Taiwan’s Presidential Frontrunner Faces a Balancing Act With China

Taiwan’s Presidential Frontrunner Faces a Balancing Act With China

More than once when William Lai was a small boy, a passing typhoon blew the roof of his home clean away. It’s a recollection that brings a wry smile to Taiwan’s vice president, who grew up in the small coalmining hamlet of Wanli perched on the island’s far north.

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Lai’s father died in an accident in the pits when he was just 2 years old, leaving his mother to raise six children alone. Money was tight. Instead of toys, Lai had banyan trees to climb; instead of new clothes, he wore cast-offs; he didn’t have privilege, he had to prove himself.

“One of the biggest assets my father left me was being impoverished,” Lai tells TIME in his only pre-election Western media interview in late October. “Because in this environment, I worked harder, more vigorously on everything I did. It gave me a sense of determination.”

It’s a work ethic that has already transported Lai to Harvard, work as a kidney doctor in Taiwan, and then public office as mayor of its southern city of Tainan. Today, Lai, 64, is the frontrunner in January elections to replace outgoing President Tsai Ing-wen, who belongs to the same Democratic Progressive Party (DPP) but is ineligible to stand for a third term.

Two days after our conversation Lai returned to Wanli on the campaign trail, where he was greeted with presumptive shouts of “hello, president!” by his erstwhile neighbors. After lighting incense sticks at a lantern-filled temple, Lai told the assembled crowd outside that he would strive to improve transport links and healthcare facilities for seniors, before turning to more weighty concerns. “My first priority is to maintain stability in the Indo-Pacific region,” Lai told a throng of farmers and crab fishermen.

Lai may not worry about typhoons these days, but geopolitical winds continue to batter the Taiwanese. Beijing considers the self-governing island of 23 million its sovereign territory and has repeatedly vowed to reclaim it—by force if necessary. Its status remains the most combustive of the myriad squabbles that today define relations between the world’s superpowers. On four occasions, President Joe Biden has vowed to protect Taiwan from Chinese military aggression. 

The saying that “all politics is local” comes with an almighty caveat in Taiwan, where January’s election will hinge on how best to manage cross-Strait relations. The CCP loathes Lai’s China-skeptic DPP and has branded its candidate a “troublemaker.” All three of Lai’s rivals for the presidential palace argue that boosting dialogue and engagement will better safeguard Taiwan’s de facto autonomy, making their candidacy far more palatable to Beijing.

According to a late October poll, Lai leads with 32% of support, with 22% for Hou Yu-ih of the main opposition Nationalists, or KMT; and 20% for Ko Wen-je of the upstart Taiwan People’s Party. Terry Gou, the billionaire founder of Apple supplier Foxconn, brings up the rear with just 5%. On Nov. 15, Hou and Ko agreed to join forces under a single candidate, threatening to tip the balance in favor of the China-friendly camp (although to date have yet to agree whom)

The vote also has profound global implications. Taiwan is the world’s 16th-largest trading economy, exchanging $907 billion in goods and services in 2022. It produces 90% of the world’s advanced semiconductor chips, which are vital for every industry but especially to the artificial intelligence boom. A blockade on Taiwan would imperil well over $2 trillion in economic activity, estimates the Rhodium Group, even before factoring in sanctions or any military response. 

Lai knows that war benefits nobody.

“Taiwan hopes to be friends with China—we don’t wish to be enemies,” says Lai. “We would welcome Chinese President Xi Jinping to Taiwan and prepare Taiwanese delicacies for him to try.”

Whether the strongman would appreciate an invitation to territory he considers his own backyard is a fraught question. What is certain is that an unprecedented third-straight term for Beijing’s nemesis DPP would represent an entrenchment of China-skepticism across Taiwanese society and potentially a tipping point for relations. While Xi has called reunification “a historic mission and an unshakable commitment,” Lai counters that “we are already a sovereign, independent country.”

Yet few other countries agree. Taiwan politically split from China’s mainland in 1949 following the nation’s civil war. Today, its government retains formal diplomatic relations with just 13 nations. The U.S. switched its recognition to Beijing in 1979, though maintains a bevy of informal ties, and is obligated by Congress to supply Taiwan with weapons. Still, attempts by Taiwan to build direct diplomatic or commercial links are met with fierce reprisals by Beijing, including military drills, a trade embargo, and diplomatic freeze.

