Taiwan’s election is approaching the moment of truth

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In January 2024, one of the key events for modern world geopolitics will take place and elections will be held on the island of Taiwan, following the results of which the country will have a new president and parliament. They may affect the global balance of power and relations between the two superpowers, the United States and China, which have been engaged in a technological race and almost open confrontation over the fate of the island’s partially recognized state for years. It is important to understand that China insists that Taiwan is just one of its provinces, not an independent state, and wants to restore “historical justice” as seen from Beijing. The U.S. does not recognize Taiwan’s independence either, since it has established formal diplomatic ties with China, but informally gives it full political and even military support in the name of defending the values of democracy and freedom. But even more important in this conflict is not historical principles but, as always, economics. The island is an important trading partner for the U.S. and the U.S. semiconductor industry depends on it. Although, such a statement is a strong understatement, and the entire world economy depends on Taiwan because the island produces 90% of the world’s most advanced microchips. But for the U.S., as the world’s technology leader, it is of particular value. Almost all the famous chip designers, such as Qualcomm, Broadcom, AMD, Intel and Nvidia, hail from the U.S. But the U.S. share directly in the global production of microchips is now at a rather low level and is about 12%, although in the “golden” for the U.S. industry in the 90s of XX century it reached 40%.

In pursuit of cheap labor, the Americans have driven themselves into a kind of trap, not only “creating” China as a dangerous political opponent in the struggle for world hegemony, but also greatly complicating their economic security by investing in many other countries, including Taiwan. And China’s plan to annex the island threatens the U.S. with the situation that the production of the lion’s share of modern chips, which is no longer fully under Washington’s control, will end up at the disposal of its enemies. Against this background, the U.S. has begun to make attempts to turn the situation “back”. Under pressure from the Americans Taiwanese economy and at the same time the world’s largest chip manufacturer TSMC at the end of 2022 announced that it would invest 40 billion dollars in the construction of plants in Arizona. Such tactics have quite objective economic reasons. For example, the company is interested in the United States, because 68% of revenue at the end of 2022, it generated exactly thanks to customers from North America, such as Apple, Nvidia and AMD. By comparison, Chinese customers were only generating 11% of TSMC’s revenue, and the decision, at first glance, seemed logical. But the U.S. plan was not as mutually beneficial as it might have seemed, and carried clear threats for Taiwan. Of course, in many ways the Americans wanted to weaken China by Taiwanese hands. Cooperation with TSMC and trade sanctions in the form of restricting U.S. semiconductor shipments to Chinese companies imposed last year could help the U.S. slow the development of China’s IT industry, including technology for Beijing’s military programs. And the desperation of the Chinese could sooner or later push them toward a military operation on the island. Despite assurances of military and political support from Washington, many in Taiwan began to fear the most negative scenario for themselves. First, there was a suspicion that the U.S. wanted to eventually withdraw TSMC’s main production facilities, destroying the island’s manufacturing jewel and plunging it into an economic crisis. Second, even more alarming were the logical arguments that a war with the Chinese could result in the destruction of the chip plants and prevent Beijing from getting them, which would be a perfectly acceptable and even good scenario for Washington. In this light, the elections were seen as an opportunity to untie this knot of contradictions without hostilities, and the U.S.-China issue became the key issue, overshadowing economic, social and national issues. In fact, the whole struggle turned into a confrontation between Beijing and Washington in a formally peaceful form, where three main currents and parties representing them emerged at once: pro-American, compromise and pro-China.

