," but recently Ma Ying-jeou claimed "Taiwan is the Republic of China." That the ROC is Taiwan is the status quo. That is the truth. However, if we turn it around and say that Taiwan is the ROC, there is a problem with that: It is not the truth. The ROC that Ma Ying-jeou and the KMT talk about includes mainland China and Mongolia, and is shaped like a begonia leaf [a comparison of the shape of Taiwan versus that of China]. Without Mongolia, it is shaped like a hen. However, that is not the status quo. That is impossible. It is a fantasy, a very naïve fantasy. If the ROC were so big that it included mainland China and Mongolia, we would have to be saying to ourselves now, "Taiwan is definitely not that ROC."

CNBC: From everything the President has said, I understand about the democratic aspirations of Taiwan's 23 million people. As much as the tying of the referendum to the presidential election in March is political to help your chances of winning, with approval ratings down at the 20 percent level, as much as it is also, more broadly, aimed at helping Taiwan's people to realize their democratic aspirations. What are the risks, though, that this could backfire badly for yourself, your party, as well as for Taiwan? Because, of course, you risk incurring not just the wrath of the US—and they are already displeased—but also of mainland China. Is that a risk worth taking?

President Chen: Taiwan has taken the road of democracy, which is a road of no return. This year marks the 20th anniversary of the lifting of martial law, which had been in place for 38 years. After martial law was lifted, it still has taken us 20 years to transform Taiwan from authoritarianism to democracy, and for this we have paid a dear price. It was not a case of lifting martial law today and waking up a democracy tomorrow. Rather, the democracy and progress we enjoy today have come about as the result of an enormous amount of sacrifice. That makes us cherish them even more.

We must, therefore, work very hard to defend and safeguard Taiwan from being incorporated into the People's Republic of China (PRC). Taiwan is Taiwan. Taiwan and the PRC are two separate countries, neither of which exercises effective jurisdiction over the other. This is a fact. This is the status quo in the Taiwan Strait. All our efforts are thus aimed at defending the status quo from being destroyed by external forces.

In 1996, before we held our first-ever direct presidential election, China test-fired two waves of missiles into waters near Taiwan. The closest missile landed only about 55 kilometers from our shores. In response, our 23 million people used their ballots to say "no" to China's military intimidation and elected their president.

Likewise, in 2000, Taiwan witnessed the first-ever transfer of political power between parties. Only three days prior to the election that year, then-Chinese Premier Zhu Rongji employed very belligerent rhetoric to threaten Taiwan's people, saying that if they dared to elect me—the presidential candidate for the Democratic Progressive Party (DPP)—they would have to suffer the consequences. Again, Taiwan's people bravely used their ballots to say "no" to China.

In 2004, we held our first-ever "defensive referendum," which China labeled a move toward "de jure independence." The Chinese authorities employed bellicose rhetoric and military intimidation against us, but our people again used ballots to say "no" to China. Next year, I think the people of Taiwan will again say "no" to China in a refutation of its claims that Taiwan, or the Republic of China, is not a sovereign state and that Taiwan is part of the PRC.

CNBC: Mr. President, if we could talk about the economy now. A lot of people say that perhaps the most honest reaction to any sort of event, political, or natural disaster, is what the markets do and what business does, where money moves or doesn't. If you take a look at what's happened within the last 10, 15, maybe 20 years, there's been an enormous amount of Taiwanese money that's been invested into China. I think they're probably as a group, the single-biggest foreign investor. So in that sense there's been already a lot of integration between Taiwan and China. A lot of people might think—businessmen especially—might think, "Look, business always moves far ahead and far faster than politics." Would you agree with that? And, if so, what do you think politics can do to catch up with what is already happening?

President Chen: I don't see a causal relationship [between economic and political integration]. We have indeed seen ever-more intense commercial exchanges and cooperation between the two sides of the Taiwan Strait, and unprecedented activities in investment and the setting up of factories and manufacturing companies in China by Taiwanese firms. But at the same time, we've also witnessed the rise of Taiwan-centric consciousness.

For example, currently, according to opinion polls, those people who consider themselves Taiwanese and not Chinese account for 69 percent of total respondents, while back in the year 2000 when I took office, only half as many people held this view. So, given the extraordinary integration we are witnessing on the economic front, we still see continued growing acceptance of Taiwan-centric consciousness. And I believe this figure will increase before the March election of next year. I think it will increase to more than 70 percent, even 75 percent, of our people seeing themselves as Taiwanese and not Chinese.

