China Tensions Dominate Taiwan Election With Global Implications

(Bloomberg) -- When Taiwanese voters pick a new president Saturday their ballot will represent another choice of global significance: Forging closer ties with China or defending the island’s autonomy with Washington’s backing.

The closely fought, three-way contest to succeed President Tsai Ing-wen, who is stepping down due to term limits, marks the world’s first major test of democracy in 2024. This year will see the governments of more than 3 billion people face some 40 elections.

Tsai’s Democratic Progressive Party, reviled by China but friendly with the US, faces the opposition Kuomintang and the more recently formed Taiwan People’s Party. Both of the latter favor closer ties with China, which claims Taiwan as its territory.

Here’s a rundown of what you need to know about the election:

1. The Candidates

Taiwan Vice President Lai Ching-te, 64, a trained doctor and former premier, wants to extend the ruling DPP’s eight-year grip on the presidency. Once a self-described “worker for Taiwanese independence,” he now argues there’s no need to cross Beijing’s red line and declare independence, saying Taiwan is already a de facto sovereign country. The DPP government is open to cross-strait talks on an equal footing, but Beijing demands Taiwan effectively concede it’s part of China.

The DPP has a solid electoral base that trusts it to stand up against China, and Lai’s rivals have split the China-friendly vote. But many people want a change at the top. 

LAI PROFILE: War With China Is the Threat Defining Taiwan’s Election

The KMT’s Hou Yu-ih, 66, mayor of New Taipei City and the island’s former top cop, has vowed to rebuild cross-strait relations by returning to a tacit agreement that both sides are part of China. Hou is respected as a relatively down-to-earth administrator, and his party has a strong base, especially among older voters. 

But many mistrust the KMT for both the brutality of its decades-long dictatorship and its quest for closer ties with China. Hou says that while he opposes independence, he also rejects Beijing’s “one country, two systems” formula for bringing the island under its control. Only through deterrence and dialogue can the risk of conflict be reduced and democracy be safeguarded, he says. 

HOU PROFILE: Taiwan’s Former Top Cop Wants China Talks as President

The TPP’s Ko Wen-je, 64, a former trauma surgeon, offers himself as an alternative to the two traditional parties, though he flirted with an alliance with the KMT. He says exchanges with China can be achieved through mutual understanding, respect and cooperation. Many remember remarks he made years ago that both sides of the strait belong to one family — symbolism often evoked by unification advocates.

Ko was twice elected as Taipei City mayor as an independent before he founded the TPP, and has been especially popular among young and well-educated urban voters. He’s also campaigned strongly on issues such as low wages and housing affordability.

KO PROFILE: The Outsider Who’s a Surprise Contender to Lead Taiwan

2. What’s at Stake?

A peaceful, uncontested election would bode well for Taiwan, which — since the end of martial law in the 1980s — has blossomed into a progressive democracy that earned plaudits for its handling of the pandemic. A close or contested result is a risk, with the 2004 election having seen months of protests after the KMT lost narrowly. If the DPP wins the presidency but loses control of the legislature, the next four years may see tough battles over key issues.

While the US has repeatedly said it has no preferred candidate, a DPP victory would see Taiwan continue its pro-Western foreign policy and decoupling from China. But it may also lead to more pressure from Beijing, which favors the KMT. 

Chinese President Xi Jinping again insisted on Dec. 31 that unification is inevitable, and there are concerns about Beijing’s influence on the polls. One candidate was detained on suspicion of receiving campaign funding from Beijing, and there is increasing online disinformation, according to reports from Taiwan’s official Central News Agency. Taiwan has condemned Beijing for repeatedly sending balloons across the Strait. 

READ: Why Taiwan’s 2024 Election Matters From China to US: QuickTake

3. It’s Not Just China 

Relations with China have dominated election debates, but many voters are upset by stubborn inflation, high house prices and slower-than-expected wage growth. The government has estimated 2023 growth would be the slowest since the 2009 global financial crisis. It costs 16 years of annual income to afford a home in Taipei — one of the highest such ratios globally. 

All three candidates have pledged more social housing, plus subsidies to boost the birth rate — Taiwan’s population fell for three straight years through 2022. All three candidates pledge steps to boost incomes.

There are divisions over energy policy on an island with a fragile electricity grid and occasional power cuts. The DPP is against nuclear power, which opposition parties say is needed. 

READ: Taiwan Parties Seek Election Edge With Focus on Cost of Living

4. How Will Markets React?

Taiwan’s tech-heavy stock market is trading near an all-time high amid an artificial intelligence boom. A result that boosts ties with China may help sentiment, but could also put the island’s key semiconductor industry under US scrutiny.

Taiwan voters are accustomed to changes in power and in relations with China, but foreign investors tend to be more wary. The Taiwan dollar, which rose 5% in the last quarter of 2023, started the new year with its first weekly decline in eight.

READ: How Taiwan’s Voters Will Choose Their Next President: QuickTake

5. When Is The Election?

Polling stations open from 8 a.m. to 4 p.m., and history shows the result may be clear by around 8 p.m. Whoever wins the most votes, even if they fall short of an outright majority, is elected. Challenges are possible if the margin is narrow, as happened in 2004. 

First time voters, those aged 20-24, account for just 5% of the voting-age population. Voters also have ballots to choose a lawmaker in their local constituencies and a political party, which will help determine who wins the 113-seat legislature. Currently, the ruling DPP has 62 seats, the KMT has 37 and the TPP has five. 

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