InterRegional for Strategic Analysis

On 24 November 2023, Taiwanese candidates filed their candidacy papers for the presidential elections to be held on 13 January 2024. The elections will be a decisive moment for the self-governed island’s 23 million inhabitants, who will decide the direction Taipei will take for at least the next four years. The elections come amid one of the most tense periods in the history of the island, which remains a central issue in the historically tense relations between the US and China, especially with Beijing’s description of this presidential race as "the choice between war and peace." Beijing has also escalated the intimidation campaign over the Taiwan Strait, which has raised military tensions there to levels not seen in decades.Conflicting ApproachesAfter the withdrawal of Terry Gou, the billionaire founder of the electronics manufacturing giant, Foxconn, the presidential and parliamentary elections have come down to the following three main candidates with different backgrounds and approaches to thorny domestic and foreign issues:1. Current Vice President of Taiwan Lai Ching-te: Lai Ching-te supports independence and has pledged to preserve self-rule in Taiwan. His party, the Democratic Progressive Party (DPP), is vocal about Taiwanese nationalism and a strong relationship with the US. As the vice president to Taiwan’s current president, Tsai Ing-wen, since 2020, Lai has worked closely with her and, like her, claims that Taiwan is already effectively sovereign even if independence has not been officially declared. Naturally, Lai rejects the notion that his presidency would be a "death blow" for Taiwan. In an interview with Bloomberg last August, he stressed his commitment to peace and the importance of preserving the status quo. In late August, Lai joked about his desire to "share shrimp-fried rice and tea with Chinese President Xi Jinping," which was intended as a goodwill gesture. In early September, in an attempt to calm tensions with the mainland, Lai stated that he would "fight for peace" and seek cooperation with China if he were elected, so as not to drag his country into war.2. Kuomintang Party candidate Hou Yu-ih: A conservative politician and the mayor of New Taipei, Hou portrays himself as the best person to urge Beijing to reduce aggression and resume trade across the Taiwan Strait. His party opposes Taiwanese independence, preferring to focus on closer relations with China in order to concentrate his country’s efforts toward economic growth. Hou has said that he would seek to conclude a "peace agreement" with China, while maintaining the status quo in Taiwan without needing to go to war. The leader of the Kuomintang Party expressed this situation clearly, saying to voters: "Vote for the Democratic Progressive Party, and the young people will go to the battlefield. Vote for the Kuomintang Party, and there will be no war on either side of the Taiwan Strait."3. Taiwan People’s Party candidate Ko Wen-je: A moderate politician and former mayor of Taipei, Ko has called for improving cross-Strait relations with China. He seeks to resume dialogue with China in order to promote economic cooperation, with an eye, however, to maintaining the status quo in Taiwan, which is considered effective independence.Ko has tried to avoid acknowledging China’s insistence that Taiwan is Chinese territory, preferring instead to talk about how "the two sides of the Taiwan Strait form one family." His spokesperson, Jennifer Yu Yi Lee, said that he wants China and Taiwan to focus on "historical and cultural similarities, while putting political differences aside at this time." It is worth noting that Ko is remarkably popular among voters who are fed up with the two traditional camps, the DPP and Kuomintang, and his poll results are close to—or perhaps slightly higher—than Hou’s.Issues of ContentionThe fate of multiple issues may be determined over the next four years, and the whole world will be anticipating this, considering Taiwan’s global geopolitical and economic importance. The most significant of these issues include the following: 1. Relationships across the Taiwan Strait: Because Beijing-Taipei relations are the most controversial issue in Taiwanese politics, the three candidates hold ambiguous positions on China policy, preferring to gauge public sentiment before formulating their opinions in order to secure the most votes. Most voters in Taiwan seem torn: they want a president able to navigate the next four years of competition between Beijing and Washington, while simultaneously avoiding war and preserving Taiwanese sovereignty—especially after the Communist Party’s offer of "one country, two systems," like Hong Kong’s, lost its appeal following a widespread security crackdown in the once-free city in 2019.In the framework of seeking to resume negotiations, China has condemned Lai and described him as a separatist, given his efforts to follow in the footsteps of Tsai, who broke off cross-Strait