Relevant terms and expressions are reported in English followed by a transcription in Chinese characters. Traditional characters are used for terms and statements drawn from Taiwanese sources, while simplified characters are used for terms and statements drawn from Chinese sources. Given the lack of a standardised system for proper nouns in Taiwan, people’s names and place names are transliterated either in Wade-Giles or in Gwoyeu Romatzyh, following their most common usage. Proper nouns from the PRC are transliterated in Hanyu Pinyin.

The year in review was one of the most tumultuous in the recent history of Taiwan and cross-Strait relations. At the beginning of 2019, President Tsai Ing-wen appeared destined for an ignominious defeat after the Democratic Progressive Party’s rout in the 2018 local elections. By the end of the year, her victory in the presidential election looked certain. On 11 January 2020, Tsai won her second term in office beating the controversial Kuomintang candidate Han Kuo-yu. Cross-Strait, international, and domestic factors converged to realise this improbable electoral comeback. The stagnation of China’s Taiwan policy over the «1992 Consensus» and the «one country, two systems» formula largely opposed in Taiwan, coupled with the increasingly assertive posture of the People’s Republic of China under the leadership of Xi Jinping, worried the Taiwanese public and revitalised Tsai and the pan-Green camp. The resonance in Taiwan of the unexpected eruption of violent protests in Hong Kong against the local and central government then cleared a path for Tsai’s electoral victory, while exposing the inherent contradictions of the Kuomintang’s own China-friendly approach to cross-Strait relations. Tsai’s recovery benefited also from the deepening support provided by the Trump administration, and from the positive spillover effects of the Sino-American trade war, which fostered a convincing economic growth in the period leading up to the election. Within Taiwanese politics, the populist wave raised by Han Kuo-yu swept over the Kuomintang and appeared ready to conquer national politics throughout the first half of 2019. However, it ultimately failed to address the concerns of the domestic electorate over the future status of Taiwan and also dragged the pan-Blue camp to defeat in the legislative election, in which the Democratic Progressive Party obtained a stable parliamentary majority to support Tsai’s second term in office.

1. Introduction

This essay explores the developments which occurred in the Republic of China (Taiwan) – henceforth ROC – in the fields of cross-Strait relations, international politics, domestic economy and politics in 2019, as well as the results of the general election held on 11 January 2020. The first section of the essay, covering cross-Strait relations, consists of four segments. The first examines the communicative dynamic between the ROC and the People’s Republic of China (PRC) in 2019, as both countries shaped narratives aiming to legitimise their positions to domestic and international audiences. The second segment assesses the articulation of China’s Taiwan policy in 2019 and how it affected the ROC’s international presence. The third discusses instead the impact of the 2019 protests in Hong Kong both on cross-Strait relations and on the trajectory of Taiwan’s elections. The last segment of this section analyses the China policy of the administration of President Tsai Ing-wen (蔡英文), with a focus on its political, legal, and defence initiatives. The second section covers major developments in Taiwan’s international relations beyond their cross-Strait dimension. It starts with an account of the deepening relation between Washington and Taipei, and it is followed by an assessment of Taiwan’s relations with both Japan and the target countries of the New Southbound Policy. The third part of the essay – chapter four – covers domestic politics and economics. While cross-Strait and international factors influencing the electoral campaign are analysed in the previous sections, this portion of the essay informs such events to the domestic economic and political processes occurring in Taiwan. In order to do so, section four is divided into three segments. The first segment presents estimates and official data on the performance of the Taiwanese economy in 2019. The second segment maps the unfolding of the campaign for the 2020 presidential election. Finally, the third segment presents the results of the general elections, with a focus on the contest for the Legislative Yuan (LY).

2. Cross-Strait Relations in 2019

Two major events shaped the path of cross-Strait relations in 2019. The first was the key speech delivered by Chinese leader Xi Jinping (习近平) in January, which doubled down on previous pledges to alter the current status quo. The second was the unexpected emergence of mass protests in Hong Kong since June, which accentuated the existing cleavage between China and most of Taiwanese society. Against this backdrop, Beijing and Taipei continued to pursue their competing strategies vis-à-vis the counterpart. Beijing mixed co-option and coercion, while Taipei continued to implement a comprehensive defence agenda against the threat of military invasion and infiltration of its civil society.

2.1. China’s stagnant Taiwan policy

On 2 January, PRC President and CPC General Secretary Xi Jinping delivered a speech on the occasion of the 40th anniversary of the «Message to Compatriots in Taiwan» issued by the Standing Committee of the National People’s Congress in 1979. For the occasion, Xi reiterated the cornerstones of his administration’s Taiwan policy: acceptance of the so-called «1992 Consensus» (九二共识) and of the «One China principle» (一中原则) enshrined within it; «peaceful reunification» (和平统一) according to the «one country, two systems» (一国两制) framework; non-negotiable opposition to any form of «Taiwan independence» (台独) and to any «external interferences» (外部势力干涉). The Chinese leader envisioned «reunification» (统一) with Taiwan as the coronation of the process of «national rejuvenation» (民族复兴). Moreover, Xi reiterated his predecessors’ claims that China would never renounce the use of «military force» (武力) and vowed that it would «reserve the option of taking all necessary measures» (保留采取一切必要措施的选项) to achieve reunification.1

