After the Election: The Future of Cross-Strait Relations

Publication: China Brief Volume: 16 Issue: 1

Taiwanese Presidential candidates James Soong, Eric Chu and Cai Ing-wen

Barring an upset of momentous proportions, Taiwan’s opposition Democratic Progressive Party (DPP) is expected to defeat the ruling Kuomintang (KMT) or Nationalist Party, during presidential elections scheduled for January 16. The latest polls by the popular Taiwanese TV station TVBS show the DPP candidate and party chairwoman Tsai Ing-wen, leading her KMT counterpart, Eric Chu, by at least ten percentage points (TVBS [Taipei], December 27, 2015). The DPP is also tipped to pick up a substantial number of seats in the Legislative Yuan, Taiwan’s parliament (China Post [Taipei], December 26, 2015; Taipei Times, November 29, 2015). For international observers, the big question is what strategies the Chinese Communist Party (CCP) leadership headed by President Xi Jinping will adopt to prevent a rollback of cross-Strait reconciliation attained during the two four-year terms of out-going President Ma Ying-jeou. Also in the spotlight are the mainland-related policies of both Tsai and Chu, who is expected to remain KMT Chairman even if he were to lose the presidential contest.

Beijing’s Taiwan policy is being formulated by the CCP Central Leading Group on Taiwan Affairs (CLGTA), whose Leader is President and General Secretary Xi and whose Vice-Leader is Chairman of the Chinese People’s Political Consultative Conference (CPPCC), Yu Zhengsheng. While there is speculation that the CLGTA may call a National Taiwan Work Meeting (NTWM) after the presidential election, much of Beijing’s future measures to promote national reunification can be divined from the work meeting that was convened in January of 2015. In the preceding months, Taiwan had held major elections and was reeling from a popular political movement. The NTWM was called when it had become obvious that the KMT was losing its popularity in Taiwan. During major municipal and county-level elections held in November 2014, the DPP won 13 seats versus six for the KMT. Of the six cities and counties won by the KMT, only New Taipei City—where incumbent mayor Eric Chu won by less than two percentage points—is considered a major KMT political stronghold. Earlier that year, the student-led campaign Sunflower Movement prevented the KMT from passing the Cross-Strait Service Trade Agreement (CSSTA) Pact in the Legislative Yuan (BBC Chinese, November 28, 2014; South China Morning Post, March 28, 2014). If a similar Leading Group meeting is called in response to this year’s election, its recommendations will be deemed to have immense significance for the mainland’s interactions with Taiwan’s new leadership.

In his speech to the NTWM, Yu Zhengsheng, who is also a member of the Politburo Standing Committee (PBSC), laid down several policies that were geared toward promoting cross-Strait economic synergy and integration. “We must push forward economic integration, and promote the overall blueprint of the cooperation of the production [structures and capacities] across the Strait,” he said. Specific measures included enhancing the participation of Taiwan businesses in free trade zones and other development areas in Fuzhou and Pingtan, Fujian Province, and in Kunshan, Jiangsu Province. Yu and other Leading Group members also cited the need to boost preferential policies, particularly for mainland-based Taiwanese manufacturers which had been hit by steep increases in labor, land and other costs ( [Beijing], February 3, 2015; Xinhua, January 27, 2015). President Xi reiterated the “economics first” principle while meeting Eric Chu in Beijing last May. The Chinese leader indicated that mainland-Taiwan “economic integration is beneficial toward mutual profits and win-win [scenarios],” adding that “this principle should not be disrupted under any circumstances.” Xi also tried to win over young people in Taiwan by urging that “youth from both sides of the Taiwan Strait should become good friends and good partners in jointly fighting [for a better future]” (People’s Daily, November 7, 2015; Xinhua, May 5, 2015).

Concurrently, the CLGTA leadership is increasing economic inducements for the sanzhongyiqing (三中一青) sectors, a reference to small- and medium-sized enterprises (SMEs), low- and medium-income groups, residents in central and southern Taiwan, as well as Taiwanese youth in general. For example, young unemployed Taiwanese are encouraged to find work in cities along China’s prosperous eastern coast. Chinese importers are also urged to buy more agricultural and aquatic products from rural areas in central and particularly southern Taiwan counties, which happen to be the traditional strongholds of DPP supporters. These moves complement decade-long efforts by mainland-based, state-owned and private firms from a wide range of industries to establish substantial footholds on the self-ruled island (Global Times, May 4, 2015; China News Service, January 28, 2015).