On the issue of whether Taiwan as a sovereign nation should use the name "Taiwan" to join the United Nations, we have over 70 percent, even up to 80 percent, support from our people. On other, even more sensitive issues, such as Taiwan's status quo or the extent of territory under Taiwan's jurisdiction, about 75 percent of our people see the status quo as Taiwan being a sovereign country, not part of the People's Republic of China. And 85 percent of our people hold that the territory of Taiwan only includes Taiwan, Penghu, Kinmen, and Matsu, and does not encompass the Chinese mainland. That is to say, the territory of Taiwan is restricted to this small area. Taiwan's territory is shaped like a sweet potato, not like a hen or the broad leaf of the begonia.

CNBC: Mr. President, you've had—Taiwan has had—ten years to observe Hong Kong after it was taken back by China. A lot of people would say, politics aside, economically, the standard of living, the quality of life, everything—at the very least—has stayed the same, if not improved. And more recently, they have agreed on something called CEPA, which is essentially closer economic cooperation. Do you see Taiwan moving along those lines, in terms of further formal economic integration with China? That's my first question. And two: What sorts of lessons has Taiwan learned, or do you think Taiwan should learn, from Hong Kong's experience under China in the last ten years?

President Chen: Hong Kong is Hong Kong and Taiwan is Taiwan. Taiwan is not Hong Kong. We do not wish to become a second Hong Kong, because Taiwan is an independent sovereign country, while Hong Kong was a colony of the United Kingdom before it was returned to China. The UK gave up sovereignty over Hong Kong. This was a so-called transfer of sovereignty. It is not applicable to Taiwan. Hong Kong and China signed a Closer Economic Partnership Arrangement (CEPA). Most people see this as more symbolic than substantive, and more political than economic. Hong Kong is already a special administrative region (SAR) of China. It is part of China. Taiwan, however, is not a part of China. We could not possibly accept being like Hong Kong, becoming a SAR or part of China. Therefore, we do not accept the "one country, two systems" formula, which is a precondition for signing a CEPA. Hong Kong has accepted China's formula of "one China, two systems." It was under that precondition and political label that Hong Kong and China signed a CEPA. If Taiwan were to accept such a formula, it would mean giving up its sovereignty. Without sovereignty, Taiwan would cease to exist as a state. The 23 million people of Taiwan could not accept being like Hong Kong and becoming a SAR or a province of China. If you were to conduct an opinion poll now, asking our people whether they accept the Hong Kong model—the 'one country, two systems' formula, more than 90 percent of our people would say "no." This is the reality. This is the status quo.

Today, it is more important and meaningful for Taiwan to sign a free trade agreement (FTA) with the US than to sign a CEPA with China. An FTA between Taiwan and the US is our first priority. A CEPA between Taiwan and China is just not possible. As our economic relations with China are already close enough, signing a CEPA is not necessary. Despite this closeness, we will not give up our sovereignty, and we will not accept the "one country, two systems" formula. Neither will we accept a so-called common market established under the "one-China principle." Consequently, we cannot agree to the so-called one-China market proposed by Vincent Siew, the running mate of KMT presidential candidate Ma Ying-jeou.

We need to have closer commercial relations with China, but not under the "one-China principle." This is a sensitive and important issue. After all, China has never renounced the use of force against Taiwan, and is still working on a three-stage military plan for war against Taiwan. By the end of this year, China will have established combat capabilities for comprehensive contingency response. By 2010, it will have built up combat capabilities for a large-scale military engagement with Taiwan. And by 2015, it will be ready to ensure victory in a decisive battle.

As we push for closer commercial relations with China, we must remain alert to China's continued military intimidation, diplomatic suppression, and use of united front tactics. We must evaluate and consider all the political and commercial risks. We should not underestimate them. Therefore, we should use "proactive management and effective liberalization" as the overarching guideline for cross-strait economic policies. Although China is a big market, it cannot be Taiwan's only or ultimate market. We will not put all our economic resources in, nor will we tie all our economic lifelines to, the single basket that is China.

CNBC: I understand, of course, Taiwan's continuing concerns with China's military threat, and from what I remember, I think that the crucial issue now is that China is developing now what they call a "blue-water capability" to actually physically be in Taiwan, not just bombard it by air. There are some people, though, who think that perhaps Taiwan's best defense against that happening would be, if not political integration, then further economic integration, whether formal or not—allowing flights, allowing shipping, allowing tourists to go back and forth—because once that happens, you have people and capital and money criss-crossing both sides. Why on Earth would either side want a war? Does it make sense at all now?