The speech was a summa of Xi’s previous statements on the Taiwan issue, but it put the spotlight firmly on the «one country, two systems» formula as Beijing’s only solution to the current deadlock in cross-Strait relations. At the same time, Xi’s message ominously reminded the Taiwanese public about the possibility of a military invasion of the island. Predictably, President Tsai responded with a stern rejection of the «1992 Consensus» and of «one country, two systems», admonishing China to «face the reality of the existence of the Republic of China (Taiwan)» (正視中華民國臺灣存在的事實) and to recognise its democratic system.2

Xi’s January speech was glaring evidence of the calcification of China’s Taiwan policy since the collapse of cross-Strait rapprochement between 2015 and 2016. His pledge to «fully consider Taiwan’s current situation» (充分考虑台湾现实情况) hardly reflected the overwhelming opposition to «one country, two systems» among the Taiwanese public, as well as the consolidation of a localist political identity on the island.3 Commentators have explained this apparent cognitive dissonance in China’s Taiwan policy by highlighting two causes. One was a hasty reading of the results of Taiwan’s local elections held in November 2018, which interpreted the Democratic Progressive Party’s (民主進步黨, DPP) resounding defeat as a condemnation of the Tsai administration’s cross-Strait policy, rather than as a protest vote on the state of the economy and the quality of its local governance. The other cause was indicated as Xi’s need to reassure the hawkish constituencies within the Party-State apparatus and to create a «rally ’round the flag» effect in the context marked by economic slowdown and the Sino-US trade war.4

Polls suggest that Xi’s message had an immediate negative impact on Taiwanese attitudes towards China, increasing support for President Tsai’s presidency, thus partially softening the damage caused by the DPP’s defeat in the November local elections.5 The impact of the Chinese leader’s message was also felt in the pan-Blue camp,6 affecting the Kuomintang’s (國民黨, KMT) attempts to shape a China policy, acceptable to the Taiwanese public. During the Ma presidency, the KMT had relied on a «One China, respective interpretations» (一中各表) narrative to argue that the «One China» mentioned in the 1992 Consensus was in fact the ROC.7 Xi’s words, however, further strengthened pre-existent perceptions of Beijing’s progressive, unilateral shift in the interpretation of the 1992 Consensus, from what was originally a common baseline for relations between two one-party states into a byword for the PRC’s «reunification» agenda.8 President Tsai skilfully fleshed out the conundrum that Beijing posed to the pan-Blue camp by explicitly identifying the Consensus with «one country, two systems» in the aftermath of Xi’s speech.9 Unsurprisingly, KMT officials struggled to disentangle the party’s own support for the 1992 Consensus from the «one country, two systems».10 KMT Chairman Wu Den-yih’s (吳敦義) decision in February to reintroduce once again the idea of a «peace agreement» (和平協議) in the Taiwanese political debate, was arguably an attempt to resolve this impasse and regain momentum.11

The CPC’s annual Taiwan Work Conference held later in January, as well as Premier Li Keqiang’s (李克强) work report at the annual plenary session of the National People’s Congress, confirmed the monolithic nature of Beijing’s Taiwan policy and its complete identification with Xi’s message, highlighting a risky linkage between unification with Taiwan and the Chinese leader’s own legacy.12 The National Defence White Paper issued in July also contributed to this process, incorporating, almost verbatim, key passages of the January message and focusing in particular on the linkage between national rejuvenation and reunification.13 Foreign commentators noted how the use of language echoing Xi’s message in the newly released white paper shaped a more assertive, if not downright ominous, narrative on Taiwan when compared to its previous editions.14

2.2 China’s use of co-option and coercion towards Taiwan

As the language of China’s Taiwan policy calcified, its modus operandi, characterised by a mix of co-optation and coercion, also remained unchanged. «United front work» (统一战线工作) continued to foster pro-Beijing actors in Taiwan via a network of forums, platforms, and recruitment schemes, with a particular focus on education.15 Covert operations focused instead on the infiltration of Taiwan’s media, either via paid news or by agenda-setting.16 China’s Taiwan Affairs Office (TAO) also maintained close contact with KMT heavyweights, party delegations and local officials throughout the year to foster a perception of cross-Strait support for Beijing’s Taiwan policy.17 Among these initiatives, it is worth highlighting Kaohsiung mayor Han Kuo-yu’s (韓國瑜) visit to Mainland China and Hong Kong. Retrospectively, especially after the beginning of the Hong Kong protests, this visit shaped public perception of Han as a pro-China candidate in the presidential election. Han officially visited the PRC to sign bespoke trade deals.18 However, he also met with TAO director Liu Jieyi (刘结一) in Shenzhen and with the director of the Hong Kong Liaison Office Wang Zhimin (王志民).19 Following the backlash to Xi’s January speech back in Taiwan, Han tried to downplay the glaring political implications of the visit, emphasising instead its business-friendly nature, but TAO reports of the meeting predictably stressed Han’s public support for the 1992 Consensus.20

