Taiwan in the Era of Tsai Ing-wen

Changes and Challenges

June Teufel Dreyer, Jacques deLisle, June Teufel Dreyer, Jacques deLisle

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9780367366865
• eBook ISBN: 9781000380194
• Edition: 1
• Topic: Geschichte
• Subtopic: Chinesische Geschichte

This book assesses the forces that led to the election of Tsai Ing-wen and the Democratic Progressive Party (DPP) in 2016 and re-election in 2020, and provides the first comprehensive treatment of this pivotal period in Taiwan's politics, policy, and international relations.

The Democratic Progressive Party's victory in Taiwan's 2016 presidential and legislative elections marked several significant turning points. The third peaceful transition of power between political parties during Taiwan's democratic era heralded further consolidation of Taiwan's democracy, and Tsai Ing-wen's election gave the Republic of China its first female president. Her administration has pursued an ambitious agenda of domestic and foreign policy reforms, and has faced challenges that include steering through economic transitions, addressing contentious issues of social justice, national identity and cultural change, and navigating an external environment defined by an increasingly powerful and hostile China, and a more supportive but less predictable United States. In Taiwan in the Era of Tsai Ing-wen, leading experts from the US and Taiwan chart the progress and problems of Tsai's first term and the prospects for Taiwan during her second term and beyond.

As a study of a crucial era of politics in Taiwan, this book will appeal to students and scholars of Taiwan studies, Political Science, Law, Economics and International Relations.

1 Introduction: change, continuity, and challenges for Taiwan in the Tsai era

Jacques deLisle and June Teufel Dreyer

When the Democratic Progressive Party (DPP) swept to a lopsided victory in presidential and legislative elections in January 2016, it marked a significant turning point in Taiwan’s politics. The voters chose Tsai Ing-wen as the Republic of China’s first female president—a still-rare event in an Asian polity, and all the more unusual for a woman who (unlike Park Geun-hye in Korea, Corazon Aquino in the Philippines, or Indira Gandhi in India) is not an heir to a political dynasty. With its sixth fully democratic national election, Taiwan’s democracy reached another milestone of consolidation, producing the third peaceful transfer of the office of the presidency across party lines. The election also gave the DPP a majority in the Legislative Yuan (LY) for the first time and, thus, the mandate—and responsibility—that comes with control over both the legislative and executive branches. Four years later, Tsai won a second term with a similar margin, and the DPP retained a diminished LY majority. In the 2020 campaign, Tsai and her team drew sharp contrasts between Taiwan’s robust democracy and civil liberties and the crisis in Hong Kong, where a version of the “One Country, Two Systems” model that China insists must apply to Taiwan was unraveling amid mass protests and Beijing-backed repressive measures by local authorities.

Tsai’s and the DPP’s 2016 and 2020 victories stemmed from many factors, some of them under their control, including Tsai’s successful move in 2016 toward the political center on policies toward China, and her adept linking in 2020 of cross-Strait policies (the 1992 Consensus and a one China principle) supported by the KMT with the appalling (to Taiwanese voters) situation in Hong Kong. But Tsai’s and the DPP’s wins also reflected the weaknesses of the other major party. In 2016, the KMT bore the burdens of an unpopular president whose approval ratings were well below 20%, corruption scandals that emerged shortly after Ma Ying-jeou’s 2012 re-election as president, sharp divisions within the party, including between Ma and LY speaker Wang Jin-pyng, and a bungled nomination process for 2016 which led to the ousting and replacement of the party’s presidential candidate mid-campaign. In 2020, the KMT again suffered from problems with candidate selection, turning to a populist who disdained the party establishment, ran an undisciplined campaign, was prone to offensive statements, and struggled to redefine the party’s cross-Strait policy as public opinion turned sharply against Beijing during the Hong Kong protests.

The KMT and its presidential candidates were also dragged down by several other issues, among which economics-related concerns figured prominently. Much of the public was dissatisfied with an economy that was performing poorly by Taiwanese standards in 2016 but voters were happier with an economy that had recovered and was doing well by 2020. There was also growing skepticism toward the deepening of economic ties to China that had occurred when the KMT was in power and that seemed to have created greater external political vulnerability without widely shared domestic economic gains. The last of these concerns was partly reflected in the Sunflower Movement, and the student-led takeover of the LY in 2014, in opposition to the then-impending passage of a government-backed cross-Strait agreement on trade in services—one of the many follow-on agreements to the seminal 2010 Economic Cooperation Framework Agreement (ECFA). The energized youth vote coming out of the Sunflower Movement in 2016 and reappearing in 2020 helped power both of Tsai’s victories and pointed to ongoing electoral challenges for future KMT candidates who would have to seek support from a generation that saw itself as “naturally independent” (tianran du).