Following the return of war to Europe, and more recently the Middle East, Taiwan’s citizens are naturally anxious that Asia’s unresolved Cold War conflict may be next to reignite. That China’s economy is suffering from a severe downturn has also increased fears that a crisis might be useful for Xi. Youth unemployment in China stands at 46.5% by some estimates, while the world’s second-largest economy again veered into deflation in October. One measure of foreign direct investment into China fell negative in the third quarter of 2023 for the first time on record. Given such doldrums, “Taiwan is an easy scapegoat for China,” Taiwan Foreign Minister Joseph Wu tells TIME.

A Ukrainian flag hangs on permanent display in Wu’s office, and both he and Lai say Russian President Vladimir Putin’s invasion was a stark reminder to all in Taiwan that peace cannot be taken for granted. The rising temperature spurred Tsai last year to extend mandatory national service for Taiwanese men from four months to one year. In August, she boosted defense spending to a record $19.1 billion, or 2.6% of GDP, a hike which includes purchasing 400 U.S. javelin anti-tank missiles (half have been delivered to date). In October, Taiwan unveiled its first domestically developed submarine. “If China were to launch an invasion, we must be able to safeguard our country,” says Lai.

Any hope of repairing cross-Strait ties requires reaffirming the 1992 Consensus—a political agreement between Beijing and Taipei that there is “one China,” even if they disagree over which is the legitimate power. The DPP steadfastly refuses to recognize the 1992 Consensus, with Lai calling any such concession tantamount to “relinquishing our sovereignty.” Beijing treats the fuzzy accord as Taipei’s support for eventual reunification, but it has little currency amongst today’s islanders, of whom 78% describe themselves as Taiwanese, rather than Chinese or some mix, according to a March poll.

“More and more young people today are supportive of independence,” says Lai, “which means steadfast support for our way of life, including democracy, freedom, and respect for human rights.”

That may be true, yet the fact remains that Lai’s lead in the polls has been owed to nowmended splits in the China-friendly opposition rather than any ringing endorsement of his candidature or the outgoing Tsai.

Growth in Taiwan for 2023 is projected to be 1.61%—its slowest pace in eight years. Dissatisfaction has been compounded by a slew of scandals. High-profile #MeToo cases have ensnared at least 10 DPP members in recent months, leading to the resignation of a party official for an alleged cover-up. Lai calls the scandal “very regrettable” but insists that subsequent reforms “will lead the DPP and Taiwanese society into building an environment with greater gender equality.”

Taiwan’s torpid economy has made the prospect of releasing Chinese pressure even more tempting. After all, Beijing only has to lift a ban on Chinese tourists to boost Taiwan’s GDP by over 1%, according to Capital Economics. China is waving other carrots too, and in September unveiled “special” policy measures to improve access for Taiwanese enterprises to China’s neighboring Fujian province. “Dialogue between Taipei and Beijing is also a crucial way to defuse crises and ensure peace and stability,” the KMT’s Hou wrote in Foreign Affairs in September.

Lai counters that the DPP can still maintain Taiwan’s sovereignty without endorsing the fiction of reunification. He wants to expand Taiwan’s growing web of economic ties to make the island indispensable to the global economy, rendering the price of conflict prohibitively high. Chipmakers like TSMC and MediaTek are already powering the AI revolution, while little-known firms like ASE—the world’s largest independent semiconductor testing and packaging company—further entrench Taiwan’s pivotal role in global supply chains. “While semiconductors and technology industries are Taiwan’s strengths, they are also Taiwan’s responsibilities towards the international community,” Lai says.

Taiwan is also busy forging new trade pacts—much to Beijing’s chagrin. In June, Washington and Taipei signed the U.S.-Taiwan Initiative on 21st Century Trade, the first trade agreement between the two sides since the severing of official relations. The agreement streamlines regulation, fights corruption, and provides help for small- and medium-sized enterprises. The hope in Taipei was that other nations would feel confident to follow in America’s wake. Sure enough, on Nov. 8, Taiwan and the U.K. signed an enhanced trade partnership that paves the way for future talks on green energy, digital trade, and investment. In response, Beijing rebuked London for using trade as “an excuse to … enhance substantive relations with Taiwan.”

