Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Third-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis of key developments over the next quarter.
Taiwan is preparing to enter a fierce campaign season as it looks ahead to presidential and legislative elections on Jan. 11, 2020, with the election result set to determine the tenor of Taiwan's relations with China for years to come. Since the election of Tsai Ing-wen as president in 2016, the 180-kilometer-wide (112-mile-wide) strait separating Taiwan from mainland China has become a center of tensions between China and the United States as Tsai and her government have pursued a pro-independence agenda, China has stepped up its efforts to militarily intimidate Taiwan, and the United States under President Donald Trump has increased its support for Taiwan. The cross-strait competition over Taiwan's international recognition is closely intertwined with great power intrigue between Beijing and Washington and has reverberated from Latin America to the South Pacific.
Relations between Taiwan and China are at a two-decade low as the United States intensifies its support for Taipei under a pro-independence ruling government. With candidates expressing sharp differences about relations with China, the outcome of Taiwan's presidential and legislative elections in January will affect not only Taipei's ties with China for years to come, but also the broader trilateral relations among the United States, China and Taiwan.
The increasingly precarious geopolitical situation guarantees high stakes for Taiwan's upcoming elections and makes familiar proxy battles between the island's pro-independent camp and those favoring stable ties with China even more apparent. Having largely failed to deliver on its economic and other campaign promises, the ruling Democratic Progressive Party (DPP) will likely ramp up pro-independence narratives and tout its relations with Washington to muster public support ahead of January's election — actions that could compel Beijing to react. Meanwhile, several popular politicians are competing to win the presidential nomination of the main opposition Kuomintang (KMT) party by promising to foster economic recovery by stabilizing relations with Beijing. But public sensitivities over Taiwanese sovereignty and a U.S. agenda to aggressively challenge China will force whoever becomes the KMT's standard-bearer to pursue cooperation with China within tight confines.
A Crowded Presidential Contest
A key feature of Taiwan's presidential election this time around has been the rise of populist, independent candidates. Like elsewhere in the world, this phenomenon reflects Taiwan's weakening economy and public discontent over traditional party politics. Prominent figures include independent politician and Taipei Mayor Ko Wen-je and the populist candidate Han Kuo-yu, who aided KMT's landslide victory during last November's local elections by winning Kaohsiung City — a DPP stronghold. But the cross-strait policies that have polarized and shaped Taiwan's politics for the past two decades will continue to define the presidential contest.
Essentially, Taiwan's presidential hopefuls are grouped into two camps. In one camp is Tsai, the incumbent, pro-independence DPP candidate seeking a second, four-year term. She secured her party's nomination on June 13 over her longtime rival William Lai, a more radical pro-independence figure. In the other camp are candidates who favor more stable relations with China to advance Taiwan's economy and closer communications with the mainland. These candidates include Han and Ko, as well as KMT members Terry Gou, the founder of Foxconn, and Eric Zhu, the mayor of New Taipei. They have all pledged to support the 1992 consensus, which is an agreement regarded by Beijing as a foundation for interaction with Taiwan and which Tsai is accused of breaking. Their views differ, however, on the degree of such interactions and on how Taiwan should work with the United States, particularly over security matters.
Given how competitive the party primaries have been, the electoral prospects for any one candidate are far from predictable. The KMT gained political momentum in last year's local elections and its top candidates, Han and Gou, led the DPP candidates competing for the ruling party's nomination in most opinion polls ahead of the DPP's primary process. But intraparty rivalries have weighed heavily on the KMT in previous elections, and its hotly contested presidential primary could again leave the party divided and weakened. To prevent a similar occurrence this year, the KMT set new rules for its primary contest and will select its presidential candidate based entirely on national opinion polls, which will be held between July 6 and 14. The winner will be announced on July 16. Similar intraparty infighting was no less intense for the ruling DPP, but the nomination of Tsai on June 13 gives the DPP a month to consolidate rival factions and mobilize resources before the KMT even knows who its nominee is.
