In its 2018 Annual Forecast, Stratfor noted that Taiwan would become a source of contention between Washington and Beijing in their growing great power competition. Throughout the year, China has intensified its military pressure on and the diplomatic isolation of Taiwan, and the United States has responded by increasing its support for Taipei. These deteriorating cross-strait relations served as a backdrop for local elections — traditionally seen as a referendum on the ruling government and as a bellwether for the next general election.
What Happened
Two years after retaking power in Taiwan, the Democratic Progressive Party (DPP) suffered a major defeat in local elections on Nov. 24. Of 22 races, the independence-leaning DPP lost seven of 13 cities and counties it held to the Kuomintang (KMT), including Taichung and the southern port city of Kaohsiung — two of the four big cities in the election. The opposition KMT was also re-elected in six races, including New Taipei and Taitung county, and it also won Kinmen and Hualien county, which were held by independents. The elections helped the KMT regain the footing it lost after being badly defeated in local polling in 2014, and the victory in Kaohsiung by charismatic KMT mayoral candidate Han Kuo-yu broke the DPP's decadeslong grip on the southern stronghold, in some ways reshaping the political landscape of a city known for its pro-independence leanings. In Taipei, the independent mayor, Ko Wen-je, was re-elected by a razor-thin margin over KMT candidate Ting Shou-chung.
Why It Matters
The local elections were seen as a major referendum on President Tsai Ing-wen and her administration, and she resigned as party chairwoman because of the defeats. The balloting was also expected to be a key bellwether of the 2020 legislative and presidential elections, and the outcome cast doubts on Tsai's presidential candidacy and, to some extent, on the DPP's prospects. In addition to the losses by its candidates, 10 referendums on the key domestic policies backed by the DPP and Tsai were voted down. For instance, an overwhelming majority voted to keep the ban on imports of agricultural products and foods from Japan's Fukushima nuclear disaster area, and a majority favored repealing Taiwan's phaseout of nuclear power. Those two losses will complicate the ruling government's objectives to advance economic relations with Japan and to create a nuclear-free Taiwan despite the island's repeated problems with producing electricity.
Background
The local elections come at a time of strained cross-strait relations and increased U.S. focus on Taiwan as a partner in counterbalancing China. Since Tsai took office in 2016, she has refused to openly endorse the 1992 consensus — where both sides acknowledge that they are part of one country — which was seen as a foundation to interaction. And China has interpreted attempts to diversify the island's economy away from the mainland as a move toward independence. It responded by suspending official exchanges and imposed informal restrictions on some tourism and the import of selected Taiwanese products. It also increased its military pressure, leading Taipei to seek security cooperation with Washington and prompting the United States to increase its support and naval presence in the region.
Still, while relations with the mainland were a factor in the elections, domestic issues, particularly the island's slowing economy, hurt the DPP and Tsai. The results don't necessarily point to a reversal of Taiwan's long buildup in nationalist sentiment. Notably, the referendum to change the island's name for the 2020 Summer Olympics in Tokyo from Chinese Taipei to Taiwan was rejected by a thin margin.
Finally, the local elections may not be a dependable indicator of things to come. Voter dissatisfaction carried the independence-leaning DPP to victory in local elections in 2014 and in presidential voting in 2016, and it was the chief reason for its losses this time. And despite its victories, the KMT is highly fragmented and anemic after the DPP seized its party assets two years ago. Its overwhelming victories were largely earned by key local politicians, such as Han in Kaohsiung. To take advantage of these victories, the KMT must come up with credible candidates over the next two years as both parties head into the presidential election.
What to Watch For
The huge defeat will likely compel the DPP to modify its cross-strait policies. Some within the party may see easing tensions with the mainland as part of the answer to the losses and seek to improve economic ties with Beijing. The elections could also raise the prominence of the radical element within the party, which may call for the DPP to abandon its moderate cross-strait policy, complicating Tsai's agenda with Beijing.
The election results also leave the mainland with a small window of opportunity to advance its agenda. Beijing could choose to highlight the DPP’s cross-strait policy as a reason for its defeat and harness politicians who are moderate on cross-strait relations or testing their momentum ahead of the 2020 polls. Notably, several non-DPP local chiefs, including Han Kuo-yu in Kaohsiung and Ko Wen-je in Taipei, advocated improved economic ties with Beijing. Shortly after his victory, Han called for a cross-strait working group to help improve the economy of the agriculture-based city. Beijing responded saying that it would welcome more cooperation between Taiwan's cities and prefectures and the mainland.
For Washington, the DPP's defeat could complicate its agenda. But, at a minimum, the United States will cultivate ties with both parties to preserve its influence with Taiwan. However, China — seeing Washington's increasing desire to cooperate with Taipei and the island's younger generation growing away from the mainland — is unlikely to allow these trends to challenge its goal of reunification for long.
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