First, it is worth talking about the Democratic Progressive Party (DPP), which is the current ruling party, has a clear position of disengagement with China and is obviously supported by American lobbyists. It is currently represented by incumbent President Tsai Ing-wen, but since she is in her second term in office, another candidate, Lai Ching-te, will run. He is a former physician and mayor of the major city of Tainan and the country’s prime minister before taking over as the country’s vice president in 2020. In his campaign, Lai insists that he will succeed the policies of the incumbent president and wants to pursue the path of full legal independence and world recognition of Taiwan in this status, even outpacing his predecessor’s radicalism on the issue. During his only visit to China in 2014, Lai Ching-te gave a clear and straightforward answer to the question of whether his DPP party was willing to abandon the idea of full independence for the sake of appeasing China. At the time, he said the party included this point in its program because it was the consensus among Taiwanese and Beijing’s opinion did not matter here. There was considerable truth in what he said about consensus, and as many as 55-60% wanted independence. However, this public position in its direct interpretation hardly describes public opinion, because the vast majority of supporters of independence do not want conflict with China, and they see too radical steps as not the best way. More recently, in July, while speaking to supporters, Lai got carried away and said that he wished the president of Taiwan could one day walk into the White House and shake hands with the American president the way the leaders of Japan or South Korea do. This provoked a negative reaction in China and an “attack” by the Chinese media on public opinion on the island with the idea that Lai Ching-te was provoking war, which provoked the response Beijing needed among Taiwanese. Lai later said that he only cares about Taiwan’s security, wants only to maintain the status quo, and therefore he has no plans to achieve formal Taiwanese independence, but seeks U.S. support in the face of the “Chinese threat”. He also added that Taiwan’s semiconductor industry is very important to the Americans and they will try to preserve it, not destroy it. However, these reassuring words were no longer believed, and skepticism about possible U.S. support began to gain momentum in Taiwanese society, which was reflected in support for the DPP. This is being exploited by opponents of the incumbent government, who not only exploit fears of a PLA invasion, but also raise questions about the economic feasibility of too close a “friendship” with the U.S. In their view, TSMC is investing too much money in building factories in the United States, and this could ultimately undermine Taiwan’s importance to Washington, including by affecting American motivation to defend the island in the event of a Chinese attack. Lai sees nothing wrong with TSMC “moving” to the U.S., but rather believes that by doing so Taiwan is demonstrating its economic power and importance to the global community, but apparently this optimism is not shared by most Taiwanese. And for this reason, with a best rating of 33-35%, he cannot be fully confident of an eventual victory.

It is the issue of independence, as well as rapprochement with the U.S. or China, that has become the defining marker of support for a particular party in the upcoming elections, taking all other issues deep into the background. Integration with China, which is embodied by the Kuomintang, is supported by only about 8% of the country’s residents, and against this background, the 27% approval of a clear course on independence and partnership with the U.S., which is, in fact, the DPP program, looks like a huge advantage. However, it pales in comparison to the nearly 61% of Taiwanese who want the status quo and peaceful relations with Beijing, and it is on them that the Taiwan People’s Party (TPP), whose candidate Ko Wen-je has been able to sharply increase his popularity in this light, relies. He is a former doctor and twice mayor of Taipei, Taiwan’s capital, and in 2019, seeing a demand for a “third force” in the face of the previously nearly non-alternative power struggle between the Kuomintang and the DPP. He also founded the TNP and became its chairman. The new trends in politics quickly appealed to nearly 20-25% of voters. His candidacy attracts voters because he represents a young party that has never participated in a presidential election before and has something new to offer this time around. According to preliminary polls, he is in third place, behind the Kuomintang’s Lai and Hou, but still has a chance to win, with a 23-25% approval rating and the prospect of a major boost. He has achieved this not only through successful conjuncture, but also through his active presence on the popular TikTok platform, where he raises the issue of the U.S.’s “bad” intentions. Ko is a beneficiary of the skepticism about the U.S. that now prevails in Taiwanese society, and he actively argues that the interests of the U.S. government, TSMC, and Taiwan are not equal. According to him, the US considers it risky for TSMC to stay fully in Taiwan, so Washington wants to move key assets to the US and leave the rest in Taiwan, which would hit the island’s economy. Ko’s rhetoric on China, for his part, is very cautious. He urges not to provoke Beijing and to focus more on domestic issues, including energy and housing. However, many experts suggest that despite the “status quo” rhetoric, he is linked to Chinese lobbyists. Realizing the weakness of pro-Chinese sentiment on the island, the authorities in Beijing simply placed an additional bet on more moderate forces that could freeze military cooperation with Washington and lift a number of anti-Chinese sanctions on the supply of the same chips. In general, if the CCP comes to power, the TNP should hope for a long-term realization of the “Hong Kong scenario” in Taiwan, even if it takes 20-25 years. And it is not for nothing that Ko chose TikTok, which Americans consider to be a social network of Chinese “soft power” under the control of Chinese intelligence services, as the main platform for his propaganda.