As the Hong Kong protests rapidly worsened, starting in June, China’s Taiwan policy did not see any relevant development until November, when 26 new measures of preferential treatment towards Taiwanese people and business were released.21 The new package expanded the set of privileges previously introduced with the «31 Measures» implemented in 2018.22 Such measures were then followed by a further revision of the law for Taiwanese investments in December.23 The timing and content of these initiatives suggest that the Chinese leadership inferred a direct correlation between their Taiwan policy and the DPP’s defeat in the November local elections, possibly expecting similar dividends for the January 2020 general elections. Successive official statements on cross-Strait relations did not introduce any relevant change. Among them, one of the resolutions of the fourth plenum of the 19th Congress CPC repeated previous pleas to respect Taiwan’s «social system and way of life» (社会制度和生活方式) after unification.24 TAO officials instead continued to profess confidence on reunification before the elections, and simply reiterated the key points of Xi’s Taiwan policy immediately after Tsai’s electoral triumph.25

Beijing’s playbook for international coercion also remained unchanged, as it further intensified punitive measures against Taipei. The Chinese government first stopped individual travel permits to Taiwan in July, and then banned group permits in August, in an attempt to turn the local tourism industry against the Tsai administration.26 Beijing also kept pursuing the suffocation of Taiwan’s international space, barring Taiwanese officials from attending International Civil Aviation Organization (ICAO), World Health Organization (WHO), and Interpol assemblies.27 In addition, the PRC poached two former ROC diplomatic allies, as both the Solomon Islands and Kiribati switched diplomatic recognition in September.28 The political implications of Beijing’s diplomatic victories in the South Pacific are assessed in the third section of this essay because, beyond their immediate cross-Strait dimension, they pertain to the broader Sino-American strategic competition in the Indo-Pacific.

Finally, Chinese military signalling did not deviate from the blueprint of incremental assertiveness established since 2016. On 31 March, People’s Liberation Army Air Force (PLAAF) jets crossed the median line of the Strait, the de facto air space border between the PRC and the ROC.29 This new development was largely expected, following the previous Chinese decision to modify the M503 flight route in January 2018, and the beginning of PLAAF operations in the proximity of the median line the following May.30 President Tsai responded to the PLAAF operation stating that she had ordered the ROC military to carry out the «forceful expulsion» (強勢驅離) of any similar «provocation» (挑釁) in the future.31 No other crossings of the median line were publicly acknowledged throughout the year. However, other branches of the PLA continued to exert military pressure over Taiwan. The PLA Rocket Force held missile exercises in the South China Sea between June and July, a signal of the shifting balance of power between the US and China in these contested waters, which holds profound implications for the unfolding of a possible conflict across the Strait.32 The People’s Liberation Army Navy (PLAN), instead, repeatedly sailed through the Taiwan Strait, first with the air carrier Liaoning, and successively, in November and December, with a carrier group led by its first indigenous air carrier, the Shandong.33

2.3. The impact of the Hong Kong protests

Against the backdrop of Beijing’s stagnant Taiwan policy, the mass protests which started in Hong Kong in June 2019 put Taiwan’s future relations with China at the centre of the political debate of the 2020 general election. The casus belli behind the upheavals in Hong Kong can be traced back to Taiwan, where, in February 2018 a Hong Kong resident murdered his partner while on holiday in Taipei. The culprit was then able to avoid a trial both in Taiwan and Hong Kong (where he had fled immediately after the murder) thanks to the absence of an extradition agreement between the Hong Kong Special Administrative Region (HKSAR) and the ROC.34 The Lam administration in Hong Kong decided to use the media clamour around the case to push for an amendment of the existent extradition bill, which in turn could have opened the door to the extradition of Hong Kong residents to Mainland China. The mass popular protests that followed, poorly managed by an increasingly weakened administration unable to propose a political solution and relying exclusively on the coercive response of the local police force, snowballed into months of urban guerrilla fighting. The vocal widespread rejection of progressive integration with the Mainland by the majority of Hong Kong citizens, was confirmed by the victory of the «pro-democracy» candidates over Beijing loyalists in the local elections in November.35

President Tsai skilfully navigated the budding political crisis in Hong Kong from its very beginning. Her government had previously refused to accept the transfer of the suspected murderer back to Taiwan, as proposed by Hong Kong authorities in May, stating concerns over the potential implications of the proposed amendment for ROC passport holders.36 Tsai later expressed support for Hong Kong activists fighting against the amendment just days before the first mass protest on 9 June.37 The consistency of her China policy and the firm handling of the legal dispute with the HKSAR government allowed Tsai to immediately reap the benefits of the widespread sympathy in Taiwan for the protests in the former British colony.38 In late June, Taiwanese pollsters gave Tsai a lead over KMT frontrunner Han Kuo-yu for the first time.39 Throughout the final months of the electoral campaign the President repeatedly highlighted the failure of the «one country, two systems» framework and accused Beijing of «authoritarianism».40 In doing so, she effectively framed the upheavals in Hong Kong as part of a global democratic struggle against the Chinese regime, with Taiwan at its forefront. Tsai’s electoral strategy, in turn, enraged Chinese authorities already prone to blame domestic dissent on «external forces» and «black hands», causing a barrage of harsh statements against the Taiwanese authorities and the DPP.41

As previously mentioned, the protests had also a profound impact on the electoral prospects of the pan-Blue camp, which had aimed to side-track identity politics and cross-Strait relations in order to focus the campaign on the state of the domestic economy. Widespread popular support for the protests put the KMT frontrunner for the presidential election, Han Kuo-yu, further on the defensive after his controversial visit to the Mainland and Hong Kong. In June, the Kaohsiung mayor attempted to repair the damage by expressing support for Hong Kong localist groups and decisively rejecting the «one country, two systems» framework.42 Since the early weeks of the protests, virtually all the major political figures in Taiwan distanced themselves from Beijing’s policies towards Hong Kong, including Foxconn magnate and KMT-primary candidate Terry Gou Tai-ming (郭台銘), and the popular Taipei mayor and rumoured presidential candidate Ko Wen-je (柯文哲).43 During the remaining months of the campaign, neither Han nor Gou were able to successfully reconcile the contradiction inherent in the KMT’s China policy, namely how to achieve domestic economic growth through closer engagement with China without risking political assimilation.