In contrast to the “economics card,” Beijing realizes that political agendas will have to wait. While it is no secret that Chinese leaders from Jiang Zemin onward have committed to starting “political talks” with Taiwan—meaning negotiations that would lead up to unification—as early as possible, even as ambitious a leader as Xi Jinping realizes that the prospects for a politically-oriented dialogue with Taiwan leaders are low in the near term. And even though Xi’s unexpected decision to hold a summit with President Ma in Singapore last November was motivated by political considerations, the history-making tête-à-tête had a relatively limited goal of ensuring that the “one China principle” (known as the “1992 Consensus” in Taiwan), which underpins eight years of cordial relations across the Strait, would not be rolled back should the DDP triumph on January 16. While Xi sought to appeal to the political sensitivities of KMT supporters in Taiwan by using the familiar “blood is thicker than water” proverb, he also wanted to show DPP supporters that Taiwanese people as well as the Taiwanese economy—stand to lose if the next ruling party were to jettison the “1992 Consensus” (People’s Daily, November 8, 2015; CCTV, November 7, 2015).

The CCP leadership, will, however, not give up the “military option” in pursuit of national reunification. The Xi leadership will continue to brandish the stick of a “war of liberation” to go along with the “carrot” of economic inducements. Despite signs of a thaw in the Taiwan Strait, both mainland and Taiwan authorities conduct annual war games aimed at each other. When Ma asked Xi during their Singapore conclave to remove the estimated 1,500 short- and medium-range missiles targeted at Taiwan, the Chinese leader did not give a direct answer (South China Morning Post, November 10, 2015; Channel News Asia, November 8, 2015). Moreover, thanks to ongoing restructuring of the command-and-control mechanisms within the PLA, which involves much-enhanced synchronization between the personnel and hardware of the Naval, Air Force and missile forces, Beijing’s ability to take over Taiwan by force is believed to be improving (Phoenix TV, December 24, 2015; People’s Daily, December 22, 2015).

How will the Tsai Ing-Wen administration react to the CCP’s multi-pronged tactics? A former professor at National Taiwan University who specialized in international law, Tsai was credited with helping to coin the liangguolun (“two countries theory”; 兩國論) when she was the cross-Strait affairs adviser to former president Lee Teng-hui. The liangguolun—which refers to the fact that Taiwan is as legitimate a country as mainland China—was one reason behind the wargames conducted by the PLA just off the Taiwan coast during presidential elections in 1995 and 1996. Yet Tsai, who served as Minister of the Mainland Affairs Council during the DDP administration of former president Chen Shui-bian, has in the past few years toned down her rhetoric about mainland issues (United Daily News, December 26, 2015; Apple Daily [Hong Kong], December 25, 2015).

This was most clearly demonstrated during her visit to Washington D.C. last June, when her main message to U.S. President Barack Obama’s administration was that she was committed to “maintaining the status quo of the Taiwan Strait.” Tsai noted in a speech at a Washington think tank that she favored the peaceful and stable development of cross-Strait ties “in accordance with the will of the Taiwanese people and the existing Republic of China constitutional order” (China Post, June 6, 2015; Taipei Times, June 5, 2015). In the last few weeks of the presidential campaign, Tsai has characterized her mainland policy as “promoting communication, no provocations and no accidents.” She said in a Christmas Day presidential debate that if elected, the DPP “would do our best to seek ways [forward] that could be accepted by both Taiwan and the mainland.” “We will not be provocative, and hope the two sides can sit down and talk in a rational manner,” she added (Hong Kong Economic Times, December 28, 2015; [Beijing], December 25, 2015).

