Cross strait complications
Cross-strait complexities played a central role in the campaign dynamics of the three major political parties in Taiwan: the Democratic Progressive Party (DPP), the Kuomintang (KMT), and the Taiwan People’s Party (TPP). The KMT aimed to attract voters seeking a less confrontational stance on cross-strait relations, while the DPP consistently criticized the KMT for its China policy throughout the campaign. Ma Ying-jeou, the last KMT president, faced criticism for his stand “trust Xi,” which, though well-intended, was used against him. The TPP, led by Ko Wen-je, a new contender for Taiwan’s top leadership, advocated for amicable exchanges between both sides. Attempts to form a joint party between the KMT and TPP did not materialize as expected.
The Central Election Commission of Taiwan confirmed that Lai Ching-te of the DPP secured the presidential chair by garnering more than 5.58 million votes. In his victory speech, Lai emphasized the values of “democracy over authoritarianism” and expressed a commitment to walking alongside democracies worldwide. United States Secretary of State Anthony Blinken congratulated Lai on his win and commended the Taiwanese people for participating in the elections, showcasing the strength of their democratic system.
However, Beijing expressed dissatisfaction with the election’s outcome. The foreign ministry of Beijing released a statement affirming that regardless of any changes in Taiwan, the fact that Taiwan is part of China remains unchanged, and China will persist in opposing Taiwan’s independence.
US-Beijing approach to cross strait relations
During the California summit in November 2023, Xi Jinping expounded on his stance regarding the Taiwan issue, urging the United States to adhere to the ‘One China principle’ and oppose Taiwan’s independence. In his New Year message, Xi reiterated that the reunification of the motherland is a historical inevitability.
In a recent incident, a Chinese satellite flying over the south of Taiwan triggered a raid alert that reverberated through loudspeakers and reached every cell phone. Additionally, on the same day as the election, two Chinese balloons were reported to have flown over Taiwan, as disclosed by the Taiwan Défense Ministry. China consistently employs such displays of military capabilities to exert pressure on Taiwan, discouraging any pursuit of independence. China’s strategy has long involved isolating the island nation and applying economic and diplomatic pressure.
Joe Biden, on four occasions, has pledged to protect Taiwan from Chinese aggression. However, he has simultaneously reassured China that the U.S. does not support Taiwan’s independence. Since shifting its diplomatic recognition to Beijing from Taipei in 1979, the U.S. has maintained the stance of not supporting Taiwan’s independence while continuing to uphold unofficial relations with the island nation. The U.S. has also approved $300 million in military aid to Taiwan, drawing criticism from China. Furthermore, Biden plans to send an unofficial delegation, possibly including former high-ranking officials.
Prospects of a war
The United States is currently preoccupied with domestic issues and conflicts in the Middle East, the Russia-Ukraine war, and escalating tensions with Houthi rebels. Adding a new issue, especially with presidential elections on the horizon, would be the least of President Biden’s preferences. Moreover, Taiwan, as the 16th largest trading economy, plays a crucial role in producing 90% of the world’s advanced semiconductor chips, vital for various industries. A blockade in Taiwan could jeopardize over $2 trillion in economic activity even before considering sanctions or any military response.
Similarly, China is grappling with weak demand both domestically and internationally, experiencing a 4.6% decline in exports compared to the previous year. The Consumer Price Index is at its weakest in 14 years, reflecting dampened domestic demand due to a property downturn and a stressed labour market. Analysts, including those from Goldman Sachs, suggest that the ongoing low core CPI inflation is indicative of subdued domestic demand.
Given these economic challenges and the high costs associated with war, both the United States and China are expected to refrain from instigating a conflict. A recent Bloomberg report highlights that the costs of war would be higher than those of the COVID-19 pandemic crisis and the global financial crises combined. Therefore, its best for China and US to maintain status quo in this region to protect its interest.
On Taiwan’s part, President Lai has expressed a desire for renewed talks with China, despite China’s reluctance, particularly with Democratic People’s Party (DPP) officials. Lai has pledged to strengthen the island’s defence and economy, which currently heavily relies on China. In a July opinion piece in The Wall Street Journal, Lai vowed to maintain the status quo, emphasizing that it is in the best interests of Taiwan and the international community. He also committed to following the diplomatic approach of Tsai Ing-wen, who successfully defended Taiwan’s interests, preserved its integrity, and navigated relations with Beijing without antagonizing the Chinese government.
Challenges ahead for Lai
Taiwan’s once celebrated economic miracle has encountered a protracted period of sluggish growth spanning eight years. After an impressive 6.6% GDP growth in 2021, Taiwan experienced a decline to 2.6% in 2022 and a further drop to 1.4% in 2023. The Finance Ministry of Taiwan reported a 9.8% decrease in total exports to $432.5 billion in 2023, and industrial production has consistently fallen for 19 consecutive months. Since 1967, the growth was driven by exporting consumer goods to the United States, followed by China’s opening up in 1980, leading to the export of product parts to China for final assembly. With the Democratic People’s Party (DPP) advocating for an economic shift away from China, Lai faces the significant responsibility of constructing a new economic model and fostering stronger economic ties with other nations to stimulate growth.
Concerns have also arisen about escalating house rents, energy insecurity, and social inequalities among the Taiwanese population. Despite having housing prices among the highest globally, wages in Taiwan are among the lowest among advanced countries. The aging demographic poses a persistent challenge, with the elderly population exceeding 14% in 2018 and projected to surpass 20% by 2025, earning Taiwan the classification of a ‘super-aged society.’
On the diplomatic front, Taiwan currently enjoys support from 13 countries. However, recent developments, such as Honduras and Nauru severing diplomatic ties with Taiwan, underscore the challenges Taiwan faces. China, leveraging its economic influence and coercive tactics, has been successful in swaying countries away from Taipei, posing a continual challenge.
Furthermore, Lai must address the concerns of the 60% of the population who did not vote for him. Building constructive relations with the opposition party becomes crucial to tackling issues related to anti-incumbency and income inequalities, standing on equal importance with managing cross-strait relations.
While securing a third consecutive term for the DPP is commendable, Lai should focus on developing a robust economic strategy, formulating social policies that safeguard the interests of the middle and lower-income segments, fostering partnerships with democratic nations, and maintaining a stable and principled cross-strait relationship.