Yet, much about the political significance and longer-term implications of the DPP’s victories and the KMT’s losses in 2016 and 2020 (as well as the KMT’s win and the DPP’s loss in the in the 2018 local elections) remains uncertain and rooted in factors deeper than those that immediately drove electoral outcomes. In this volume, Richard C. Bush and Shelley Rigger take up these issues. They address whether recent electoral outcomes, particularly at the national level, reflect more the DPP’s strengths or the KMT’s failures. In evaluating the 2016 elections, Bush identifies DPP strong points: Tsai’s attributes as a candidate (including her appeal to young voters and her authority within the party), the DPP’s well-run campaign (which included voter mobilization), and the victors’ ability to define the issues on which the election was fought. Bush also points to KMT weaknesses: voters’ dissatisfaction after eight years of KMT rule, splits within the KMT (including the feud between Ma and LY speaker Wang Jin-pyng), failure to address rising social movements (including the student-led Sunflower Movement), troubles in picking a presidential candidate (culminating in the belated switch from Hung Hsiu-chu to Eric Chu), loss of control over terms of the policy debate (once Tsai’s pledge to maintain the status quo deprived the KMT of its traditional advantage on cross-Strait issues), falling popularity of KMT policies (especially on cross-Strait and economic issues), and the loss of voters to low turn-out and defections to third-party candidate James Soong. In Bush’s account, China’s familiar strategy of relying on the Taiwanese public’s preference for good relations with Beijing, and warning Taiwan’s voters not to support the DPP, failed in the 2016 environment of growing concern in Taiwan that closer ties with China were more harmful than beneficial to Taiwan.

Bush finds both similar and different factors at work in the DPP’s ability to retain power in the 2020 presidential and legislative election, following its severe setback in the 2018 city and county elections. In the 2020 cycle, the KMT again suffered from a messy nominating process and internal division, with the populist, anti-establishment Han Kuo-yu emerging as the candidate, and moves by Beijing that greatly strengthened Tsai’s and the DPP’s hand, with Tsai successfully equating the KMT-backed 1992 Consensus with the One Country, Two Systems model—widely rejected in Taiwan—that Xi Jinping reemphasized as his model for Taiwan. Adding to the DPP’s advantage and the KMT’s troubles was the turmoil in Hong Kong over the proposed extradition bill, making the prospect of closer ties with China—and anything resembling the Hong Kong version of One Country, Two Systems—even more unappealing to Taiwanese voters.

In Bush’s account, performance matters for electoral prospects among voters who have relatively stable political identities and attitudes. In contrast to the first DPP government under Chen Shui-bian in 2000, Tsai and her team came to power with the advantages of unified government and prior experience in governing. Nonetheless, they soon faced sagging popularity and a serious electoral setback in 2018 that Bush attributes variously to some voters’ dislike of controversial policy changes pushed by the DPP, and to other voters’ frustration with the DPP’s failure to fulfill its policy promises. For Bush, a Taiwanese leader who seeks to keep herself and her party in power needs some success across four overlapping arenas: domestic policy, where Tsai’s first-term record on improving the economy, reforming public sector pensions and the labor standards law, legislating marriage equality, and pursuing transitional justice to address the legacy of the KMT authoritarian era was a mixed success politically; domestic politics, where she managed to keep challenges from the DPP’s “deep green” base in check; relations with the United States, which have been strong and improving under Tsai; and cross-Strait relations, where Beijing has been unwilling to engage Tsai, given her refusal to accept the 1992 Consensus and the One China Principle, and has increased pressure on Taiwan.

