This piece is the second in a series on Taiwan’s 2016 election. It was written by Aube Rey Lescure. Carnegie’s work on Taiwan benefits from the generous support of TECRO.

Tsai Ing-wen was elected Taiwan’s first female president on January 16, with her Democratic Progressive Party (DPP) sweeping the Legislative Yuan majority with 68 seats. Her Chinese Nationalist Party (KMT) opponent, Eric Chu, stepped down as chairman of his party after losing the presidential race with 31 percent of the vote. Although both parties’ platforms on cross-strait relations have drawn widespread attention from global media, the elections were seen as having been largely determined by bread-and-butter economic issues such as stagnating wages and high housing prices. President-elect Tsai, a Cornell-trained law professional known as an apt negotiator and a rallying presence, lost the presidential bid four years ago, undercut by KMT and American criticism that her victory would strain relations with China. But she was reelected as party chairperson in 2014 after she resurfaced as the DPP’s best hope for a victorious presidential bid.

Dissatisfaction with the Ma Ying-jeou administration and its pursuit of a closer economic relationship with China, however, did leave a mark on the 2016 elections. The New Power Party, an outgrowth of the student-led Sunflower Movement, secured five seats in the Legislative Yuan and became Taiwan’s third-largest political party. The New Power Party supports formal independence and will likely become a highly visible minority voice on divisive issues. Its exact relation with the majority party, however, has yet to be clarified. DPP Secretary General Joseph Wu said that the two parties expect to have regular exchanges and cooperation, but that this “third force” was undoubtedly a new element in Taiwan’s political calculus. The KMT’s ongoing disintegration, on the other hand, may give rise to more extreme factions, which would not be in the island’s interest. Wu concluded at a Brookings-CSIS forum in Washington, that, in any event, the DPP had the “convincing majority” to push legislation through the Legislative Yuan.

The eve of the election was abuzz with news of the release of a video apology from a sixteen-year-old Taiwanese singer, Chou Tzu-yu, for waving the Taiwanese flag on South Korean TV. The apology, in which Chou declares that “there is only one China,” was claimed by the Chinese tabloid Global Times as a “complete victory by mainland internet users over Taiwanese independence” and drew widespread ire from Taiwanese internet users, prompting reactions from all three presidential candidates. Tsai even mentioned the event during her post-victory press conference, acknowledging the anger it had spread among the Taiwanese people and pledging that no citizen of Taiwan should “need to apologize because of our identity.” While some segments of the KMT pointed to the event as a last-minute external factor that swung many voters in DPP’s direction in many competitive races, analysts and DPP supporters argue that the video probably only had marginal impact on the electoral outcome.

The Chinese government’s response to Taiwan’s electoral results has been notably muted, if not unformulated. Last month, Zhang Zhijun, head of China’s Taiwan Affairs Office, warned against “complicated changes in the Taiwan situation” and urged for “compatriots on both sides to be on alert for and oppose Taiwan independence.” Following the DPP’s all-around victory, which Beijing considers a suboptimal outcome, the Taiwan Affairs office said that it had noted the results and was willing to exchange with “all parties and groups that recognize both sides of the strait are one China.” Xinhua News Agency published a commentary urging for Tsai’s prudence with respect to the so-called “poison” of Taiwan independence. Analysts suggest that Beijing is opting for restraint after past experience showed that vocal criticism of Taiwanese politics only backfires into more support for parties Beijing opposes. Mainland internet commenters, on the other hand, lashed out against the KMT for losing the election, blaming the triumph of the DPP on the KMT’s lack of a unifying platform or political identity.

Tsai faced her first crisis as president-elect mere days after her victory when the entire executive cabinet quit en masse in an apparent effort to force the DPP’s hand into forming a transitional cabinet. The island’s outgoing premier, Mao Chi-kuo, led 44 members of the cabinet to resign following the DPP’s victory, citing a clear end of the people’s mandate for the current administration. Premier Mao had previously offered to hand over control of the Executive Yuan to Tsai so that the majority party could start forming a new council, which Tsai declined. The DPP explicitly stated its preference for the current cabinet to stay on during the four-month transitional period, and said that there are no constitutional provisions for the majority party to form a new cabinet. Mao’s resignation was carried out in blatant violation of President Ma Ying-jeou’s wishes—with Mao going as far as refusing to meet President Ma when the latter traveled to Mao’s residence—and signaled exacerbated infighting within the KMT after party chairman Eric Chu stepped down to take responsibility for the electoral loss. Some party veterans reportedly lobbied for Chu to stay on in KMT leadership, but others worried that doing so would prevent the party from attracting a newer, younger voter base. 

On the Economy

Taiwan’s GDP contracted in the last quarter of 2015 and experienced 1 percent growth over the course of the past year. President-elect Tsai’s first priority in office will be to revive economic growth, in part through the development of regional industrial bases such as technology in the north and manufacturing in the island’s center. Furthermore, Tsai is looking to rebalance Taiwan’s trade outreach on a more regional and global scale, avoiding to repeat the uproar that resulted from Ma Ying-jeou’s attempt to push through over twenty trade agreements with China. The DPP has specifically identified Southeast Asia, Japan, and the United States as major trading partners with which to improve trade ties. Some analysts, however, worry about the DPP’s ability to stimulate growth given its lackluster economic growth record the last time it was in power, from 2000 to 2008.

The DPP has stated its clear desire for Taiwan to participate in the second-round of TPP negotiations, which would require wide-ranging regulatory reform in Taiwan and modifications to Taiwan’s ban on American pork imports. During the Brookings-CSIS forum, Joseph Wu, the DPP secretary general, called desire for Taiwan’s TPP membership a “near consensus” across all major parties in Taiwan, which may help push through comprehensive reform packages targeting the complicated legal infrastructure in Taiwan that makes it difficult to welcome international investment and business. Wu also stressed the need to adjust bureaucratic practices in Taiwan to adapt to trade liberalization. With respect to the import of American pork, Wu commented that the Taiwan agricultural sector needed to become more competitive before it could be opened up.

On Cross-Strait Relations

Tsai has pledged to maintain the status quo in cross-strait relations and stresses restraint and reciprocity of engagement. Although the DPP does not endorse the so-called 1992 consensus between the KMT and Beijing, the party allows for differing interpretations of the “one China” principle. Tsai is expected to outline her cross-strait policy during her inauguration speech in May. The first task facing the new DPP-led legislature will be to pass a bill regarding the oversight of future agreements with China, an issue that has blocked the ratification of the trade pact already signed with Beijing. Tentative next steps include negotiating with Beijing on trade in commodities and potentially revisiting the Cross-Strait Service Trade Agreement that has stalled since the Sunflower Movement.

With respect to potential Chinese opposition to Taiwan’s efforts to join TPP negotiations, DPP Secretary General Joseph Wu warned that such a step would “not be very forthcoming in terms of cross-strait relations.” Wu pointed out that the U.S. government and Japanese government had both expressed public support for Taiwan’s participation in TPP, and that smaller members of the trade deal had also privately signaled their welcome. Even if Taiwan could not achieve full TPP membership for one reason or another, it would seek FTAs or near-FTAs bilaterally with TPP participants. Given that membership is, in theory, open to all, Wu said that Chinese and Taiwanese membership in the TPP need not be mutually exclusive. Wu added that cross-strait communication and informational channels, including intelligence gathering, were clearly already abundant. The onus on the coming age of cross-straight relations, then, would be for both sides to build trust and reciprocity.