President Chen: We believe that, in the face of China's continued military intimidation and diplomatic suppression, our best defensive weaponry is not submarines, PAC-3 [missiles], or anti-submarine aircraft, but rather our democracy. This is why we must continue to deepen and consolidate democracy, because in it lies the key to our survival and national development.

Realizing democracy is therefore of the utmost importance. Its true meaning and substance includes referenda, which are also concrete manifestations of democracy. We believe that Taiwan is unable to engage in an arms race with China. What we want is to be able to put up a basic defense and self-protective shield. We are, therefore, very grateful to the US government and the Bush administration for acting in accordance with the Taiwan Relations Act and selling defensive weaponry to Taiwan. However, these weapons are not the only means we rely upon to safeguard our security and maintain the status quo. Democracy still plays an absolutely vital role, and we hope that Taiwan's democracy can act as a beacon of hope to China's 1.3 billion people.

Over the past seven years, we have implemented the "mini-three-links" [transportation, postal, and commercial links between China and Taiwan's Matsu and Kinmen islands] and expanded their scope. Moreover, we have also introduced direct cross-strait charter flights for Lunar New Year and expanded the provision of such flights to include two other major traditional holidays. All this is unprecedented. In addition, several years ago, we set a policy goal to allow tourists from China to visit Taiwan. We have also been vigorously promoting direct cross-strait charter flights for cargo.

However, it is very regrettable that the government of China has been politicizing these issues because they think that allowing tourists from China to visit Taiwan or introducing direct flights would only serve to add credit to the DPP administration or myself. They are mistaken in this. Whatever can be done to add credit to Taiwan and its 23 million people should be done, and not politicized from the word go. Yet, how come China's government constantly finds reason to disagree with our government and make an enemy of Taiwan's president, thus affecting the well-being and livelihood of our nation's 23 million people?

The root of the problem is that China is bent on downgrading and marginalizing Taiwan and treating it as a local government of its own, in attempts to negate the authority of Taiwan's government as well as the national sovereignty of our country. Even though the KMT has introduced the "1992 consensus," with its principle of "one China, with each side having its own interpretation," China has not accepted the KMT's version. This is because China believes it was only the "one China" part that was agreed upon, and not the "two interpretations."

At the 1992 Hong Kong meeting, China did not agree that each side could have its own interpretation of "one China." While they may have discussed it, in the end, they failed to reach a consensus. Ma Ying-jeou of the KMT said that each side could have its own interpretation of "one China." However, China still cannot agree with this idea because they think that allowing each side to have its own interpretation is no different from admitting that there are two Chinas. They can only agree that there is "one China" without each side having its own interpretation. This is the crux of the matter, and the situation cannot be changed no matter who is president of Taiwan or whichever party is in power.

In other words, regarding its military threat and diplomatic suppression of Taiwan, China pays no heed to political affiliation. It does not distinguish between green [indicating political parties that favor a future in which Taiwan continues to be apart from China] and blue [indicating parties that favor a future in which Taiwan is unified with China]. Nor does it differentiate between the central and local governments, or the private and public sector. China suppresses Taiwan in [in its attempts to participate in] the World Health Organization (WHO), and undermines Taiwan in the World Organization for Animal Health (OIE), trying to make us change the name under which we participate as an OIE member irrespective of the well-being of humans or animals.

CNBC: Welcome back, this is The CNBC Conversation—we're talking to our special guest today, Taiwan President Chen Shui-bian. Mr. President, after March of next year, after the presidential election, of course, term limits prevent you from running again for a period of time. What are your plans? What will you be doing?

President Chen: It is normal for democratic countries to hold regular elections, and Taiwan is no exception. By May 19 of next year, I will have finished my second term as president, which will have lasted for eight years, and on the 20th of May, I will hand over the baton to the next president. I am very grateful to the 23 million people of Taiwan for having given me the opportunity to be their president, and also for giving Taiwan this opportunity.