2.4. The Tsai administration’s firewall against Beijing

Since it came to power in 2016, the Tsai administration has engaged in the construction of a comprehensive firewall against both the threat of a Chinese military invasion and the infiltration of Taiwanese media and society via «united front work». This effort can be assessed in two distinct areas: defence and law. The dominant issue in Taiwanese defence in 2019 was the decision to scrap previous plans to modernise the fleet of the ROC Air Force (ROCAF) with F-35 fighters and upgrade instead the existent fleet of F-16A and F-16B with the F-16V variant models.44 The ROC Ministry of National Defense submitted a Letter of Request for the F-16V to the US in March, and the Trump administration approved the sale in August with a US$ 8 billion deal for 66 models.45 Taiwan’s domestic military build-up in 2019 included also the beginning of mass production of missile corvettes and minelayers;46 and the further development of the indigenous submarine project, the first phase of which was completed in March. The factory where the submarines will be produced was inaugurated in May in Kaohsiung.47 The ROC military also regularly staged the annual Han Kuang military exercises at the end of May. The exercises were split into two phases, computerised war-games and live-fire drill, with this second leg focusing on the threat of an over-the-horizon amphibious invasion from China and new take-off and landing exercises.48 For the year 2020, the LY approved a budget of NT$ 343.5 billion (US$ 11.4 billion) for national defence within the proposed 2020 central government budget. The budget included NT$ 96 billion (US$ 3.1 billion) on military investment, with funds to produce an indigenous jet fighter trainer, the AIDC T-5 Brave Eagle, and for the continuation of the indigenous submarine production programme.49

Outside the realm of defence, Taipei strengthened its cordon sanitaire against China through law enforcement and a series of ad hoc legal responses. Between January and March, Chinese companies Huawei, ZTE, Tencent, and Baidu were banned as agents of Chinese influence.50 A series of high-profile scandals and cases followed these early measures as the general elections drew closer, creating an effective «emergency narrative» in the polarised ecosystem of Taiwanese media. In May, an official of the National Security Bureau (NSB) – the ROC intelligence agency – reported the existence of Taiwanese media closely working with Beijing in a LY session, even though he refused to reveal their identities.51 The same month, a widely circulated report from the Digital Society Project which cited Taiwan as the country most affected by foreign (Chinese) online disinformation campaigns, further contributed to strengthen perceptions of threat throughout the summer.52 In July, a «Financial Times» article reported collusions between China’s TAO and the constellation of media belonging to Tsai Eng-Meng (蔡衍明), chairman of the Want Want China group headquartered on the Mainland;53 while in August a «Reuters» investigation found evidence of Chinese payments to Taiwanese media.54 In November, ROC Foreign Minister Joseph Wu Jaushieh (吳釗燮), publicly accused Beijing of having meddled in the November 2018 local elections, which saw sweeping KMT gains and the surprising victory of Han Kuo-yu in Kaohsiung.55 Perceptions of threat were further compounded by Chinese defector and alleged spy Wang Liqiang (王立强), who claimed to have participated in attempts to sway the general election in China’s favour.56 In December, a retired ROCAF senior officer was arrested for attempting to recruit military officials for the PRC, while local authorities proceeded to a crackdown on exchange schemes with China used to ease visits by CPC and PRC officials.57

Beyond law enforcement, the centrepiece of the Tsai administration’s efforts in 2019 was the new Anti-Infiltration Law (反滲透法), which criminalised political activities and funding from «foreign hostile forces» (境外敵對勢力). The law was designed to stop Chinese co-option of political candidates and local media on the island. It was passed by the LY on 31 December, days before the general election, and promulgated by President Tsai on 15 January 2020.58 The Anti-Infiltration Law was predictably met with vocal opposition by the pan-Blue camp, which raised fears of a potential quashing of civil liberties, and by the TAO, which decried the imposition of a «green terror» (绿色恐怖) by the DPP.59 Tsai responded to critics in her 2020 New Year’s Address, stating that the Anti-Infiltration Law will not affect either freedom of speech and human rights in Taiwan, or economic and trade exchanges with the PRC.60

3. Taiwan’s international space in 2019

The US-Taiwan relation had already undergone a qualitative upgrade in 2018, as the strategic competition between the US and China became even more manifest. This trend continued and intensified in 2019 with Taipei’s closer diplomatic and military alignment with Washington. Taiwan’s relations with Japan and the target countries of the New Southbound Policy also experienced progress, but within the constraints of the One China policy to which these countries abide.