However, the biggest challenge facing Tsai is not missiles from the mainland, but rather China’s unprecedented outbound foreign direct investment (OFDI) game plan—or at least that part of the overseas investment strategy that is meant to render the island even more dependent on the mainland economy. Tsai has made no secret of the fact that DPP supporters fear Taiwan’s economy would be swallowed up by the onslaught of “mainland money.” As she put it last month: “Taiwanese people fear that Chinese enterprises are using state money to get into Taiwan so as to break up and then control Taiwan’s independent industrial structure” (Ming Pao [Hong Kong], December 26, 2015; Channel News Asia, December 26, 2015). Recent attempts by the state-owned chip-maker and IT giant, Tsinghua Unigroup, to shell out $2 billion for substantial stakes in two Taiwan chip-packaging companies, Silicon Precision Industries Co. (SPIL) and ChipMOS Technologies Inc., have raised eyebrows in business and political circles on the island, particularly owing to the fact that several big-name Taiwan chipmakers have already relocated to Shanghai and other areas. Tsinghua Unigroup’s gambit has been interpreted as a part of an attempt by the mainland to hollow out the Taiwanese high-tech sector (Liberty Times [Taipei], December 12, 2015; United Daily News [Taipei], December 12, 2015). It is true that mainland capital has in the past few years targeted important economic fields in Taiwan ranging from banks to media groups. Yet efforts by Chinese high-tech firms to at least partially control chip-makers—thereby making a dent in Taiwan’s so-called “Silicon Shield”—have aroused the most concern due to the fact that this sector has long been one of Taiwan’s truly globally competitive industries (Global Times, December 7, 2015; Taipei Times, June 5, 2015). As of the end of 2015, Tsinghua Unigroup is awaiting the approval of the Taiwan government as well as that of shareholders of affected companies.

Charting a New Path?

In the event of a KMT win, the path forward is less certain, as the KMT’s policies toward the mainland seem to be in flux. KMT authorities were forced to drop their presidential candidate, Legislative Yuan Vice-Chairman Hung Hsiu-Chu, at an acrimonious party conference last October because of the perception that she was too “pro-mainland” (BBC Chinese, October 15, 2015; [Hong Kong], October 7, 2015). Moreover, the appearance of KMT Honorary Chairman Lien Chan in Beijing’s military parade marking the 70th anniversary of the Chinese victory in World War II ignited so much indignation among the general public that even President Ma and other prominent KMT politicians dissociated themselves from Lien’s perceived kowtowing to the CCP (BBC Chinese, September 5, 2015; [Hong Kong], August 30, 2015). This would constrain a KMT President’s ability to follow President Ma’s much closer relationship with the mainland.

Irrespective of how well Chu does at the polls in less than a week, it is likely that the KMT will avoid provocative statements regarding closer political ties between the mainland and Taiwan. Chu and his colleagues, however, will continue to insist that the future of GDP growth in Taiwan depends on a continuation of cross-Strait economic interactions—in addition to academic, culture and people-to-people interchanges. The KMT—and the CCP—seem confident that rational demonstrations of the win-win scenarios that have accrued from outgoing President Ma’s friendly mainland policies the past eight years will enable Taiwan’s oldest ruling party to triumph again in four years.


In light of the diffusion of cross-Strait tension since the pro-mainland KMT became the ruling party in 2000, Taiwan’s significance as a player in the Asia-Pacific geopolitical theatre seems to have faded somewhat from the global limelight. Beijing’s vehement protest against Washington’s recent sale of $1.83 billion’s worth of frigates and other hardware to Taiwan testifies to the CCP leadership’s worry that the self-ruled island could become a pawn in America’s perceived “anti-China containment policy” (Radio Free Asia, December 18, 2015; Apple Daily, November 26, 2015). The likely ascendancy of the DPP in Taiwanese politics could prod the Xi Jinping leadership into adopting tougher tactics to thwart “Taiwanese independence” including the re-brandishing of the “military liberation” card. Beijing could also take stronger measures against what it perceives to be Washington’s efforts to scupper China’s emergence as the unchallenged regional superpower. On the shoulders of the future Taiwanese president falls the complicated task of maintaining the island’s economic growth while at the same time defusing tension with China and ensuring American support.

Dr. Willy Wo-Lap Lam is a Senior Fellow at The Jamestown Foundation. He is an Adjunct Professor at the Center for China Studies, the History Department and the Program of Master’s in Global Political Economy at the Chinese University of Hong Kong. He is the author of five books on China, including “Chinese Politics in the Xi Jinping Era: Renaissance, Reform, or Retrogression?”