Political Compromise Key for Lai to Build Taiwan’s Resilience

Challenges facing island are too daunting to face without new consensus.
Caroline Fried
Caroline Fried

Interim Director of Research, Center for Asia-Pacific Resilience and Innovation

Lai Ching-te is set to start his term as Taiwan’s next president in May from a much weaker position than that of incumbent President Tsai Ing-wen.

As opinion polls had predicted, Lai, now vice president, beat off two election challengers but his Democratic Progressive Party (DPP) not just lost control of the legislature but won even fewer seats than the opposition Kuomintang (KMT). Given the profound challenges that face Taiwan, the new government will have to make tough, well-informed policy decisions to protect the island’s ability to chart its own future.

The lack of a majority party in the new legislature is raising concerns of potential deadlock for the next four years and suggest that the Lai administration is likely to struggle to implement its policy agenda.

This will make policymaking fundamentally different from the last eight years under Tsai, a period that has seen the DPP push through pension and civil service reform, legalize same-sex marriage and diversify trade and investment away from China by bringing Taiwan closer to Southeast Asian nations as well as the U.S. and other Western partners.

Many of these DPP policies have been deeply unpopular, and throughout the Tsai administration, voters handed decisive victories to the KMT in local elections. In 2022, for example, KMT candidates won 14 of 22 mayoral races and captured 90 more local council seats than the DPP.

Under Tsai, the DPP particularly failed to address key policy issues affecting young voters. Homeownership in Taipei and other large cities has remained a distant dream for young adults while wages have stayed stubbornly low outside the high-growth technology sector, stoking concerns about growing wealth inequality.

Believing that neither the KMT nor DPP are forward-looking enough to respond to their concerns, young people across the political spectrum have flocked to the newer Taiwan People’s Party (TPP), led by former Taipei Mayor Ko Wen-je.

In general, Taiwan voters are seeking good governance as well as the protection of the island’s autonomy.

People are concerned about how Taiwan can increase use of renewables to achieve a sustainable energy supply equilibrium. They also worry that the island is poised to become a super-aged society, with birth rates steadily decreasing as the population of older people needing support grows.

In addition, Taiwan needs a new engine of economic growth besides the semiconductor industry. As U.S.-China relations deteriorate, Taipei still has to continue deterring open warfare in the Taiwan Strait.

With public opinion in Taiwan solidifying around maintaining the status quo — not declaring the island’s formal independence, not seeking unification with China and not accepting the “One China, Two systems” formula Beijing forced upon Hong Kong — the new government will be challenged to continue hedging between two superpowers to both maintain Taiwan’s autonomy and to deliver tangible benefits to its 23 million people.

The three presidential candidates painted different visions of how to do that leading up to this month’s election.

Lai promised to continue the Tsai administration’s strategy of promoting trade and exchanges with the U.S. and the West, including cooperation with U.S. export controls intended to prevent advanced technologies from reaching China. The KMT and TPP candidates by contrast campaigned to reopen discussions with China on expanding trade through the 2010 Economic Cooperation Framework Agreement.

All three candidates also expressed support for Taiwan joining regional trade pacts, with Lai advocating for membership in both the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) and the U.S.-led Indo-Pacific Economic Framework. Hou and Ko both backed joining the Regional Comprehensive Economic Partnership (RCEP). Taiwan and China have both applied to join the CPTPP while China is already an RCEP member.

Now that the three parties will have to play together in the legislature, they need to consolidate their different visions and reach compromises that will enable Taiwan to build its resilience to potential shocks, whether a financial crisis, a natural disaster, another pandemic or a blow-up in the Taiwan Strait. Otherwise, the island risks having its future decided by the relationship between the superpowers on either side of the Pacific.

Read the full Article at Nikkei Asia