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Geopolitics & Security

Elections Explained: Voters Weigh China Ties and Economic Pressures in Taiwan Poll

Commentary10th January 2024

TBI’s Elections Explained series examines the key issues and potential impacts of globally significant polls.

After eight years of Democratic Progressive Party (DPP) rule, Taiwanese politics is at an inflection point. Current leader President Tsai Ing-wen has reached her term limit and must stand down. Relations with China, as well as domestic issues like wage stagnation and housing costs, are top of voters’ minds as they decide whether to hand the DPP a third consecutive term in the 13 January polls – a result that would be a first for any Taiwanese party since democratisation in 1996.

The election is attracting considerable international attention. Taipei’s rumbling tensions with Beijing, teamed with Taiwan’s central role in semiconductor supply chains – the island produces 90 per cent of the world’s most advanced chips – make this an election of global importance.

First up is a three-way race for the presidency that has already delivered its fair share of political drama. Back in November, Hou Yu-ih of the main opposition Kuomintang (KMT) and Ko Wen-je of the Taiwan People’s Party (TPP) publicly failed to reach an agreement on a joint ticket to challenge frontrunner Lai Ching-te, also known as William Lai, of the incumbent DPP.

But equally important will be the often-overlooked elections for Taiwan’s parliament, the Legislative Yuan, where the centre-left DPP looks set to lose its majority and potentially hand the balance of power to the TPP, a 2019 newcomer to Taiwan’s traditional two-party system that pitches itself as an anti-establishment alternative.

For now, polls suggest the DPP will secure the presidency but could be facing a hung parliament. However, margins are tight and a presidential victory for the centre-right KMT is not off the cards, nor is a slim KMT legislative majority.

The balance that emerges between these two institutions – the presidency and the Legislative Yuan – will shape Taiwan’s next four years, whether in terms of relations with China, partnerships with the United States and across the Indo-Pacific, or the evolution of Taiwan’s democracy.

All Parties Agree on Preserving the Status Quo With China

Tensions with China are not just at the top of international headlines, they are at the top of Taiwanese voters’ minds too. Cross-strait policy tends to dominate national-level votes, despite the best efforts of the newcomer TPP to reframe the debate around domestic issues.

There is often a tendency to characterise the two major parties as diametrically opposed: the KMT as pro-China and the incumbent DPP as anti-China. The KMT, and even Chinese officials, have leaned into this, framing the polls as a choice for voters between war and peace.

The reality is more complex. Both major parties are broadly agreed on the need to uphold the status quo in the Taiwan Strait and the importance of boosting Taiwan’s defences to do so. Where they differ is in the sort of links they want with China.

The KMT’s position is that dialogue and partially restored economic links act as a safety guarantee – although the party does have some smaller factions that advocate for outright reunification.

The DPP, however, has put the brakes on formal dialogue due to disagreements over the 1992 Consensus, a tacit agreement on “One China” between China and the KMT. Beijing sees acceptance of the 1992 Consensus as a precondition for talks. Yet the DPP has still avoided unnecessary antagonism: it maintains that because Taiwan is already de facto independent, there is no need to make formal moves towards independence.

The position of the TPP, which prefers to focus on domestic concerns, has been inconsistent but has not exceeded the positions of the two major parties. In other words, no party is looking to rock the boat on cross-strait relations.

That means even in Beijing’s worst-case scenario – a presidential and legislative victory for Lai, who they have publicly labelled a separatist – no immediate long-term escalation should be expected.

There might be a brief spike in Chinese military activity in the aftermath of the polls, but Beijing has a number of reasons to take its time deciding next steps:

  • There is a four-month gap between elections and the presidential inauguration in May. Beijing will want to ensure that Lai, if elected, does not announce anything too radical in his inauguration speech.

  • Taiwan is not the only major election this year; Beijing will want to know who will be in the White House beyond November before mapping out what’s next.

  • If there is a DPP president but a strong KMT or TPP showing in the new legislature, Beijing will want to see what can be done to boost support among KMT and TPP lawmakers for closer ties or create gridlock.

Even then, what happens next depends on what happens in China itself, not just Taiwan. China has its own political cycle, and it is possible Taiwan policy could become a political football as officials compete for influence in the run-up to 2027’s all-important 21st party congress.

There is also the less-reported side to Beijing’s Taiwan policy. Chinese military build-up is continuing at a remarkable rate, but Beijing is also making new forays into consensus building, including ambitious proposals for the “integrated development” of Taiwan and Fujian province.

All this means that while a DPP victory might raise the stakes, it by no means seals a particular fate – nor would a KMT victory ensure Taiwan’s safety. Instead, the election will likely result in a slow-burn shift in dynamics that plays out over years.