3.1. The US-Taiwan relation

Three directives can be identified in US-Taiwan relation in 2019: increasing American political and diplomatic support, deepening military cooperation between Washington and Taipei, and a closer strategic alignment between the two administrations. In January, the Democrat-controlled House of Representatives introduced a bill to support Taiwan’s return to the WHO as an observer.61 Later in May, the House passed the Taiwan Assurance Act, which deemed Taiwan «an important part of U.S. strategy» in the Indo-Pacific and urged the conduction of «regular transfers of defense articles to enhance Taiwan’s self-defense capabilities».62 The 2020 National Defense Authorization Act, passed by the Republican-controlled Senate in December, contained a clause concerning the reporting of Chinese interference operations in Taiwan.63 These bills, notable for their bipartisan support, became part of a growing constellation of Congress initiatives, including the Taiwan Travel Act and the Asia Reassurance Initiative Act previously passed in 2018, which signalled the increasing support for Taiwan in American politics. Congress’ support, in turn, matched the increasing commitment of the Trump administration. In the spirit of the Travel Act, a number of American officials visited Taiwan throughout the year.64 Among the visiting officials, John Bolton was the most senior. Noticeably, this was the first publicly acknowledged meeting between a US National Advisor and its ROC counterpart, the secretary-general of the National Security Council David Lee Ta-wei (李大維).65 Within this context, the inauguration in May of the new venue of the American Institute in Taiwan (the de facto US embassy on the island), even though long-planned, acquired a more profound symbolical relevance, especially following the Trump administration’s decision to deploy Marines for the protection of personnel in the new structure.66

President Tsai stopped over in the US twice in July, before and after a diplomatic tour of Taiwan’s diplomatic allies in the Caribbean. In line with the narrative of a global struggle for democracy pursued by the ROC administration, the island-state’s diplomacy used the tagline «Journey of Freedom, Democracy, and Sustainability» to describe both the US stopover and the diplomatic tour. The ROC President spent two days in New York, where she gave a speech at Columbia University before visiting the Caribbean, and two days in Colorado on her way back to Taiwan, where she was guest of the state senator, Cory Gardner.67 The unofficial but high-profile visit to the US provided Tsai a prestigious platform at a crucial time of her electoral campaign, with protests in Hong Kong rapidly intensifying and favourable momentum back home increasing. Moreover, the visit represented a key moment in the ongoing strategic alignment between Taipei and Washington under the aegis of the Japanese-American strategy/vision of a «Free and Open Indo-Pacific» (FOIP).68 Tsai described Taiwan as «a vital bastion of democracy in the Indo-Pacific» during her speech at Columbia;69 and, later, in her National Day address on 10 October, as «the forefront of the Indo-Pacific strategy» (印太地區戰略前緣) and the «first line of defence for democratic values» (守護民主價值的第一道防線).70 Beyond statements, in September Taipei signalled its ever closer alignment with the Trump administration, pledging to buy US$ 2.2 billion of soybeans from Iowa, a key state for Trump’s own chances for re-election, previously targeted by Beijing’s retaliations at the beginning of the trade-war.71

Taiwan’s importance for the US was even further raised due to the broadening geo-strategic competition between Beijing and Washington; the ROC’s international presence, mostly relying on a handful of LAC (Latin American and Caribbean) and South Pacific small states targeted by China’s «chequebook diplomacy», increasingly overlaps with American concerns over the potential proliferation of Chinese dual-use infrastructures in the Western hemisphere.72 Washington has consequently stepped up its efforts to refrain Taipei’s allies from switching diplomatic recognition to Beijing. This was evident in the LAC region where, after Panama and El Salvador severed relations with the ROC between 2017 and 2018, the US pressured Guatemala, Honduras and Nicaragua to withstand Beijing’s charm offensive.73 However, as previously noted, China scored a key diplomatic victory in the South Pacific, where American pressure did not stop the Solomon Islands and Kiribati from switching sides.74

Against this backdrop, military cooperation between the two sides further deepened. In July, the Pentagon approved a US$2.2 billion arms sale package.75 The Trump administration followed up this decision with the approval of the largest-ever arms sale to Taiwan, a US$ 8 billion deal for the upgrading of the ROCAF with the F-16Vs – as mentioned in the previous section.76 The US Armed Forces also responded to Chinese pro-activism in the Strait. In August, a USAF airplane which took off from Okinawa flew over the Strait’s median line, arguably in response to the PLAAF’s trespass in March.77 The US Navy instead further routinised sailing operations in the Taiwan Strait, with a series of passages publicly acknowledged between March and August.78 It is worth noting, however, how American activities in the Strait slowed down as Washington and Beijing worked towards their «phase one trade deal». Balancing such change of pace, which could reignite the «bargaining chip» narrative which first emerged after Trump’s phone call to Tsai in January 2016, was the first-ever joint ROC-US cybersecurity exercise, held in November;79 followed by the announcement, in December, of the establishment of a joint maintenance centre for the expected F-16V fighter jets.80