As this mixed pattern from Tsai’s first term suggests, and as the DPP’s weakened showing in the 2020 LY elections reflects, Bush argues, the DPP’s future success and the KMT’s future failure are far from certain, especially in a context where politically salient public opinion is relatively stable and divided. Looming over Taiwan’s electoral fluctuations, Bush discerns deeper dangers. After setbacks to hoped-for rapid progress in cross-Strait relations during Ma’s second term and two presidential and legislative election wins by Tsai and the DPP, Beijing may have concluded that persuading public sentiment is a lost cause and that displays and exercises of power are the more fruitful strategy. Taiwan’s polarized, zero-sum party politics may leave it ill-equipped to forge the domestic consensus needed to deal effectively with a more threatening China.

Rigger focuses on deep-seated problems in the KMT to explain its defeats in the 2016 and 2020 elections, and to suggest that the KMT may not be able to right itself, at least in the near term. She identifies a long-running leadership crisis and more recent difficulties in formulating cross-Strait policies. She traces both problems to the Lee Teng-hui era. In Rigger’s account, the leadership crisis reflects conflict between what she calls “’49ers” (often called “mainlanders”) or waishengren, who came to Taiwan after losing the civil war in China, and “locals” (often called “Taiwanese” or benshengren). After the “local” or “Taiwanese” Lee succeeded mainlander Chiang Ching-kuo and cooperated with James Soong—of mainlander background but with strong ties to local, grassroots politics—the schism seemed manageable. But when Lee marginalized Soong and backed mainlander Lien Chan as his would-be successor, the KMT split and lost a three-way race for the presidency in 2000 to the DPP’s Chen Shui-bian, who would soon receive support from Lee’s new party, the Taiwan Solidarity Union. The urgent tasks of stymying Chen and winning back the presidency papered over the KMT’s divisions for a time, with Lien and Soong even running, unsuccessfully, on a unity ticket. But with Lee and Soong gone from the party, the KMT party center reverted to control by the mainlander elite, while Wang Jin-pyng—speaker of the LY and thus the KMT’s top-ranking politician—emerged as a powerful localist leader. Although the KMT regained the presidency and retained control of the LY in 2008, Ma Ying-jeou’s two terms as president saw spiraling conflict between Ma—associated with the mainlander elite—and Wang. After the Sunflower Movement’s occupation of the legislature stalled a cross-Strait trade in services agreement backed by the Ma government, and a bungled presidential candidate nomination process, the mainlander-dominated KMT lost the presidency and the LY in 2016. In 2020, it appeared that the KMT might manage once again to straddle its internal divide with a surprising presidential candidate: Han Kuo-yu—an unconventional politician of mainlander background but with long-cultivated localist credentials. In the end, the provocative populist Han alienated both wings of the KMT and the party again lost badly.

In cross-Strait policy, Rigger argues, Lee had devised a winning formula for the KMT. His Guidelines for National Unification accepted a version of “one China,” asserted Taiwan’s/the ROC’s sovereignty in terms that Beijing could tolerate, and moved away from the Chiang-era non-recognition of the PRC’s existence—thereby opening the door to increased engagement with the mainland, especially in economic affairs. Despite the deterioration in cross-Strait ties later in Lee’s tenure, especially after his characterization of Taiwan-mainland relations as a “special type of state-to-state relations,” Lee had laid the foundation for the 1992 Consensus—a term retrospectively coined with reference to a cross-Strait meeting that Lee had instigated, and that became the framework for the rapid cross-Strait rapprochement and domestic political success achieved by the KMT under Ma’s leadership. The problem for the KMT, Rigger argues, is that mounting disappointment with cross-Strait relations and distrust of Beijing and its agenda have turned Taiwanese (especially the younger generation) against the KMT’s approach—all the more so as the DPP under Tsai has adopted a more moderate stance on cross-Strait issues. The problem became worse as KMT presidential candidates Hung in 2016 (before her replacement by Chu) and Han in 2020 struggled to articulate a cross-Strait policy that was neither more accommodating toward China than the no-longer-appealing 1992 Consensus, nor disconcertingly unclear or unstable, nor unacceptable to Beijing.

Still, Rigger cautions against counting the KMT out. She points to Taiwan’s resilient two-party system, the considerable, if diminished, financial and organizational assets possessed by the KMT, the existence of a capable, if small, cohort of young KMT politicians—including the new chairperson selected in 2020—and supporters who could revive the party, and the lack of ardent support for the DPP among many voters.

