Taiwan: Third presidential term for autonomist DPP is clouded by the loss of parliamentary majority

Event

Lai Ching-te, Taiwan’s vice-president from the ruling Democratic Progressive Party (DPP), will succeed Tsai Ing-Wen as Taiwan’s new president. On 13 January, his party won the presidential elections for a record third consecutive time. His victory is nevertheless less resounding than his predecessor’s. Not only did he only win 40% of the votes (against 57% in 2020 for Tsai), but his party also failed to win a parliamentary majority. Indeed, the Kuomintang (KMT), the main opposition party and closer to Beijing, won 52 seats (51 for the DPP) whereas the small Taiwan People’s Party (TPP) won 8 parliamentary seats out of 113 . After the polls, new President Lai claimed to favour the status quo with China, on which he called to ease tensions and allow dialogue. In reaction, Beijing notably reiterated the ultimate goal of unification with mainland China, whereas Washington congratulated him with his democratic victory. Lai will formally become president in May.

Impact

Lai’s victory makes history and fundamentally confirms the population’s aspirations for a status quo vis-à-vis China. The latest elections have nevertheless shown that the DPP’s appeal has been waning over time, which is understandable after eight years of rule but also highlights disappointment on domestic issues such as housing and cost of living. In fact, looking at the results (33.5% for the KMT leader and 26.5% for the TPP leader), the DPP can thank the KMT and TPP’s incapacity to form a joint ticket some weeks before the elections. This said, Lai’s presidency will be complicated by two factors. The first one is the loss of majority in Parliament, which will be an obstacle to policy-making and will compel the DPP to court the TPP, which tends to be closer to KMT, on various issues for implementing its agenda. This might notably hinder the expansion of defence spending (mainly US weapon supplies) somewhat. The extent of political deadlock will first be illustrated in February when Parliament is expected to appoint the new house speaker, a major post in foreign policy the TPP and KMT are both seeking.

The second hurdle remains unchanged, namely dealing with high pressures from China and preserving a peaceful status quo. Though a stronger outcome for the KMT could translate into some easing of cross-strait tensions and increased Chinese contacts and cooperation with the KMT, Chinese pressures are not expected to stop under Lai’s presidency. That is why Lai has announced he will also continue to maintain strong security ties with the USA, diversify Taiwan’s economic and trade links with other foreign partners and reduce economic dependency on China.

In this context, Credendo’s ratings for MLT political risk (2/7) and political violence risk (3/7) remain unchanged.

Analyst: Raphaël Cecchi – r.cecchi@credendo.com