3.2. Taiwan’s relations beyond Beijing and Washington

Taiwan-Japan relations, after the setbacks suffered in 2018, experienced a revival in 2019.81 In a March interview with the Japanese newspaper «Sankei Shimbun», President Tsai expressed her wish to share military intelligence with Tokyo and the desire to establish a direct Japan-Taiwan security dialogue focused on China.82 Tsai’s requests were not deemed acceptable by an Abe administration in the midst of a complex act of surface-level normalisation of Sino-Japanese relations.83 Tokyo, however, took tangible, pro-active measures to impress a new momentum into its relations with Taipei. In April, the two sides reached an agreement on fishery rules in the contested waters of the East China Sea, after renewed tensions between Japanese and Taiwanese fishermen and two failed meetings in 2018.84 In May, Foreign Minister Kōno Tarō expressed for the first time Japan’s support for Taiwan’s membership in the World Health Assembly.85 Moreover, following Taiwanese efforts to renegotiate existing bans on Japanese food products, Furuya Keiji, House of Representatives’ delegate at the Taiwan-Asia Exchange Foundation Forum in Yushan, announced Tokyo’s support for Taiwan’s bid to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) previously launched in 2018.86 Having been unable to sign any FTA with foreign countries since coming into power, membership in the CPTPP would represent a key prize for the Tsai administration, especially after the ROC’s predictable exclusion from the China-driven RCEP mega-FTA, signed in November.87 Events between the end of 2019 and the beginning of 2020 suggest a continuation of this «slow but positive» trend in the foreseeable future. Routinised bilateral dialogue was maintained throughout the 2019 edition of the annual dialogue on Maritime Cooperation, which was held in Taipei in December,88 while the message sent after Tsai’s electoral victory by new Japanese Foreign Affairs Ministry Motegi Toshimitsu promised «further deepening cooperation and exchanges», if only on a continuing «non-governmental basis».89

Notwithstanding the diplomatic constraints of Japan’s «One China» policy, economic relations between Taipei and Tokyo possess relevant implication in the geo-economic scenario of the Asia-Pacific. The growing influx of Japanese tourists constituted a lifeline for the local Taiwanese industry left exposed by Chinese travel bans.90 Similarly, the Taiwanese semiconductor industry increasingly came to rely on business ventures with Japanese companies to sustain the impact of China’s strategic attack to this key industrial sector.91 Taiwan also provided lucrative opportunities for Japanese companies such as Hitachi and Toshiba in an increasingly competitive Asian railway market in which China now poses a formidable challenge.92 In particular, Japanese companies expect further revenues from the Taiwan market in the next decade thanks to the planned extension of the island’s shinkansen network.93 On a side note, the close resemblance of the first model of Taiwan’s indigenous submarine unveiled in May to Japanese Sōryū-class submarines seems to prove the unofficial involvement of Japan in the ROC’s defence industry in recent years.94 This, in turn, suggests at least the tacit approval, if not the support, of the Abe administration for Japan-Taiwan co-operation.

Another major trend of the Tsai administration’s foreign policy was the continuous engagement with the target countries of the New Southbound Policy (NSP) in South Asia, Southeast Asia, and Oceania.95 ROC governmental bureaus released a string of progress reports on the NSP in May, touting the success of the policy in the 2016-2018 period, including a 22% increase in trade and a 66% increase in investment to Taiwan from NSP countries.96 A more effective benchmark to assess the success of the NSP is to track its progress in the four «main areas» designed by the Executive Yuan: «talent exchange» (international professional training), «resource sharing» («culture, tourism, medical care, technology, agriculture and small and medium-sized enterprises»), «economic and trade collaboration» (support to Taiwanese business in target countries) and «regional connectivity» (trade agreements, and institutional cooperation with partner countries).97 Tangible achievements were attained in the first two areas.98 Official data on «economic and trade collaboration» show an increase of outbound investment in NSP countries, up to 16.16% compared to 2018, and amounting to US$ 2.79 billion, even though it was largely concentrated in major regional economies such as Vietnam, Singapore, Thailand and Australia.99 Progress in «regional connectivity», however, stalled at a bilateral level, and was subsumed within an agenda of closer cooperation with the US.100 Ultimately, the NSP in 2019 appeared to have played an ancillary role to broader, macro-trends which favoured the China policy of the Tsai administration, such as the economic slowdown of the Chinese economy and the consequent reshoring of foreign business, the rising cost of labour for Taiwanese business in Mainland China, and the impact of the Sino-American trade war.

4. Domestic politics and economics in 2019 and the 2020 general elections

Previous sections of this essay analysed how the unyielding Taiwan policy of the Xi administration, the Hong Kong protests, and the strengthening of US-Taiwan relations shaped Tsai Ing-wen’s path to victory in the presidential election. Against this backdrop, this section analyses how the performance of the Taiwanese economy in the year in review, as well as the unfolding of the electoral campaign for the presidential election, led to the results of the general election held on 11 January 2020.