negotiations when she took office in 2016, because her pro-American party refuses to affirm that the island country is part of China. By contrast, Hou and Ko have pledged to resume dialogue with Beijing, and the two opposition parties will adopt a more conciliatory stance towards the mainland. Both of them also accuse the DPP of endangering Taiwan by being "excessively anti-China." In a recent television interview, Ko made it clear that his country must find a "secure balancing point" between Beijing and Washington. The Kuomintang Party also promised to end the dispute by returning to the "1992 Consensus," an implicit agreement that stipulates that Taiwan is part of China.Based on the foregoing, the two opposition parties may try to appease rather than resist or provoke the Communist Party, which could reduce tensions with the mainland and also give China much greater influence in Taiwan. However, if the DPP wins a new presidential term, it may prompt China to conclude that public sentiment in Taiwan has already irrevocably shifted in favor of official independence. If so, the odds of increased Chinese pressure on Taiwan—perhaps even a forced takeover—could greatly increase.2. Avoiding war between Taipei and Beijing: Regarding the previous point, even if war is unlikely, most analysts also say it is not impossible—a point strongly confirmed by the Russia-Ukraine war. Although comparing Taiwan to Ukraine in Asia has become popular in the United States and Europe—thanks in large part to Xi Jinping and Vladimir Putin’s declaration of "unlimited" friendship between China and Russia weeks before the war—the comparison remains controversial in Taiwan. The DPP believes that Taiwan and its semiconductor industry are more important to the global economy than Ukraine.By this logic, Washington will certainly defend the island, with troops if necessary. Thus, the party has tried to strengthen Taipei’s ties with the US and other like-minded democracies, such as Japan and Australia, and the possibility of their coming to Taiwan’s aid might deter China from invading.3. Relationships with the US: In recent months, some in the US have appeared to express strong support for Lai Ching’s pro-independence position, especially in Congress, which is likely to intensify support for Taiwanese independence if Lai wins the elections next year. Likewise, Washington may encourage him to change President Tsai’s relatively cautious position on cross-Strait issues and adopt stronger pro-independence policies. Although the US officially follows the "one China policy" and does not have formal relations with Taipei, it remains Taiwan’s most important international supporter. In June 2022, US President Joe Biden stated that his country would defend Taiwan if it is invaded, but shortly thereafter, it was clarified that the US does not support Taiwanese independence.From another standpoint, the candidates have expressed their commitment to strengthen Taiwan-US relations, whether in terms of Lai’s choice of the former Taiwanese envoy to the US as his running mate, or Hou’s dependence on influential advisors from the moderate wing of the Kuomintang Party who have good relations with Washington. While Ko does not guarantee the US its undisputed pivotal role in the strategic triangle between Taiwan, China, and the US, he emphasizes the importance of maintaining relations based on equal footing with both sides, and he is expected to have more flexible relations with both Washington and Beijing, especially since he is not bound by any sectarian ideology.4. Rapprochement with Japan: Japan is an important nexus and ally in Taiwan’s relationships with other countries in the Indo-Pacific region. Bilateral relations have gained new momentum in the electoral campaigns, with all the candidates communicating proactively with representatives of the Japanese government, either by visiting Japan themselves (like Ko and Hou) or by meeting with Japanese officials visiting Taiwan (like Lai). Ko and Hou have not only benefitted from the historic shift in momentum of Japanese foreign policy, which looks upon China as a growing threat to regional stability and peace, but they have also benefitted from the DPP government’s efforts over past years. Thus, relations between Taipei and Tokyo are expected to strengthen during the time in office of any of the three candidates.5. Supporting the country’s military power: Taiwan’s military strength is a source of major concern for voters, especially given China’s growing military power. Many analysts believe that Taiwan is not sufficiently militarily prepared to counter any potential Chinese invasion, which makes strengthening Taiwan’s defense capabilities a critical priority.Thus, the Biden administration has increased its support to Taiwan not only through various multilateral diplomatic initiatives, but also by greatly enhancing its defense aid through arms sales, joint training, and increased military presence around Taiwan. This has included