Any New Administration Will Seek Deeper US and Regional Ties

As well as managing relations with China, the new administration will also be prioritising ties with the US and Taiwan’s neighbours.

All parties value Taiwan's relationship with the US, as evidenced by all three candidates visiting the US in the run-up to the election (albeit with Lai in his capacity as vice president). 

During his trip, KMT candidate Hou Yu-ih called for increased military cooperation with the US, including joint exercises, as part of his broader ambitions for a more robust military – despite the KMT’s reputation as a pro-Beijing party.

DPP candidate Lai did not have the opportunity to visit the US for as long as his opponents – as the current vice-president, any trip to the US must be classed a “stopover” – but his party has had eight years in power to establish relations. Lai’s choice of running mate, Hsiao Bi-khim, shows the importance he attaches to the relationship. Hsiao, Taiwan’s former representative to the US, is credited with re-establishing a firm Taiwanese presence in Washington. Last year, the US offered hundreds of millions of dollars in military aid for the first time, including a package worth up to $345 million in July. The US has sold weapons to Taiwan for years but only last year did it start providing military aid, which allows weapons to arrive much faster, using similar mechanisms to those used to provide assistance to Ukraine.

Many of the weapons heading to Taiwan will not arrive until long after the election, meaning the US is committed to supplying Taiwan whatever the make-up of the next administration. This could change if the KMT is perceived to be getting too close to China, in which case high-grade military equipment might be withheld, but for now continuity and even acceleration in military ties seems most likely.

The third candidate, the TPP’s Ko Wen-je, perhaps summed up the future of Taiwan’s relationship with the US best in his admission that regardless of who wins “our relationship with the US will not change”. 

Elsewhere, as part of President Tsai’s New Southbound Policy, which aims to reduce Taiwan’s economic dependence on China through regional integration, the DPP has deepened economic ties with 18 countries in the Indo-Pacific. In 2023, Taiwanese investment in New Southbound countries outstripped investment in China for the first time.

Hou has criticised this policy, calling for Taiwan to expand relations in the region beyond the 18 specified countries. But the KMT is also open to closer economic ties with China that could contradict a pivot to other regional neighbours.

With the possibility of a hung parliament – whose approval is needed for trade deals – tensions could develop over a “southward” policy, focused on the Indo-Pacific, or a more China-facing “westward” trade policy. Ultimately, no party is looking to turn its back on key partners – but Taiwan, as with any government, has finite capacity, meaning that priorities will have to be chosen.

A New Chapter for Taiwan’s Democratic Evolution?

This election’s unusual three-way race shows that the post-democratisation model for Taiwanese politics, which has generally been defined along pro-unification or pro-independence lines, is beginning to shift.

Beijing may have called President Tsai and her potential successor Lai “separatists”, but in fact they have overseen the DPP’s most moderate position on cross-strait relations. Some of their fiercest opposition has come from factions within their own party hoping for moves towards de jure independence.

The KMT is also having to adapt to voters’ changing demands. Officially called the Chinese Nationalist Party, the KMT is starting to react to the possibility that without a change of course, it could face political irrelevance. As a sense of distinct Taiwanese identity grows, especially among young people, the number of people wanting eventual unification has shrunk to a near-record low of below 10 per cent of respondents in a recent survey.

This mutual moderation on cross-strait relations does not necessarily mean smooth sailing elsewhere, however. There is much more to Taiwanese politics than China. The DPP and KMT diverge on everything from the minimum wage to home ownership and nuclear energy. And the TPP’s remarkable rise has exposed growing anti-establishment fatigue – particularly among the young – waiting to be tapped into.

These dynamics will play out long beyond the campaign trail. While the TPP’s Ko may have come off worst from an embarrassing public collapse of talks on a joint opposition ticket with the KMT, all but ending his chances of winning the presidency, there is still a fair chance his party could hold the balance of power in a hung parliament.

This would be an unprecedented power-sharing model for Taiwan. Ko has proved capable of moving between KMT and DPP positions and, beyond promoting core TPP priorities like housing, his loyalties as TPP kingmaker are hard to predict – especially as he will presumably have an eye on another run for president in 2028. Besides, even without a hung parliament, a DPP president with a KMT legislative majority (or vice-versa) could also risk political gridlock that opens up new spaces for debate in Taiwanese politics.

All this means that a focus on short-term cross-strait tensions does this election a disservice. Instead, it is the long-term evolution of Taiwan’s domestic politics that bears watching as it enters unchartered territory that will shape how the island engages with China, the US and – crucially – Taiwanese voters themselves in the years to come.

Lead image: Getty

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