Taiwan’s Great Recalibration

The winds of change that swept Taiwan on Saturday, Jan. 16, propelling Democratic Progressive Party (DPP) candidate Dr. Tsai Ing-wen to a landslide victory — with nearly double the number of votes garnered by her ruling-party opponent, Eric Chu — marks a turning point in both domestic Taiwan politics and also great-power politics. Taiwan’s internal affairs are re-emerging as the small island’s main wellspring of change, rather than pressure from the two behemoths most linked to Taiwan’s destiny: China and the United States.

After several years of relative quiescence, the Taiwan question will be back on the high agenda. Popular sentiment emanating from Taiwan, a self-governing island of about 23 million, is likely to challenge mainland China’s expectation of advancing a more integrated “one China” policy. At the same time, U.S. ambiguity regarding the degree to which it would back a democratic Taiwan in crisis may well be tested anew.

The seeds of change originated within Taiwan itself. First, the election of Taiwan’s first female president reflects a resounding affirmation for gender equality. Taiwanese voted for Tsai on the merits, not her gender, but that underscores how much the electorate in this young democracy has matured. In contrast to China’s startling absence of women in high government, Taiwan’s emphasis on equal representation of the sexes derives from the 1951 constitution’s quotas that reserved a portion of the legislative seats for women. Since then, the percentages of women elected to political positions have increased to 33.6 percent in 2012. While total women’s employment in Taiwan resembles that of Japan and South Korea at 51 percent in 2015, Taiwanese women are more likely than their Asian counterparts to continue working after marriage or childbirth. Saturday’s victory is not just a triumph for Taiwan’s democratic process, but for Asian gender equality.

Another push for DPP victory came from mobilized Taiwanese youth. Anger at pro-China legislation boiled over in March of 2014 when the KMT-dominated Legislative Yuan attempted a heavy-handed passage of a controversial agreement on services with China. Some 200 student protestors responded by occupying the legislature’s floor until offered a concession. The protestors called their campaign the Sunflower Movement, a symbol of hope that also invoked demonstrator’s chief complaint: that the Taiwanese government has lacked the sunlight of transparency in its dealings with the mainland. From the students, activists, and heavy metal rockers of the Sunflower Movement emerged the New Power Party (NPP), which advocates for Taiwan independence, civil liberties, and human rights. The DPP will now hold an outright majority, with 68 seats in the 113-member Legislative Yuan. Still, in less than a year, the NPP has become a serious political force, running only narrowly behind James Soong’s People First Party in Saturday’s election. The NPP will wind up with five seats in the Yuan.

Besides the NPP, a number of other independent parties succeeded in running candidates for election this year. Tsai would do well to consider appointing a multi-partisan cabinet to reflect these increasingly diverse political demographics. One of the biggest criticisms of lame duck President Ma Ying-jeou was that he failed to listen to the evolving Taiwanese electorate. Even with a clear victory and strong DPP coalition showing in the legislature, Tsai will have to improve government responsiveness to a people increasingly engaged in and enamored with democratic processes.

The domestic trends that have swept Tsai into office underscore the fact that Taiwan’s people have become one of the important drivers of change in all of Asia. This sentiment is incompatible with a government that operates in a cloistered way. Tsai will have to recalibrate Taiwan’s approach to economic growth, territorial sovereignty, and defense policy. This recalibration will create uncertainty in the region and raise different concerns in Beijing and Washington.

To build a stronger foundation underneath Taiwan’s autonomy, Tsai will have to contend with the economic forces that led to her mandate. A falling GDP growth rate under Ma — from 3.4 percent in 2014 to one percent at the end of 2015 — significantly contributed to KMT losses, and to avoid a similar fate Tsai will have to focus on boosting economic growth for the island’s high-tech economy, the world’s 28th largest. Part of that will involve sharpening Taiwan’s competitive edge versus China, which has eroded as China has moved from a low-tech trading sector complementary to Taiwan’s economy to one capable of competitively producing its own high-value goods. Yet Ma’s pro-China trade deals have left Taiwan’s economy connected to Chinese markets, and therefore vulnerable to China’s ongoing economic slowdown. Tsai will likely answer the Taiwanese people’s anxiety with economic policies that distance the island from its mainland neighbor.