4.1. The Taiwanese economy in 2019

The domestic economic policy of the Tsai administration in its first term focused on tackling divisive but structurally necessary measures to reform pensions and taxation, and to raise the minimum wage. At the same time, the administration implemented medium-term programmes aiming to modernise and expand the island’s infrastructures with its «Forward-Looking Infrastructure Plan». It also laid down the foundation for a new industrial policy, focusing on innovation and reshoring of Taiwanese business from the Mainland with the «5+2 Industrial Innovation Plan», and the «Industry 4.0» and «Asian Silicon Valley» initiatives. The government also aimed to address one of the most problematic issues in Taiwanese society, affordable housing, with a National Housing Act.101 None of these measures, however, had a widespread, immediate impact on the livelihood of the local population: stagnant wages and a housing market unaffordable for large swathes of the population remained pressing problems. This predicament left Tsai and the DPP exposed to a KMT electoral campaign promising economic growth while avoiding questions on the future of Taiwan’s status vis-à-vis the PRC. This was the situation at least until cross-Strait politics and the Hong Kong protests began to monopolise the political debate. In this complex scenario, the flaring up of the Sino-American trade war provided new challenges to the Taiwanese economy, but also new opportunities. The central administration promptly profited from the trade war with its «Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan», launched in January 2019, which guaranteed subsided loans and eased land acquisitions.102 Throughout the year, major Taiwanese companies such as Hon Hai (Foxconn), Quanta, Lite-On, and Pegatron opted for reshoring to Taiwan, contributing to a total of US$ 23 billion of investments and 46,000 new jobs in manufacturing, according to government sources.103 By November, a report from a UN Secretariat agency defined Taiwan as «the largest beneficiary of the trade diversion effects of United States tariffs on China».104

Major economic indicators for 2019 show that Taiwan was able to withstand the impact unleashed by the trade war on the global economy. National statistics estimated the GDP rate of growth on a year basis to 2.71%, in line with the 2.75% reached the previous year, higher than other regional economies such as Japan, South Korea, Hong Kong and Singapore. Crucially, after experiencing a sharp drop in the first quarter of 2019, plunging to 1.84%, GDP grew convincingly in the last three quarters, reaching 3.31% in the final one.105 Industrial production dropped by 0.32% compared to 2018;106 total exports saw a 1.4% contraction, and imports rose 0.4%, with a trade balance ultimately shrinking by 11.7% compared to the previous year.107 Exports to China and the US reflected the patterns of the trade war and the Tsai administration’s policies, respectively shrinking by 4.1% (accounting for 40.1% of the total) and rising 17.2% (accounting for 14%).108 Private-sector estimates of the 2019 current-account balance indicate a US$ 71.6 billion surplus, compared to US$ 70.8 billion recorded in 2018.109 Estimates of the labour force saw instead no changes in the unemployment rate, still at 3.7%.110 Foreign direct investments (FDIs) experienced a 2.14% contraction compared to 2018, amounting to US$ 11.2 billion, the fourth highest value ever recorded.111 Also reflecting the pattern of Beijing-Taipei-Washington relations during the trade war, FDIs from China collapsed to US$ 97 million, recording a 57.97% contraction,112 while investments by American multinationals Micron and Alphabet (Google) accounted for US$ 2.2 billion and US$ 853 million respectively.113 With an eye to the January elections, the government also raised budget expenditure for 2019 and 2020. Compared to the 2018 budget balance, in which expenditure matched revenue, the 2019 balance was estimated at -0.9% for 2019 and forecast at -1.1% in 2020.114 Overall, the relatively solid performance of the Taiwanese economy, especially in the second half of 2019 helped sheltering Tsai from an electoral campaign focused exclusively on the domestic economy, defusing pan-Blue plans to side-line the «China question» in Taiwanese politics.

4.2. The road to the 2020 presidential elections

Both Tsai Ing-wen and Han Kuo-yu faced internal challenges and the threat of a potentially disruptive third-party candidate on their road to the January 2020 elections. Tsai, initially weakened by the disastrous results of the November 2018 local elections, resigned from the DPP chairpersonship and reshuffled her cabinet in January.115 Her position was further threatened by the challenge of an internal primary launched in March by former Premier William Lai Ching-te (賴清德), but the party organisms repeatedly delayed the contest – originally scheduled in March – until early June.116 By then, at the onset of the Hong Kong protests, a resurgent Tsai was able to win the primaries by 8%.117 Lai’s shift from his original pro-independence position to the centre of the DPP political spectrum (already occupied by Tsai), together with the party’s decision to rally around the President, arguably led to his defeat.118 In a show of party unity, Lai would later join Tsai in November in the DPP presidential ticket as Vice-President.119

The KMT’s road to the nomination was far more tortuous. The initial favourites were institutional figures within the party: the 2016 presidential candidate Eric Chu Li-luan (朱立倫), the party chairman Wu Den-yih, and the former LY speaker Wang Jin-pyng (王金平). The intricacies of KMT factional politics and the rising popularity of Han Kuo-yu in the wake of the 2018 local elections altered this landscape, with Wu renouncing his candidature in April and throwing his weight in support of Wang’s own protégé, Han.120 The Kaohsiung mayor, in turn, refused to officially join the primaries until 5 June, a belated decision that arguably helped maintain the focus of local media on him.121 KMT’s intra-party struggles were further complicated by Foxconn tycoon Terry Gou’s decision to contest the nomination. Gou, after months of speculation, launched his bid in April. The eight-character slogan with which he opened the campaign, translatable as «peace, stability, economy, future» (和平、安定、經濟、未來), seemed to suggest a technocratic and China-friendly agenda.122 During his visit to the White House on 1 May, where he met President Trump, Gou cast himself as a key figure both in the Sino-American trade war, due to Foxconn’s business interests in both countries, and in the Beijing-Taipei-Washington triangle, emphasising his personal connections with the Chinese leadership and Trump.123 Days later, he further detailed his China policy as essentially a rehash of the «One China, different interpretation» approach pursued by the Ma administration, ignoring Beijing’s fundamental shift in posture on the issue since the mid-2010s.124 Gou’s candidature, however, rapidly lost momentum, as he was neither able to mobilise popular support like Han,125 nor be trusted on cross-Strait relations by the general public, given Foxconn’s economic interests in the PRC.126 Han ultimately won the party primary held in July, decisively beating Gou by 17%. Eric Chu came a distant third, while Wang Jin-pyng had dropped from the race in June.127

