Lai Ching-te and the Challenges Ahead for Taiwan

Securing Presidential victory in one of the major democratic elections this year was just the beginning of what Lai Ching-te (賴清德) has to deal with.

Securing Presidential victory in one of the major democratic elections this year was just the beginning of what Lai Ching-te () has to deal with.

Cross-Strait Blues

No prizes for guessing— relations with China  dominated the elections as the three major political parties deliberated on how to manage tensions across the 110 mile Strait. Throughout the election season, Beijing not only recurrently warned “troublemaker” and “war-mongerer” Lai  against “sensationalising” Cross-Straits relations but also stressed on the “historical inevitability” of reunification.

The Democratic Progressive Party (DPP) candidate, who secured over 40% (over 5.58 million votes) of the total votes making DPP the first political party in Taiwan’s history to have won the presidency thrice, initially crowned himself as a “pragmatic worker of Taiwan’s independence” only to tone down the discourse with the promise of continuing former President Tsai Ing-wen’s policy of seeking allies, building economic and defense resilience against China while keeping a window open for talks.

The opposition was however not as kind in forgetting Lai’s words. Kuomintang’s Hou Yu-ih (侯友宜) and Taiwan People’s Party’s Ko Wen-je (柯文哲), both of whom were severely targeted by the DPP for their “pro-communist” stance, criticised Lai for creating “instability” and pushing Taiwan on the verge of a war with Beijing. Lai won nevertheless, describing his electoral success as the “victory for the community of democracies”.

Will China invade Taiwan?

Beijing is clearly not happy with the outcome as can be gauged from the stepped up discourse on unification, not to forget the “flood of disinformation campaigns” and numerous “spy balloons” floating across the Strait. China’s blunt criticism of Lai casts away all doubts, if there were any, on the possibility of Cross-Strait negotiations. Lai’s words stressing dialogue cut no ice with Beijing which would like to see more of a “sincere” approach in keeping the US at bay, something it does not expect the DPP to do. Tensions are bound to simmer but China is highly unlikely to send troops to Taiwan. A simple reason— the huge blow on the purse. A recent report by Bloomberg noted that a war over Taiwan is likely to cost a whopping 10 trillion dollars, surpassing not just the Ukraine War but also the economic losses inflicted by the COVID pandemic and the Global financial crisis. Neither the United States nor China can afford the cost and Xi would specifically refrain as the economy slumps. Not only did exports in 2023 fell for the first time since 2016 but the Consumer Price Inflation too was the weakest in the past 14 years. Amid such a situation, war over Taiwan is the last thing China would like to see. Though dissatisfied, Beijing can live with Lai as long as he does not cross the “red lines” — the extremities of which would be declaring Taiwan’s independence, something Lai himself has ruled out.

Willingly or not, China has displayed flexibility when it comes to interpreting the “red lines”. Despite its “more assertive, elaborate and emotionally charged” 2022 White Paper, Beijing refrained from sending troops to Taiwan when it rolled out the red carpet for the then US House of Representatives speaker Nancy Pelosi. Similar to its response following Pelosi’s visit, China is likely to stop at military blockades and sanctions. Atleast for now, all calls for war preparedness on Beijing’s part can be safely put aside as being partly concerned with national mobilisation and partly for deterring Washington to aid Taiwan.

Can Lai influence US policy over China?

Lai’s electoral victory was quick to garner felicitations from the United States, with Secretary of State Anthony Blinken congratulating the Taiwanese people for “once again demonstrating the strength of their robust democratic system and electoral process” and describing Taiwan as “an example for all who strive for freedom, democracy, and prosperity”. As customary, a high level delegation of former top officials is set to visit Taipei. US President Biden too congratulated Lai, however he reaffirmed Washington’s commitment to the One China Policy and refused to support Taiwan’s independence in the same breath. This shows that despite Lai being a close ally and Taiwan a crucial part of his Indo-Pacific Strategy, Biden will refrain from stoking the fire with Beijing— especially as domestic tensions mount, economic woes remain despite a strong GDP record, wars in Ukraine and the Middle East keep him busy and a thaw appears in Sino-US ties— just before Biden goes for a re-election with a 39% approval rating, higher than 37% recorded in November 2023 but the lowest of all Presidents in recent history recorded at the same point in their presidencies.

While Washington’s “friendshoring”  policies are likely to continue, it has time and again indicated that its national interests lie in stable relations with Beijing. Taiwan, then led by KMT, was not informed till the last minute when the US decided to forge diplomatic ties with Beijing to balance the Soviet Union. Though Biden has assured American support to Taiwan in case of a Chinese invasion, he is counting on Xi to not initiate an attack. Give it to poor Ma Ying-jeou—  “trusting” Xi, whether one likes it or not, seems to be a Hobson’s choice; not because China must be feared but because it is in everyone’s– Lai’s, Biden’s and Xi’s– best interests if the status quo is maintained.

A Bumpy Road ahead

Despite being at a 21 year low, economic reliance on China remains considerable as Taiwan’s exports to Beijing amounted to 35.25% in 2023. The Taiwanese economy seems to be losing its charisma as the GDP consistently declined from 6.6% in 2021 to 2.6% in 2022 and 1.4% in 2023. Incomes too remain low. In fact, Taiwan has one of the most inadequate incomes among advanced nations, with the minimum wage reportedly fulfilling just 49.5% of the basic needs. Cost of housing, on the other hand, is among the highest in the world. An ageing population is another major issue. According to the National Development Council, the proportion of elderly population is likely to exceed 20% by 2025, turning Taiwan into a “Super-Aged Society”. This necessitates welcoming foreign workers,most of whom hail from Southeast Asia, to compensate for the domestic shortage however Taiwan’s image has been severely tarnished over allegations of “forced labour” particularly in the fishing fleet.

Things remain hard on the diplomatic front too, with Taiwan losing 9 diplomatic allies since Tsai Ing-wen came to power in 2016. While some nations in Central and Eastern Europe have tried to forge closer ties with Taiwan, China’s economic clout and coercive practices remain a major concern as seen in the case of Lithuania.

Furthermore, Lai has a major challenge of appealing to the 60% who did not vote for him. This shows that opposing unification with China is not the be-all and end-all of Taiwanese elections, with issues such as anti-incumbency and income inequalities being equally relevant. One of the urgent tasks would be to fruitfully work with the opposition in the Legislative Yuan where DPP has failed to secure a majority. Lai is open to working with other parties and given the seats distribution, Ko’s TPP will play a key role in deciding which party will get the Legislative Speaker’s position and hence have a major say in directing the agenda that the house discusses. Bridging divisions among the Green parties is therefore of crucial importance.

Lai’s victory is undoubtedly a spectacular win for the DPP but if one reads the tea leaves, the situation remains volatile both within and outside Taiwan.

Cherry Hitkari
Cherry Hitkari
Non-resident Vasey Fellow at Pacific Forum, Hawaii. Cherry Hitkari is an Advisory Board member of 'Tomorrow's People' at Modern Diplomacy. She holds a Masters in East Asian Studies specialising in Chinese Studies and is currently pursuing an advanced diploma in Chinese language at the Department of East Asian Studies, University of Delhi, India.