For Lai, every Taiwanese investment abroad and foreign investment at home incrementally boosts the island’s security. Already, Taiwanese firms such as TSMC, Foxconn, and electric vehicle battery manufacturer ProLogium are exploring new facilities in the U.S., India, and France respectively. Meanwhile, foreign firms such as California-based chipmaker Nvidia—whose founder, Jensen Huang, was born in Tainan—and Dutch lithography machinery maker ASML are looking at Taiwan expansions. 

But ultimately, it’s a two-way street. While Taiwan’s burgeoning role in supply chains increases international opposition to Chinese aggression, should Beijing actually gain control of the island, it also increases the cost of diplomatic or military retaliation. In May, Warren Buffett sold off Berkshire Hathaway’s entire stake in TSMC, citing rising geopolitical tensions. 

“Countries might be really reluctant to sanction Beijing if that stands in the way of them getting access to those semiconductors,” says Oriana Skylar Mastro, a fellow at the Freeman Spogli Institute for International Studies at Stanford University and author of Upstart: How China Became a Great Power.

The question for Taiwan’s voters remains who they trust to safeguard their cherished way of life. At the DPP’s headquarters within a scruffy office block in central Taipei, TIME shadowed Lai through several meetings with suited industry representatives and social activists in tees and sweatpants.

At one, Lai was chided about his party’s commitment to disabled rights, and for the fact that the government’s judicial reform website hasn’t been updated since 2020. “Does that mean the government didn’t do anything or just doesn’t care about this topic?” asked the spokesman for a lawyer’s group pointedly. At another meeting, a lesbian couple allowed to wed after Taiwan’s landmark 2019 marriage equality legislation tearfully described the lingering discrimination their daughter feels at school. While Tsai was often criticized for her academic’s aloofness, Lai possesses the doctor’s bedside manner, listening carefully and soothing with soft eyes and disarming humor.

Yet the open nature of Taiwan’s democracy has left it vulnerable to the CCP “influencing our presidential elections to support parties they see as friendlier to their interests,” says Lai. One prominent DPP lawmaker ended his reelection bid after intimate photos from his affair with a Chinese national were sent to Taiwanese media. In August, counterfeit documents circulated that claimed Lai had pledged $320 million for a housing project during an official visit to Paraguay.. 

China also targets Taiwanese pockets. After former U.S. House Speaker Nancy Pelosi visited Taipei in August last year, Beijing responded by banning thousands of Taiwanese products, including pineapples, custard apples, and Taiwanese grouper —each carefully chosen as a key export in a swing constituency to increase pressure on the incumbent administration. And with the prospect of four more years of DPP government, the question is what levers are left for Beijing to pull for a reaction.

“Over time, the Taiwan population becomes more inoculated towards coercion,” says Chong Ja Ian, an expert on China’s diplomacy and professor at the National University of Singapore. “That also means [Beijing] has to up the ante every time to send a strong signal of displeasure.”

These tactics alone underscore that China and Taiwan share a language and history, but precious little else. Taiwan ranks 10th in the world (and top in Asia) in the Economist Intelligence Unit’s 2022 Democracy Index. China sits in 156th place. Taiwan’s politics are messy, partisan, and febrile; China is ruled by Beijing’s secretive Zhongnanhai leadership complex. China has banned Pride since 2021 in a crackdown on LGBTQ rights; in October Lai became the highest-ranking Taiwanese official to attend Taipei’s parade, saying his support was natural given his commitment to “freedom, democracy, and human rights.” Compare this to China, where online censors even scrubbed out “overly effusive” tributes following October’s death of former Premier Li Keqiang, lest the grief foment social unrest.

For Lai, any pretense that these two societies are in any way converging is preposterous. Ultimately, the 100 miles of choppy ocean that separates island and mainland doesn’t do justice to just how differently their people feel and think—and the coal miner’s son has no qualms getting his hands dirty to keep it that way: “We will not back down.”

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