Understanding the Taiwan elections

The Economist magazine called Taiwan the most dangerous place in the world in 2021, but it certainly did not feel that way on Jan. 13, a sunny Saturday that saw Taiwan's citizens go to the polls in a remarkable demonstration of participatory democracy.

The potential danger this island democracy faces lies some 100 miles across the Taiwan Strait on the mainland, where the People's Republic of China has long considered Taiwan a wayward province that is rightfully part of its territory. China President Xi Jinping has gone so far as to call reunification with Taiwan "inevitable," and China has engaged in significant saber-rattling, running military maneuvers around Taiwan (and often violating its sea and airspace). As a result, future relations with China were very much on the ballot in this election.

"Alongside a host of domestic issues, the Taiwanese were essentially choosing whether their nation draws closer to mainland China or continues seeking strong relations with United States and the West," said David J. Keegan, adjunct lecturer in the Chinese Studies Program at the Johns Hopkins School of Advanced International Studies. Prior to his academic career, Keegan served as a foreign service officer in the U.S. State Department for 30 years, specializing in China, Taiwan, and the Asia Pacific region.

Here, Keegan shares his thoughts on the short- and long-term outcomes of the recent election.

What happened in the recent Taiwan election?

Two elections were decided on Jan. 13—the presidential election and the election of the 113 members of Taiwan's unicameral legislature. In the presidential election, current Vice President Lai Ching-te and his running mate Hsiao Bi-khim—until recently Taiwan's de-facto ambassador in Washington—won with 41% of the vote. Lai has promised to continue the policies pursued by current President Tsai Ing-wen over the past eight years; they are leaders of the Democratic Progressive Party, or DPP, which has long advocated continued Taiwan separation from China, an agenda that China fiercely opposes.

Lai defeated Hou Yu-ih of the Nationalist Party, also known as Kuomintang, or KMT, which aspires to reduce tensions with China in the short term and unify China under the Republic of China in the long term. A third candidate, Ko Wen-je of the newly formed Taiwan People's Party, has called for an end to the ideological arguments and a pragmatic approach to relations with China that would benefit all.

How will China respond to this outcome?

Lai's victory promises at least four more years of a staunchly autonomous Taiwan, insistent on continued separation from China. It confirms what polls of Taiwan identity and hopes for their political future have indicated for years—that Taiwanese increasingly identify as Taiwanese rather than Chinese and that they want a political future separate from China. China had hoped for a Taiwan ruled in the near term by a KMT committed to accommodation with China, but those hopes have been dashed.

Almost certainly China will expand its gray-zone coercive efforts against Taiwan in all domains—social media, economic, diplomatic, and military—in a futile effort to change DPP policies and to persuade Taiwanese to overthrow Lai, or to at least vote him out in four years. No one, except perhaps Chinese President Xi Jinping, seems to have any confidence that coercion will succeed. China will also seek to complement these coercive efforts with an informal alliance with the KMT. Over the past eight years the KMT has sent a variety of party and local government leaders to China. They have explained this as an effort to support Taiwan business on the mainland and reduce tensions. Beijing has employed these contacts as a way to appeal to Taiwan without dealing with Taiwan's elected leaders.

What should the U.S. do?

The U.S. has found President Tsai a responsible and cooperative partner. It is nervous that Lai may prove more disruptive, and it will be working to encourage Lai to hew to Tsai's status quo policies, as he has promised he will.

Taiwan is at heart a highly pragmatic status quo society. The U.S. must continue to support Taiwan's efforts to strengthen its military capabilities and encourage Taiwan to prioritize the asymmetric weapons and force structures that can ultimately convince China that an assault on Taiwan is riskier than it is willing to contemplate. The U.S. must combine these deterrent efforts with reassurance to China that it will put strong pressure on Lai and Taiwan not to declare unilateral independence or otherwise disrupt the cross-Strait status quo. These assurances are our best chance to reduce the possibility that China will conclude that all hope of unification with Taiwan is lost, and that it must therefore take decisive military action.

What will Taiwan do next?

All of Taiwan's political parties are also committed to supporting Taiwan's expansion of its military capabilities to deter and, if necessary, resist Chinese military coercion, even if China moves toward attacks on Taiwan and possibly an invasion. The DPP and the KMT have both called for expanded conventional capabilities—large naval ships and combat aircraft—to counter Chinese gray-zone military coercion in the Taiwan Strait. Both have also accepted the need for asymmetric capabilities—mobile anti-tank and anti-air missiles combined with drones and other small lethal platforms—to defeat a Chinese invasion. The DPP insists China must abandon its insistence on unification of Taiwan with China as a precondition for dialogue. The KMT says that its aspiration to a unified China should enable talks and a reduction of tensions even as it strengthens Taiwan's military.

What does this election mean for Taiwan's economy?

The DPP wants to foster economic trade and investment ties beyond China, particularly toward Southeast and South Asia. Since China's Deng Xiaoping inaugurated "Reform and Opening" in 1978, Taiwan investment has poured into China, often to produce exports to the U.S., such as Foxconn and Apple. Roughly 84% of Taiwan's external investment was in China by 2010. To diversify risk and reduce its exposure to Chinese economic coercion, the DPP government of President Tsai has worked to shift Taiwan's new investments outside of China with some success, recently riding on the coattails of U.S. and European efforts to de-risk by shifting supply chains away from China. In 2023, Taiwan's investment in China fell to 23%.

Taiwan's global dominance in the most advanced semiconductors—together with U.S.-China clashes over technology, intellectual property rights, and the military uses of advanced semiconductors—has made Taiwan the focal point of trade wars and technological sanctions. Under the pressure of U.S. customers and the U.S. government, Taiwan has begun building semiconductor fabrication factories in Arizona, while keeping its most cutting-edge facilities in Taiwan, and struggling to maintain its profitable markets in China. At the same time, Taiwan has sought to negotiate better trade and investment access with its Western partners to mitigate Chinese sanctions. All three political parties will support Taiwan companies in navigating these trade tensions, although the DPP will lean toward South and Southeast Asia and the U.S. The KMT will work to support Taiwan companies in China and to persuade China to offer Taiwan economic incentives rather than political sanctions.

Are you hopeful about the future?

I am optimistic that Taiwan will continue to be a rambunctious democracy, an economic powerhouse, and a key partner of the U.S. in East Asia. China will harass and intimidate Taiwan, but it needs Taiwan as an economic partner, and it will avoid letting coercive steps get out of hand.