We cherish very much the achievements that we have made over the past few years. Taiwan has managed to rid itself of authoritarianism in its march toward democracy. Not only did we bring about Taiwan's first-ever transfer of political power between parties, but we were also able to nationalize the military [so that it is no longer controlled by particular party or individual]. In terms of freedom of speech and religious freedom, in an evaluation by the Washington-based organization Freedom House, Taiwan was awarded full marks. Regarding freedom of the press, Taiwan was ranked number one in Asia, higher even than Japan, by Paris-based Reporters Without Borders. We take pride in and are joyful for our democratic achievements.

Another good example of our progress is the referendum. In the past, referenda were a taboo subject, equated with disasters, and even seen as capable of causing a war. But we are proud to say that [in 2003,] we passed a Referendum Act, and [in 2004,] held our first-ever national referendum. [In 2005,] we incorporated referenda into the Constitution [as a means to ratify constitutional amendments]. Next year, we will put further issues to a vote via referendum.

We are glad we embarked on the correct path—that of democracy—and we are very grateful for the continuous encouragement and support that the United States has given to Taiwan in its democratization, helping us to make so much progress and produce such fruitful results along the way. Next year, when I leave the presidency, I will be very content with what we've achieved so far.

Some people say that retired presidents, or former presidents, shouldn't meddle too much in political affairs. I think that not only should they avoid meddling too much; even "meddling a little" is unacceptable, as it still implies a degree of involvement, and any form of involvement is unnecessary. I shall remember this, and when I leave office, I will be content with being a willing volunteer and a happy grandpa, spending more time with my grandchildren. I will keep in mind that I should not meddle in political affairs or involve myself with the next president's administration when I have left this post.

CNBC: I guess I am sorry if I interrupt her. I am asking the roundabout way to getting towards the question of what the president think about the DPP's priorities, economic priorities and plans should be, post March next year?

President Chen: I think the direction is very clear. While continuing to insist on Taiwan-centric consciousness, we must reinvigorate Taiwan's economy, ensure sustainable development, and focus on social justice and equity. This is another important path to follow.

We attach great importance to maintaining balance in terms of economic development. The so-called three balances mean maintaining balance in the areas of regional, industrial, and environmental development. Looking at "balance" in regional development in the past under KMT rule, development was focused on northern Taiwan, while the southern, central, and eastern regions were neglected. Since the DPP came to power, we have been trying our best to achieve balanced development for all regions and areas in Taiwan—be they urban or rural, in the north, south, west, or east, or on the main island or on outlying smaller islands.

In addition, we have our "three middles" policy, which places more emphasis on helping the central and southern regions develop, and helping the lower and middle classes, and small and medium-sized enterprises, as well as underprivileged groups, of course.

As for "balance" in industrial development, apart from the two so-called trillion-dollar industries of semiconductors and flat-panel display production and the "twin star" industries of digital content and biotechnology, we hope to see precision machinery, communications and electronics technology, and biotechnology become Taiwan's third, fourth, and fifth trillion-dollar industries.

We will actively support the Kyoto Protocol and the United Nations Framework Convention on Climate Change. Although Taiwan is not a UN member, it will not shirk its global environmental responsibility. Our next step is to develop clean, renewable, and alternative energy. In the future, we will also see drives to develop solar energy, wind power, and biomass energy sources such as biofuel and biodiesel.

We are also working hard on helping emerging industries like wireless broadband, digital lifestyle, health care, and green business. The prospects are very good. We think the combined production of these industries will reach US$40 billion by 2009, and increase four-fold to US$160 billion by 2015. These are industries where Taiwan can devote its resources in the future and where it has the best competitive advantage. Although still in the initial stages, we are very optimistic about the future development of these industries.

In respect to financial reform, Taiwan was lucky to have escaped the immediate effects of the Asian financial crisis of [1998], but that did not mean that Taiwan's fundamental financial problems had been solved. The previous administration did just enough to cover up the problems and postpone financial troubles to a later date.
In 2000, when I assumed office as president, many people warned me that a domestic financial crisis was going to befall Taiwan, and that it would come no later than late 2000 or beginning of 2001 before the Lunar New Year. I bore that in mind and made 2001 our year of financial reform. That summer, we passed six major financial reform bills. I am proud that during this first phase of financial reform, NT$1.6 trillion of non-performing loans have been written off, and the average non-performing loan ratio has been reduced from more than 11 percent to less than 2.3 percent.

Reforming the credit departments of farmers' and fishermen's cooperatives that were no longer competitive was a difficult task. However, we believe we have pulled off a mission impossible and successfully reformed these departments.

