Hou, Ko, Gou or Lai?
Exploring the Potential Impacts of Taiwan's Upcoming Election
On January 13, the Republic of China (also known as Taiwan) will hold its next presidential election. The outcome of that election will impact Taipei’s relationship with Beijing and could lead to a material change in the nature of cross-strait relations. It very well may determine whether or not China decides to militarily “reintegrate” the island nation. And while the stakes are obviously high for those who reside in Taiwan, the ripples from the Taiwan Strait will be felt globally.
To successfully navigate the election uncertainty, it’s helpful to think in terms of scenarios. How will Taiwanese policy change under the various election scenarios? And perhaps more importantly, does the Chinese Communist Party (CCP) in Beijing have a preferred outcome? If so, might it inspire election interference or disinformation efforts to influence the results?
Before we dig into these scenarios, however, it is important that we understand the players involved. It’s also critical to understand that Taiwanese politics has been historically dominated by two parties that differed in how they sought to interact with the People’s Republic of China (PRC). This year, we have a third party as well as an individual who has opted to run as an independent. Nevertheless, notes Reuters,
The Players
The incumbent political party is the Democratic Progressive Party (DPP), a party that de facto stands for the protection of Taiwan’s independent status and views the mainland with skepticism. The public mission of the DPP is “to further deepen Taiwan’s democracy and safeguard Taiwan’s democratic institutions for the Taiwanese people,” but the party also refused to accept the “1992 Consensus,” an agreement made by the KMT with the CCP acknowledging there is only one China.
Current Taiwan president Tsai Ing-wen leads the DPP party and is wrapping up her second term. Lai Ching-te, Tsai’s current vice president, is the party’s candidate in the upcoming presidential election. He is a former doctor who in 2017 called himself a “pragmatic worker for Taiwan independence.” (In the eyes of Beijing, making such statement is tantamount to treason.) At a recent national DPP convention, Lai stated his commitment to strengthening Taiwan’s defense capabilities while also expressing a willingness to engage China, but only “on an equal basis.” Lai is currently leading in the polls.
The Kuomintang (KMT), also known as the Nationalist Party of China, is the political group most closely aligned with the Chinese Communist Party and seeks to increase engagement with Beijing. Despite being in power on the mainland during the Republican Era (1928-1949), the party fled to the island of Taiwan on December 7, 1949 when it lost the Chinese civil war.
The KMT has been presented the current election as a choice between war and peace…and noted that a vote for the DPP is a vote for war. The KMT candidate for the upcoming election is Hou Yu-ih, a former police chief turned mayor of New Taipei City. Hou seeks to engage the CCP and strengthen ties between Taipei and Beijing in an effort to de-escalate tensions. Critics suggest the KMT has deep ties to the CCP and is therefore beholden to Beijing.
In 2019, a third party entered Taiwan’s political scene. The Taiwan’s People Party (TPP) was formed with a basic premise: the ROC’s relationship with the PRC isn’t the only issue affect the citizens of Taiwan. The TPP had a marginal impact during the 2020 elections, but has recently been surging in popularity, particularly among younger voters. TPP’s founder, chairman, and current candidate, Ko Wen-je, is a former doctor who served as mayor. He’s vowed to unite Taiwan and is currently polling in 2nd place, behind Lai.
The fourth contender for the President’s office is the billionaire entrepreneur Gou Tai-ming, founder of Foxconn, the manufacturing company that has Apple, Google and Amazon among its top clients. Gou failed to secure the KMT nomination and later opted to run as an independent, launching his campaign in August 2023. Gou needs to secure 290,000 signatures (~1.5% of the number of votes cast in the last presidential election) before November 2 to qualify as a candidate. In early October, his campaign claimed to have achieved this objective.
Gou’s platform is focused on increasing trust across the Taiwan Strait with a focus on peace: “I will never allow Taiwan to become the next Ukraine.” He plans to do this by increasing engagement with the PRC, doubling the rate of economic growth, and making Taiwan’s GDP per capita the highest in Asia. Some have suggested that his late entry into a crowded field of pro-China candidates makes a DPP victory more likely, while other suggest his entry will spur a coalition among the TPP and KMT.
What to Watch
Recent polls suggest that the DPP is starting to lose momentum. Although a large percentage of voters remain undecided, Lai has seen his support drop below 30%. Although he’s still the front-runner, the TPP’s Ko Wen-je is rapidly catching up and recently polled around 26%, while KMT candidate Hou Yu-ih came in around 21%. Simple math suggests a coalition between the KMT and TPP could dethrone DPP dominance, leading to a more Beijing-friendly government in Taipei. While recent reports suggest a coalition is being explored, the ticket would have to be set soon, a process that includes picking who would be president and who would be vice president — a non-trivial task.
