What does Lai's election win mean for China-Taiwan relations?
President-elect Lai will certainly be limited in his capacity to enact any major shift in the coming years. Meanwhile, Beijing’s Taiwan policy has proven ineffective and may need a change of course.
Democratic Progressive Party (DPP) president-elect William Lai Ching-te (C-L) and vice presidential candidate Hsiao Bi-khim (C-R) celebrate after winning the presidential elections in Taipei, Taiwan on 13 January 2024.
What does Lai's election win mean for China-Taiwan relations?
Taiwan’s election is being hailed as an astounding success for liberal democracy. However, the Democratic Progressive Party’s victory in Taiwan is less than absolute.
President-elect Lai’s administration will certainly be limited in its capacity to enact any major change of course in the coming four years. Meanwhile, Beijing’s Taiwan policy has proven ineffective and may need a course change.
The political success of William Lai, Vice President and President-elect of Taiwan, is remarkable in more ways than one. He has an impeccable track record of political victories: four times as a member of the Legislative Yuan, twice as mayor, the VP, and the presidential candidate, winning every major election for which he contested. The 2024 presidential victory is a tribute as much to the shifting public sentiment as his political deftness.
Secondly, this marks the third consecutive win for the Democratic Progressive Party (DPP) in the Taiwanese presidential elections — the first time a political party has delivered such accomplishments since democratic elections were introduced in Taiwan.
Thirdly, president-elect Lai won despite enormous pressure from mainland China, deeming Beijing's military and economic pressure increasingly ineffective and unpopular among the people in Taiwan.
Beijing's Taiwan policy has proven ineffective and may need a course change.
However, underlining this success is the latent decline of the DPP's popularity in Taiwan.
The DPP won 40% of the popular votes in the 2024 presidential election. Compared with the votes the Party won in the previous two presidential elections at 56% and 57%, it's lost a clear majority.
The KMT — Taiwan's pro-unification party and the DPP's major political rival — was not the beneficiary. DPP's loss is attributable to the loss of popularity among the youth, who have endorsed a rising political party — the TPP — which may become more significant in Taiwan's political future.
The DPP also lost 11 seats in Taiwan's Legislative Yuan in this election, losing its legislative majority. The KMT, despite its disconnect with the youth and increasingly pale narratives upholding the 1992 Consensus, garnered a thin lead, one seat over the DPP in the Legislative Yuan.
Now that the DPP will govern after losing the majority in both the presidential election and the Legislative Yuan, the next four years will be characterised by political compromise and policy neutrality, restricting its ability to enact a major course change.
Beijing's red lines
So, just how is Beijing likely to respond?
Beijing has unequivocally pronounced that the One China Policy is the core of the core Chinese interests. When translated into Beijing's policy red lines, it means that Taiwan must not seek de jure independence, and Taiwan and the US (and other countries with diplomatic relations with China) shall not establish de facto diplomatic relations.
President-elect Lai has repeatedly declared on his campaign trail that Taiwan will not seek independence under his administration. When asked about the result of the Taiwan election, US President Biden replied that "the US does not support Taiwan's independence." Both the incoming president of Taiwan and the Biden administration have treaded carefully within Beijing's bounds of tolerance.
So long as the above two red lines are respected, cross-strait relations are unlikely to erode into military confrontations in the foreseeable future. China's policies towards Taiwan will chart a predictable course — albeit becoming increasingly ineffective.
Beijing's policy red lines are that Taiwan must not seek de jure independence, and Taiwan and the US (and other countries with diplomatic relations with China) shall not establish de facto diplomatic relations.
Rising economic and military pressure
President-elect Lai's victory does not come as a surprise to Beijing. Polls ahead of the election reflected the close electoral outcome. Beijing's response to Dr. Lai's victory should be equally unsurprising.
Beijing's first response will be to increase economic pressure on Taiwan. Taiwan's economy is heavily reliant on the international markets. In 2022, Taiwan recorded a $51.9bn trade surplus and over $150bn trade surplus with China.
In 2023, Taiwan profited from a $80.5bn trade surplus and an $80.5bn trade surplus with China alone. The overarching statistics demonstrate the deep interlaced economies between Taiwan and the Chinese mainland.
In 2022, China banned over 2,000 export items from Taiwan to the mainland in response to former House Speaker Nancy Pelosi's visit to Taiwan. However, the fish and fruit farmers, rather than the semiconductor manufacturers, most acutely felt Beijing's economic squeeze.
I led a Congressional delegation to Taiwan to make crystal clear that America stands with the people of Taiwan – and all those committed to Democracy and human rights.
Weeks before the 2024 Taiwan election, Beijing lifted the sanctions on grouper fish export from Taiwan to induce a Beijing-friendly outcome from Taiwan's economic-conscious voters.
The carrot and stick approach — imposing and lifting economic sanctions when necessary — will continue to be Beijing's economic tactic of choice in the foreseeable future.
Secondly, Beijing will continue to ramp up military pressure in and around the Taiwan Strait with the use of more drones, fleets, fighter jets, balloons, and other autonomous devices to deter the US's arms sales to Taiwan and further formal political engagements between Taiwan and the US.
From one election to another
Dr. Lai's inauguration will take place on 20 May. Beijing will look for policy clues during his address — the first formal articulation of his administration's foreign policy.
Both Beijing and Taipei will be closely watching the presidential election in the US, a linchpin of Washington-Beijing-Taipei relations. It would be both unwise and unlikely that Taiwan's leader will make a clear directional shift without being certain who the next US president is and what Taiwan's position will be.
Beijing will certainly be drafting contingency plans in response to the outcome of the US presidential election, and Taiwan is central to its relations with the US.
2024 will be a year of watching and waiting for the November US electoral outcome, a quintessential variable to China-Taiwan relations and regional peace.
Both Beijing and Taipei will closely watch the US presidential elections, a linchpin of Washington-Beijing-Taipei relations. It's unlikely that Lai will make a directional shift without being certain who the next US president will be.
The DPP's victory reflects the failure of economic and military pressure on Beijing over time. Beijing defiantly shows to the US that trade and technology sanctions imposed by Washington are only temporarily effective. Any distortion of liberal market principles is economically ineffective in the long run.
Meanwhile, Beijing imposes similar sanctions on other regional economies, including Taiwan. However, over time, these sanctions will become less effective.
First, if all the trade and economic levers Beijing has at its disposal were imposed on Taiwan now, it would leave no room for further punitive sanctions when tension over Taiwan further escalates. If Beijing wishes sanctions to be effective in times of urgency, it must taper their use now.
Secondly, if Taiwan begins to divert its economic ties from the Chinese mainland due to the sanctions, it will be more immune to future pressures. Over the past couple of years, Taiwanese investments have been departing China for other vibrant regional markets such as Vietnam.
In 2023, Taiwan's exports to China fell by 18.1%. Export to China accounts for approximately 1/3 of Taiwan's total, the lowest in 21 years.
For China, the irony and the wisdom may lie in a future policy of economic détente with Taiwan. Any genuine political integration, if possible according to Beijing's wish, must start with deep economic integration and trust among the people.
Policy choices that further alienate Taiwan will only engender fear of China and induce public sentiment in Taiwan moving in a direction opposite to Beijing's wish. For lack of a better choice, détente within the confines of the red lines is not a bad one.