Economic issues loomed large in Taiwan’s 2016, 2018, and 2020 elections and pose some of the biggest challenges facing Tsai and the DPP-led government. By Taiwan’s standards, economic performance had been sluggish under Ma, and this was part of what drove voters to the DPP in 2016. With the Chinese and global economies growing more slowly and amid increased competition from lower-cost producers abroad, one traditional driver of Taiwan’s economy—exports—held limited potential to spur sustained growth. Economic anxiety among the young, who feared the consequences of a greater opening to the lower-wage behemoth across the Strait, fueled the Sunflower Movement, which boosted the DPP’s electoral fortunes in 2014 and 2016, and gave rise to the new, partly DPP-aligned New Power Party (NPP) (shidai liliang). A principal reason that cross-Strait policy shifted from perennial liability to new-found strength for the DPP by the 2016 election cycle was that the public had grown skeptical of the Ma administration’s claims that deepening integration with mainland China’s economy would bring economic gains to Taiwan that were worth the long-acknowledged political risks. Amid worsening income distribution, income inequality and economic insecurity had become major issues as well. In the 2016 campaign and during the four-year term that followed, Tsai and the DPP moved to address these economic policy issues with initiatives that included pension reform, education reform, improving the social safety net, industrial policy focusing on several technology-intensive sectors, reforms to the financial sector, and foreign trade and investment policy, including rebalancing to reduce dependence on China.

In 2018, economic difficulties contributed to the DPP’s serious electoral setback in local elections. The economy was still sluggish, its troubles accentuated by an energy shortage that was partly the product of government policies on nuclear power. Some groups, such as future public-sector pensioners, saw their economic interests at risk from DPP-supported reforms. Other groups were disappointed with slow progress of promised reforms. By 2020, however, a modest economic recovery—aided by the flight back to Taiwan of mainland-based operations concerned about the escalating U.S.-China trade war—saw Taiwan outperforming its closest comparators, including Korea, Hong Kong, and Singapore. This likely helped Tsai and the DPP in their successful quest for re-election. As Tsai began her second term, however, a new and serious economic issue loomed: the fall-out from COVID-19. By the time of Tsai’s second inaugural, it was clear that Taiwan had handled the pandemic, or, at least, its first wave, extraordinarily well. But the severe downturn in the global economy, especially among advanced industrial countries in Europe and North America, posed new and possibly lasting challenges for Taiwan’s deeply internationally integrated economy, even as it also created new opportunities, including those arising from new imperatives to diversify global supply chains.

Although such near-term developments are politically salient, in economics as in politics, the policy challenges and opportunities facing Tsai and the DPP government in its first and second terms have deep roots in long-standing, structural factors. In assessing Taiwan’s troubles and the prospects for effective policy solutions, Pochih Chen frames economic analysis and policy assessment with a long historical view to conclude that Taiwan under Tsai faces several difficult problems stemming from deeply ingrained economic habits ill-suited to current conditions, and from unreasonably high expectations partly born of past success and the complacency it has produced. Chen attributes Taiwan’s stunning gains as a newly industrializing country through the 1980s to its having engaged a relatively open and liberal trading order and thereby benefiting from the forces of international factor price equalization. As one of the relatively few countries to take advantage of open markets in more developed countries, Taiwan reaped gains in national income and development that came from exporting goods in which Taiwanese producers had a comparative advantage. Taiwan enjoyed increases in per capita income generated by trade-driven pressure to equalize the price of labor cross-nationally in industries that produce traded goods. This resulted in Taiwanese workers’ wages rising toward developed country levels.

In more recent times, however, the same processes have begun to work against Taiwan. As Taiwan became a relatively high-wage country, and as China and other less-developed economies began to compete with Taiwan in the global marketplace, open international trade began to drive down Taiwanese firms’ prices and profits and exerted downward pressure on wages and employment for lower-skilled Taiwanese workers in sectors that produced tradable goods. Finding new sources of growth in national income and wages is now more difficult for Taiwan, requiring the development of higher-value-added industries, and effective government policies to foster them. This includes promoting knowledge-intensive industries and relying more on non-tradable sectors of the economy (including some types of services) that are better insulated from lower-paid foreign competition.