Against the backdrop of Lai and Ko, the last candidate Hou Yu-ih from the Kuomintang Party, who has worked in law enforcement and held senior positions in the past and has been the mayor of New Taipei since 2018, is also playing an important role in the election process. That party has gravitated toward building a dialog with China, which is why Hou’s victory is most favored by Beijing. However, his support from Taiwanese people has fallen sharply recently, despite his re-election as mayor of New Taipei last year. There are several reasons for this, including both the drift of more moderate “pro-China” voters to support the TNP and billionaire Terry Gou’s failed attempt to run for the Kuomintang, which led to his self-nomination and the crushing of the party’s ratings. Many also note some lack of charisma for the leader of the country in Hou himself, especially well manifested against the background of the same Terry Gou, which also does not contribute to the growth of his ratings. A notable figure is Gou himself, whose real name is Guo Taiming. He is the founder and chairman of Taiwan’s largest company, Foxconn, which manufactures electronics for Apple, Sony and Microsoft and others. He favors peace between Taiwan and China and talks on equal footing, and in April 2023, after a week-long trip to the United States, he said he wanted to run for president of Taiwan for the Kuomintang Party. His peculiar image as a liberal and a businessman, while simultaneously advocating soft pro-China positions, was very winning, but the party and the billionaire somehow could not agree. As a result, in November 2023, after collecting signatures as an independent candidate, Gou decided not to run. This was probably due to pressure on him from the Chinese side. Thus, in late October, China launched an investigation against Foxconn after Chinese tax authorities conducted an audit of the company’s subsidies in Guangdong and Jiangsu provinces. It can be assumed that Beijing still bet on the conservative Kuomintang rather than the TNP, whose candidate Ko Wen-je is a personal friend of Gou. And the results were not long in coming, with the Kuomintang’s rating skyrocketing from 21-22% to 32-33% at the expense of Gou’s “freed” electorate.

As polling day approached, the struggle only intensified, and in November the ruling Democratic Progressive Party (DPP)’s position was more difficult than ever. Its presidential candidate Lai Ching-te’s approval ratings fell below 30% for the first time amid islanders’ fears of a Chinese invasion, which they strongly linked to continued independence and military partnership with Washington. On the very eve of the meeting between Biden and Xi Jinping in San Francisco, the two main opposition forces, the Kuomintang and the Taiwan People’s Party, agreed to form a common coalition, and in the polls such a coalition could garner up to 60% of the vote, leaving Lai no chance. However, as a result, the opposition parties failed to reach an agreement with each other, and the electoral situation remained unchanged, while China suffered a political defeat from American lobbyists regarding this project. Now the outcome of the election is difficult to predict, although it is more likely that the ruling DPP may retain power. If Lai Jing-te wins, Taiwan may further develop cooperation with the U.S., including in the military sphere and the “migration” of TSMC outside the country. However, tensions between Taiwan and China may increase, which could further strain China’s relations with the U.S., which are already at an all-time low. Beijing and oppositionists in Taiwan have repeatedly accused Lai of provoking the outbreak of hostilities. Experts in the Asian region admit the possibility of the introduction of Chinese troops into Taiwan, but believe that such a scenario is extremely unlikely, because China does not want the catastrophic economic and political consequences of a war. In the event of a military conflict, the U.S. would have only two choices, both of which are negative The first is for Washington to go to Taiwan’s defense and confront a rival that has nuclear weapons. The second is not to send its troops to Taiwan and then agonize over why a key partner left the island unsupported. In such a case, the U.S. could jeopardize cooperation with a leading producer of semiconductors, which Americans badly need, and undermine the self-confidence of other allies in Asia and Europe. For Taiwan, on the other hand, a Chinese invasion could mean the end of a period of extraordinary prosperity, devastation and disaster. And it is for this reason that voters who are relatively sympathetic to the DPP may change their preferences and support the Kuomintang or the PNT just to avoid this disastrous scenario. However, international politics, like elections in Taiwan, is unpredictable, and we will know which path will be realized in the end much later, and the name of the country’s new president will not be known until January 13, 2024.