Specifically, Chinese investor appetite for Taiwan’s microchip industry has led to widespread apprehension on the island. In July 2015, Tsinghua Unigroup, a Chinese state-owned company, offered $23 billion to buy Taiwanese memory-chip producing company Micron Technology. Then in November 2015, China’s Tsinghua Unigroup acquired a $600 million dollar stake in Taiwan’s chip packaging and testing company, Powertech Technology, Inc., becoming the company’s largest shareholder. Tsai called the Powertech deal a “very, very large threat to Taiwan’s industry.” Now, she will have to work to fend off Chinese bids that threaten increased economic independence, while strengthening Taiwanese indigenous industry so it does not need so much outside capital.

Another top priority for Tsai will be Taiwan’s joining the Trans-Pacific Partnership (TPP), a U.S.-led free trade agreement that is competing with China for shaping regional trading rules. TPP is currently linking twelve nations on the Pacific Rim but is poised to consider a second-round of entrants in the next few years. The economic benefits of Taiwanese membership are obvious: trade with TPP parties represents roughly 35 percent of Taiwan’s total trade, such that failing to join the TPP could result in an overall one percent decrease in export value for Taiwan by 2025. By contrast, the privileged market access that Taiwan would enjoy as a TPP member could provide the island with a diversified set of trade options, lessening Taiwan’s dependence on China’s economy. TPP would also provide Tsai with a welcome alternative to Chinese-dominated institutions such as the new Asian Infrastructure Investment Bank, which requires Taiwan to hold the demeaning title “Chinese Taipei.” Even discussing membership in TPP, however, is likely to draw scorn in Beijing, which does not acknowledge Taiwan’s nationhood. Also a TPP non-member, China would likely insist on joining the club first — a step that at the very least would delay Taiwan’s membership for years.

Tsai will also have to forefend threats from China’s military modernization and its increasing maritime aggression if she wishes to maintain the cross-strait status quo. To defend Taiwan against the threats of a more forceful China, Tsai will have to pursue the smart indigenous defense policy she outlined during her campaign. In May 2015, she announced a plan to create a cyber-army, which would become the fourth branch of Taiwan’s armed forces; DPP Secretary-General Joseph Wu has claimed this policy is necessary to combat China’s daily cyber attacks against the island. Several months later, Tsai introduced a national defense policy that aimed to decrease Taiwan’s dependence on foreign arms sales, a move that her campaign projected would create $12.17 billion worth of benefits for the Taiwanese defense industry and job market. The DPP obviously lacks a magic formula for dramatically increasing defense spending or resurrecting a neglected defense industry without ignoring domestic priorities, but over the next four or eight years Tsai could certainly turn the tide.

The return of the DPP to power in Taiwan will surely elicit a response from China. But Chinese President Xi Jinping is most likely to take a wait-and-see posture while testing whether, or to what extent, Tsai intends to push the boundaries of the current status quo. Beijing’s early probes of Tsai’s intentions might include simple — largely stealthy — steps to limit the power of a Taiwanese passport or reduce access to international forums such as APEC. As Xi approaches his 19th party conference in late 2017, however, he will more rigidly stand up against any challenge to the “one China” policy posed by Tsai. In short, the Chinese leadership is apt to reach a firm conclusion about whether to treat Tsai as a comrade or a challenger within the next two years.

These winds of change originating in Taiwan are also certain to buffet the next U.S. president. Since normalizing relations with China and the passage of the Taiwan Relations Act in 1979, repeated administrations have maintained a high degree of ambiguity regarding support for Taiwan. A reenergized Taiwanese electorate will test the longevity of America’s current strategic ambiguity about the actual extent of its commitment to Taiwan. As increasingly fewer living Taiwanese have parents or grandparents who migrated from the mainland, attachment to China will weaken — and affection for the experience of democracy will strengthen. Or so the current winds blow.

This article has been updated to reflect further election results.

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