While the Tsai administration appears to have grasped some of the issues, it faces several serious obstacles: widespread overestimation of the productivity and international competitiveness of Taiwan’s labor force; ingrained habits of relying on original equipment manufacturing (OEM)—a sector where price competition is fierce and production to buyers’ specification stifles value-creating innovation; reliance on cost-cutting as a response to foreign competition in export sectors; poor measurement and incentive structures for research and development; weak entrepreneurship that is further discouraged by outmoded regulation and high costs for land and other factors; and underdeveloped financial institutions that do not adequately transfer savings into investment and that lead to other deleterious effects associated with surplus savings. Integration with the Chinese economy, which began under Lee, grew under Chen, and accelerated under Ma, has compounded these difficulties. The ties to the mainland have led to rapid transfer of lower-end industry across the Strait, and the pattern soon began to spread to higher value-added upstream and downstream sectors. This integration into the international production chain also has made Taiwan more vulnerable to Beijing’s use of the economic leverage it has gained over Taiwan for political ends.

Chen concludes that wise government policies—including ones pursued by the Tsai government to foster several higher-tech industries, reform the financial sector to encourage targeted investment, and pursue closer economic ties with the U.S. in a time of greater U.S. wariness toward China—can address some of the most important problems. But it is too soon to address the effect of Tsai’s policies, and success is not assured, given the magnitude of the tasks, the difficulty of overcoming entrenched thinking that sees policies of trade liberalization as the surest path to economic success, the skepticism that inevitably greets (sometimes with justification) ambitious initiatives in state industrial policy, and the new uncertainties introduced by the global economic impact of the COVID-19 pandemic. In her first term, Tsai’s government made only limited progress on these difficult policy fronts.

In a similar vein, Peter Chow finds policies on international economic relations to be a possible, but limited and difficult-to-achieve, answer to some of the long-mounting economic difficulties facing Taiwan. Acknowledging the challenges posed by slower global economic growth since the 2008–2009 financial crisis—which offered a preview of the serious economic fallout from COVID-19—and China’s potent and growing ability and inclination to constrain and impede Taiwan’s international economic engagement, Chow identifies several areas that offer significant opportunities, as well as challenges, for Taiwan under the Tsai government.

Taiwan can build upon, and exploit, the gains that flow from Taiwan’s having attained membership in the World Trade Organization and major WTO-linked plurilateral agreements and various multilateral economic institutions—such as the Asian Development Bank (ADB) and the Asia Pacific Economic Cooperation (APEC) group. But some newly important bodies and accords, such as the Beijing-led Asian Infrastructure Investment Bank (AIIB) remain beyond reach. Taiwan can seek to avoid provocation and deterioration in cross-Strait economic relations—and renew the pursuit of ECFA follow-on agreements—to mitigate the possibility that Beijing will use its considerable economic leverage against Taiwan. But this policy is not assured of success given the tough line Beijing has taken toward Tsai’s government, domestic political opposition in Taiwan to greater integration with China, and the significant risks that come with highly asymmetrical cross-Strait economic interdependence. Taiwan can pursue bilateral trade and investment pacts (beyond the few small-scale ones achieved so far), primarily with countries in the region and especially with countries that are members of large emerging trading blocs, including the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Yet Beijing’s posture as a formidable and obdurate gatekeeper limits prospects in this area. Taiwan can seek to deepen its already strong de facto integration—and especially its links to the U.S. and Japan—in the global value chain for high value-added products. On the other hand, this strategy risks encouraging greater migration of even relative...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Acknowledgements
• List of contributors
• 1. Introduction: change, continuity, and challenges for Taiwan in the Tsai era
• 2. Elections and the challenges of governing in Taiwan under Tsai
• 3. Kuomintang agonistes: party politics in the wake of Taiwan’s 2016 and 2020 elections
• 4. Taiwan’s need for new attitudes, aims, and actions to further economic growth
• 5. Taiwan in international economic relations
• 6. Constructive build-up of Taiwan’s defense
• 7. Cross-Strait relations under the Tsai administration
• 8. U.S.-Taiwan relations: continuity and change in a triangular dynamic
• 9. Taiwan-Japan relations in the Tsai era
• 10. Taiwan’s quest for international space in the Tsai era: adapting old strategies to new circumstances
• 11. Taiwan’s culture wars from “re-China-ization” to “Taiwan-ization” and beyond President Tsai Ing-wen’s cultural policy in long-term perspective
• Index