Another factor to watch is Beijing. In an article entitled “China Is Flooding Taiwan With Disinformation,” The Economist noted how Chinese efforts have ramped up to present the United States (not China) as the island’s biggest threat. The article highlights a claim that America wanted to blow up Taiwan’s biggest chipmaker. It was promoted via a video featuring a US lawmaker discussing the possibility on Douyin, China’s version of TikTok. A Taiwanese paper picked up the story and it was amplified by opposition lawmakers, talk show hosts, and others.
Another example of Chinese disinformation includes a “leaked” report of a secret government meeting between Washington and Taipei in which America apparently asked Taiwan to start manufacturing bioweapons at a lab on the island. After the story spread rapidly, it went on to suggest that the government was going to collect 150,000 samples of Taiwanese blood for the Americans to develop a virus to kill ethnic Chinese people.
Will these disinformation efforts work? It’s unclear. They are all reminiscent of the CCP’s efforts going into the 2020 election, when the University of Gothenburg in Sweden found that Taiwan was “subjected to more disinformation from Beijing and other governments than anyplace in the world.” While it’s impossible to know how effective those efforts were, the 2019-2020 Hong Kong protests dominated headlines, leading voters concerned about China to vote for the DPP.
China has also drastically increased its military maneuvers in the Taiwan Strait and “rehearsals” of an attack on the island. It’s also increased cyber attacks and regularly violates Taiwanese airspace restrictions. Could the CCP try to scare the population into voting for the KMT?
So What?
If Hou wins, Chinese hopes for a peaceful reintegration of Taiwan rise while military tensions fall. Could it begin a process of a peaceful reunification? Given domestic weakness within the PRC, I imagine the political narratives would drift to the rear as economic topics regained center stage. Derek Grossman, a senior defense analyst at the RAND Corporation who formerly served as an intelligence adviser at the Pentagon, summarized the situation quite succinctly: “For China, it will be the KMT’s Hou or bust. If Taiwan elects Lai, this will represent another major step backward in Beijing’s plans for peaceful reunification.” My sense is that a TPP, Gou, or a KMT-TPP coalition victory would also be much preferred to a DPP victory, but less desired than a KMT win.
If Lai wins, escalation risks increase dramatically, quite possibly leading to military conflict. Xi Jinping might find the regression away from peaceful reunification unacceptable and, with the Western world distracted by ongoing wars in Ukraine and Israel, conclude it was time to militarily reunify with Taiwan. It’s possible that Chinese economic weakness, combined with Taiwanese saber-rattling, would prevent war from breaking out. Time recently reported “Taiwan’s DPP leaders are looking beyond the election toward the more threatening approach from China. Their latest pushback comes in the form of a new defense report they hope will make China think harder about a future invasion.” That report, released in September, called for strengthening Taiwan’s asymmetric defense capabilities, including a ramp up of military drones (based on lessons fro the Russian invasion of Ukraine). Might the report change Beijing’s calculus? Another possible impact of a Lai victory is termination of the Economic Cooperation Framework Agreement, the free trade agreement between China and Taiwan.
Xi Jinping might find the regression away from peaceful reunification unacceptable and, with the Western world distracted by ongoing wars in Ukraine and Israel, conclude it was time to militarily reunify with Taiwan.
If the election leads to war, China will be the target of many sanctions, further impacting an already slowing domestic economy. It might even lead Chinese citizens to question the legitimacy of the CCP. Would Beijing be willing to bear this risk? Further, Joe Biden has reiterated four times as president of the United States that he’d send American troops to protect the island if necessary, which could pit two nuclear armed nations against each other. Other US and Taiwanese allies, such as Australia and Japan, might also join the conflict, massively increasing the possibility of the war spreading. And of course, an invasion of Taiwan would lead both local and global economies into a recession as overwhelming uncertainty would reduce consumer and business confidence. The semiconductor industry would be paralyzed, disrupting the entire supply chains of products that contain chips. The US dollar, gold, US treasuries and bitcoin would likely rise in value as global capital would head to safe havens.
As we rapidly approach the January election, it’s important to remember “Taiwanese voters will in effect be asked to decide whether Taiwan should remain aligned with America in strengthening deterrence against a possible Chinese invasion, or should move towards building ties with China.” Regardless of what they choose, economic and political ripples are likely to wash up on distant shores.
About Vikram Mansharamani
Dr. Mansharamani is a global generalist who tries to look beyond the short term view that tends to dominate today’s agenda. He spends his time speaking with leaders in business, government, academia, and journalism…and prides himself on voraciously consuming a wide variety of books, magazines, articles, TV shows, and podcasts. LinkedIn twice listed him as their #1 Top Voice for Global Economics and Worthprofiled him on their list of the 100 Most Powerful People in Global Finance. He has taught at Yale and Harvard and has a PhD and two masters degrees from MIT. He is also the author of THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence as well as BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst. Follow him on Twitter or LinkedIn.
A reader just sent me this piece which I wanted to share. It's worth reading and highlights what might happen if the DPP's Lai wins.
https://responsiblestatecraft.org/taiwan-presidential-election-2024/