increasing Taiwanese defense budgets annually, investing in the development of domestic weapons systems, such as combat drones, jet training aircraft, defense missile systems, and naval ships, and providing billions of dollars in military aid to Taipei in recent years, including a deal worth USD 8 billion to deliver 66 F-16 fighter jets by the year 2026.It is also worth noting that, between 1950 and 2022, Taiwan was the fourth largest buyer of American foreign military sales, while it was the largest purchaser during the period 2020-2022, inclusive. Last August, Taiwan announced plans to increase its total defense spending to a record level of USD 19.1 billion, i.e., 2.6% of its GDP. This level exceeds that of NATO allies such as the UK, France, Italy, and Germany.Thus, defense policy has gained particular momentum in the election campaigns of the three candidates, who agree on the need to increase Taiwan’s capabilities to defend and protect itself in case of a military attack or blockade by China. According to Lai, improving military capabilities and strengthening alliances with like-minded countries are the keys to deterring China from military ventures. Meanwhile, Hou and Ko seek more economic, educational, and other exchanges and the resumption of high-level diplomatic dialogues with China to reduce tensions and maintain peace in the Taiwan Strait, and the development of Taipei’s military capabilities to achieve the necessary deterrence to protect its borders.6. Facing the island’s economic challenges: The three candidates have pledged to improve the country’s economic performance and create more job opportunities. After eight years in power, the DPP faces difficulties, especially among young voters who suffer from the high cost of housing and low wages. Salaries in Taiwan are not keeping pace with housing costs, and the monthly minimum wage is less than TWD 30 thousand (USD 950), not to mention that some are also concerned about the potential outbreak of war with China and the severe, negative economic repercussions that would result.Despite the upswing in Taiwan’s economic growth during the second quarter of this year, the economy shrank during the first half of the year as a result of the continued weak global demand that continues to impact Taiwanese exports. Worse yet, any restructuring of high-tech supply chains, touted by the US in the name of "national security," could weaken Taiwan’s total exports, which amounted to USD 478 billion in 2022, with 25% of it going to China for a total of USD 121 billion. Accordingly, the latter remains Taiwan’s main export market, especially for electronics, which make up more than half of Taipei’s total exports to Beijing, because they play a pivotal role in many other sectors.Fears have recently emerged regarding China’s intention to end the Economic Cooperation Framework Agreement with Taiwan if Lai is elected. Although many analysts claim that such a step in and of itself would have only a limited impact on Taiwan’s economy, the deeper consequences, according to Taipei, may be very negative, as its prosperity depends on investors’ confidence in a secure and stable environment.7. Diversifying energy-production sources: Nuclear power and energy security have been a point of contention among the main candidates. Over the past few years, the Tsai administration has gradually phased out nuclear power, until it now accounts for only 8% of Taiwan’s energy consumption. Continuing her plan, Lai is the only candidate who opposes the use of nuclear power plants in Taiwan. However, he has shown some signs of moving away from Tsai’s energy policy, recently stating that he would not rule out nuclear energy if safety and waste issues could be adequately addressed.Meanwhile, Hou announced that, if elected, he would not phase out nuclear power and would reopen decommissioned plants, citing national security as a reason for his decision. Currently, Taiwan relies heavily on imported energy, most of it natural gas, which raises concerns about whether Taipei can avoid electrical outages in the event of a Chinese blockade or invasion. Likewise, Ko has recommended extending the service life of Maanshan, the only remaining active nuclear power plant in Taiwan.In conclusion, Lai Ching-te is considered the most likely candidate to win the presidential elections in 2024. According to The Economist magazine, the results of an opinion poll taken between the 10th and 25th of November 2023, showed Lai at 32.33%, Hou at 30.25%, and Ko at 24.56%. However, the race remains close and may change in the days leading up to the vote, depending on how the candidates’ positions develop over the course of the campaign. Even if the DPP retains the presidency, it is likely to lose its majority in the Taiwanese legislature in the concurrent assembly elections, which would make it more difficult to pass legislation against balanced relations with China.

How Will the Approaches of the Presidential Candidates Affect Taiwan’s Future?