Concerning our second phase of financial reform, we have gone some way toward achieving the goals we set out to meet. For example, we hope to have three domestic banks each with at least 10 percent of market share. Moreover, we have reduced the number of financial institutions a majority of whose shares are government-controlled from twelve to six.

What we have yet to do is reduce the number of financial holding companies, now numbering 14, by half. Because many are privately owned, we will need to continue to encourage them to merge. Many specialist investment institutions have suggested that the number of financial holding companies should be reduced to between six and four. We have set our goal at halving the number to seven, and we are encouraging advances in this area.

By the end of this year, we hope to merge the Bank of Taiwan, the Land Bank, and the Export-Import Bank of the ROC into a financial holding company called Taiwan Financial Holdings, which will be the 18th largest in Asia and 89th largest in the world, giving Taiwan at least one in the top 100 such firms globally. We also want to encourage and support foreign banks and financial institutions to merge with or take 100-percent ownership of local banks. For that reason, we have amended regulations to allow this. A foreign bank having 100-percent ownership of local banks will not be a problem, and if they want to do this, then they will also be able to set up new commercial banks in Taiwan.

These steps represent how we want to go about reforming Taiwan's overall financial situation. That is, we aim to strengthen and increase the competitiveness of our financial institutions, fully embrace globalization and liberalization, and move closer into step with the international community.

CNBC: Mr. President, one final question before we go. You have six months left till the March presidential election next year, until your final term in office runs out. I would think it would be a safe assumption to think that yourself and the party, most of the energy and a lot of time would be going towards winning the election. My question to you is, therefore, I suppose it would also be fairly safe to assume that within the next six months, there is very little that investors or businesspeople from outside should expect in terms of reform, especially economic reforms, financial reforms as well. But after the March election, are you confident that (a) there is enough momentum in reforms that they will continue and (b) the changes that you've seen fit to make have been institutionalized, or are enough to institutionalize reforms, that they will carry on after you. That is what I am trying to ask you.

President Chen: Reform is a road of no return because it is the correct path. We will not stop or slow the pace of reform, including financial reform, just because elections are approaching. I mentioned establishing Taiwan Financial Holdings. The election will not affect this. In fact, we would like to establish it around the time of the election. After it is set up, it will certainly account for more than 15 percent of market share and we hope for it to be one of the top 100 financial institutions globally.

We hope that foreign investors and businesspeople can set their minds at ease. Even though we are holding elections, we will still go ahead with what we need to do. In particular, in the last eight months of my term, we will continue to promote various reforms. We will continue to work on incentives favorable to improving the economy and people's livelihoods and other measures.

We have great confidence that the party firm in upholding Taiwan-centric consciousness will still be in power after the election next year. Because of this, the political situation will actually become more stable. This is because the Communist Party of China (CPC) will eventually learn to face reality. Those parties, including the KMT, that engage in a power struggle will lose and realize that boycotts, fighting, and other activities that wasted resources in the past were actually harmful to everyone and did not benefit them. In the end, they will still be unable to return to power. Therefore, the KMT will launch internal reviews and make changes, which is a positive development for Taiwan's political stability and future economic development.

By the same token, China has been waiting since 2000, hoping the KMT they support would return to power. However, the fact is that, in the end, their hopes will not be realized. The CPC will thus also review and change its policy of opposing and refusing to contact or engage in dialogue with Taiwan's government and popularly elected president. Because of this, in the future, the two sides of the Taiwan Strait will definitely further normalize relations, which is a positive and constructive result.

For foreign investors and businesspeople in Taiwan looking for opportunities to make money, this will mean greater security and protection. We would like all our friends, especially foreign investors and businesspeople, to understand that although some of us may have different observations and opinions, Taiwan's future will surely be better after March 22 next year. We have confidence that Taiwan will get better next year, and the year after that.

To put it simply, if the referendum regarding joining the United Nations under the name "Taiwan" is passed, the solidarity of people in Taiwan will be further strengthened, and they will have greater strength to face the world, which will benefit economic development. In addition, as the DPP, which upholds Taiwan-centric consciousness, will continue to be in power after May 20 next year, and as the combination of the names of the DPP presidential and vice presidential candidates—Hsieh Chang-ting and Su Tseng-chang—show, Taiwan will enjoy everlasting prosperity (chang-chang).

(Should discrepancies exist between the Chinese and English transcripts of the President's remarks, the Chinese version takes priority.)

【Source: Office of the President】