A Familiar Narrative
The balance of power in January's elections will be shaped by how well each party manages intraparty divisions and delivers on its policy agenda, particularly on economic issues. After all, Taiwan's persistent economic stagnation, frozen wages and rising youth unemployment fueled public disillusionment with the ruling DPP and led to last year's electoral losses. While many of the KMT's presidential primary candidates enjoy reputations as economic managers, forces outside the political parties will also affect the outcome of January's vote. For instance, given that Ko shares some similar views with the KMT on economic development and cross-strait ties, his possible run as an independent candidate could cost the KMT more votes than the DPP. More critically, the outcome will be affected by the course of Taiwan's relations with China and the dynamism of the U.S.-China-Taiwan trilateral relationship over the next six months.
Notably, after the DPP's big local losses last year, Tsai adopted an even more pro-independence and increasingly hostile stance against an equally more aggressive Beijing. The move enables Tsai to deflect the blame leveled toward her for the economy and helped her win over some of Lai's more radical pro-independence supporters in her primary contest. The strategy, aided by China's hard-line messages and recent flights by Chinese fighter jets over Taiwanese airspace, appears to be paying off, considering her rebounding approval rating in public opinion polls. Tsai will continue to be more vocally pro-independent against China as she campaigns for reelection, a prospect that will likely further compel Beijing to increase its suppression of Taiwan's diplomatic space and up its military intimidation. Beijing will feel equally pressured, however, to respond to escalating U.S. support for Taipei as part of its broad agenda to balance against China, particularly if the United States follows through with massive arms sales, passes the proposed Taiwan Reassurance Act and continues senior-level official exchanges and other practices that could justify Taiwan as an independent state.
The deepening tensions across the Taiwan Strait since Tsai and the DPP took power in 2016 contrast with campaign pledges by KMT and other candidates to advocate for more stable relations with Beijing. Indeed, the ruling party's attempts to economically diversify from China by increasing trade and investment ties with countries in the Indo-Pacific rim via a so-called new southbound policy remain frail, embrittled by an even more prolonged economic and export slowdown that wasn't powered by China's traditional sweeteners. Meanwhile, its alienation with China also cost Taipei five diplomatic allies, with only 17 countries now maintaining full relations with Taiwan — a reality only marginally offset by the United States' increased support. With China accounting for 40 percent of Taiwan's total exports, hosting more than half of Taiwanese investments and holding an upper hand politically and militarily, the DPP's opponents believe a revived cross-strait engagement would be the most effective way for Taiwan to recover its economy and increase its international space.
Between the Two Powers
Given the party's more conciliatory stance toward China, Beijing favors a KMT victory. At a minimum, China will withhold any engagement with the DPP before January's election and could go so far as to stoke military tensions to try to limit the DPP's chances. But just as its efforts to indirectly empower the KMT's electoral bases via economic incentives — already underway in some KMT-held cities — could reinforce public concerns about Chinese interference, Beijing's coercive tactics against Taipei could backfire. If previous elections serve as any precedent, serious cross-strait military tensions and direct threats from China's leadership could increase public fear of Beijing, in turn strengthening the DPP's bid, as was the case during Taiwan's 1996 elections and again in 2000. Likewise, rising public sensitivities over Taiwanese sovereignty will force non-DPP candidates to argue for strengthening economic ties with China within narrow limits lest they are seen as encouraging Beijing's unification ambitions.
On the contrary, while a DPP government aligns more closely with U.S. regional strategy to counterbalance China, a more radically pro-independent government could equally concern Washington in terms of having to deal with the real prospect of Chinese military action against Taiwan. U.S. officials have recently engaged informally with several KMT officials, including Trump's meeting with Gou in early May and visit with Han by Douglas Paal, the former chief U.S. diplomat to Taiwan. Given Taiwan's growing significance to the United States in its rivalry with Beijing and its broader Indo-Pacific strategy, Washington will work with whoever wins in January to elevate ties with Taipei and advance its security initiatives. And with Beijing's increased territorial assertiveness, the prospect will continue to put Taiwan in the middle of a great power game — with all the associated risks that that entails.