Taiwan's shifting landscape

After eight years of KMT rule Taiwan elects its first female leader, as the DPP takes control. 

For the first time in Taiwan’s history a party other than the Koumintang (KMT) is set to control both the Presidency and the legislature. In last weekend’s elections the Democratic Progressive Party (DPP) won a resounding victory, a result which raises questions about the island's relationship with China, Taiwanese identity politics and the direction of Taiwan’s economy.

By the numbers the DPP’s success was remarkable. While DPP Chair Tsai Ing-wen’s victory in the Presidential election was widely predicted, her haul of 56 percent of the vote (to Eric Chu of the KMT’s 30 percent) was greater than even her most optimistic supporters would have predicted. Even more surprising was the DPP winning a majority in the Legislative Yuan, a feat which it has never previously achieved. Together the results represent a repudiation of the last eight years of KMT rule by the Taiwanese electorate.

Inevitably much of the post-election analysis has focused on the implications of the elections for Taiwan’s relationship with China. Over the last eight years cross-strait relations have enjoyed unprecedented stability, with the KMT’s Ma Ying-jeou seeking to bind the two economies together. In 2015 relations between China and Taiwan reached an apogee, when the Taiwanese leader met China’s President Xi Jinping at summit in Singapore. This marked the first time leaders from Taiwan and China had met in almost seventy years.  

However in Taiwan people have been more sceptical about the benefits the relationship has brought to the island. Taiwan has been stung by the slowdown in its neighbour’s economy, with GDP growth clinging to the low single digits in recent years (analysts are predicting 1 percent growth in 2015). While sectors such as tourism have benefited from increasing numbers of tourists from the mainland, manufacturing industries have struggled with increased Chinese competition.

In this sense, the election results reflect domestic concerns as much as they do Taiwan’s relationship with China. Notable campaign issues included property prices (Taipei’s housing prices to income ratio is 15 - London’s is around 9), wages (which lag well behind the levels of Taiwan’s neighbours), employment and growing inequality. Pressure will now be on Tsai to deliver on these areas, while balancing the relationship with China.

While the huge mandate she enjoys gives Tsai a solid platform on which to build, the challenges are already apparent. Tsai’s policy ambitions, such as joining the Trans-Pacific Partnership, will require significant reforms within Taiwan and the DPP will need the support of the smaller ‘third force’ parties. Keeping them on board while placating China will not be easy.

Furthermore, predictions of the KMT’s demise may yet be exaggerated. While the party looks on its knees for now and demographic trends appear bleak (the KMT relies heavily on an ageing vote), it is worth pointing out that the voter turnout of 66 percent was the lowest in Taiwan’s election history. With suggestions that 50 percent of the KMT’s lost 3 million votes represent supporters who stayed away, whether these voters ever come back will be a key question in the coming years.

Peter Headden

Hill & Knowlton Strategies Search