Han’s own victory in the KMT primaries constituted the zenith of a social and political phenomenon, dubbed the «Han wave» by the local media, which had been sweeping Taiwanese politics since the electoral campaign for the 2018 local elections.128 Indeed, until the beginning of the Hong Kong protests, virtually all polls gave Han a consistent advantage over Tsai. Han shaped a populist political discourse focused on the plight of «common people» (庶民) against technocratic, corrupt elites,129 reflected in campaign slogans such as «never forget that in the world there are many who suffer» (莫忘世上苦人多) and the «common people’s President» (庶民總統).130 Taiwanese commentators observed how Han rallied a diverse array of supporters: traditional KMT constituencies affected by the pension and tax reforms of the Tsai administration; older generations threatened by the shifts in Taiwanese national identity and the increasing liberalisation of its society; younger generations with low-income occupations marginalised by a knowledge-based economy and alienated by the DPP’s technocratic outlook, as well as local interest groups historically aligned with the KMT, who felt increasingly dissatisfied with the party.131

Terry Gou remained however a potential threat to the KMT even after the primary, as he appeared ready to run either as an independent, or together with the popular mayor of Taipei, Ko Wen-je. Throughout August, after Ko’s decision to establish a new personal party, the Taiwan’s People Party (台灣民眾黨, TPP) and a much-publicised appearance together with the Foxconn tycoon and Wang Jin-pyng, a Gou-Ko-Wang alliance seemed ready to disrupt the two-way race between Tsai and Han.132 These expectations were quashed by the immediate emergence of personal tensions between the three, and in particular between Ko and Gou.133 The Foxconn tycoon ultimately announced his decision to drop from the race in September, just before the deadline for submitting his candidature.134 Even though relations between the two had already soured, Ko eventually stated that Gou’s eleventh-hour decision did not leave him enough time to plan a presidential campaign.135 In fact, Ko’s decision can arguably be traced back to his own personal «China policy». The Taipei mayor was perceived as an independent politician somehow close to the pan-Green camp at the beginning of his mayoralty in 2014, but he has progressively moved closer to pan-Blue positions since then.136 Ko has indeed cultivated solid relations with Chinese authorities, which he publicly displays through the platform of the annual Shanghai-Taipei City Forum. While he has never acknowledged the 1992 Consensus, he consistently defines his cross-Strait policy as «the two sides of the Strait are one family» (两岸一家亲).137 Earlier in May 2019, before the beginning of the Hong Kong protests, the Taipei mayor criticised Tsai’s own stance on cross-Strait relations. He suggested instead that Tsai should avoid engaging in any kind of rhetorical confrontation with Beijing over Taiwan’s status.138 Squeezed between the flaring up of the Hong Kong protests and Tsai’s resurgence on one side, and the emergence of Han Kuo-yu on the other, Ko arguably did not see any chance of success for his brand of centrist, «techno-populist» politics in the presidential election.139

With Gou and Ko out of the picture in September, the last four months of the campaign focused squarely on Han and Tsai. Since August, enthusiasm within the KMT for Han had begun to fizzle out, as virtually all polls, even from media in the pan-Blue camp, gave a clear advantage to Tsai.140 The unfolding of the final leg of the campaign was then marked by a series of controversial statements by Han and other major KMT figures.141 While these statements could be downplayed as simple gaffes, their targets (such as President Tsai’s status as a single middle-aged woman, Filipino immigrants, the local LGBT+ community), revealed a conscious last-ditch attempt to energise the more conservative constituencies in the islands against the pan-Green camp. While doubling down on identity politics, the Han campaign tried to re-adapt its China policy to the local sentiment, backtracking from a previous promise made in February to deliver a «peace agreement» with Beijing.142 Han’s perceived weakness was further highlighted by his campaign’s decision to avoid the customary visit for a presidential candidate to the US in October, officially due to a busy campaign schedule, but arguably out of fear of a cold reception in the US.143 By November, Tsai registered a decisive lead in the polls, with a 9% margin on Han, which rose to 19% a month before the vote.144 Two televised confrontations were then held in December, when Han tried to attack Tsai. The KMT candidate argued that Tsai maintained an ambiguous stance on the issue of Taiwan independence, and that her China policy was confrontational and aiming to stoke anti-mainland sentiment; Tsai, however, comfortably fended off the attacks insisting on the need to defend Taiwan from an aggressive China.145 With a comfortable lead after the last televised debate, Tsai’s victory on 11 January 2020 was taken for granted by all observers days before the vote.

4.3. The results of the January 2020 general elections

President Tsai won the presidential election held on 11 January 2020 with 8,170,231 votes, 57.1% of the total. Tsai recorded 1,275,487 more votes than in 2016, reflecting a higher turnout – 74.9% against the 66.2% of the previous election. Her share of the popular vote increased by 1%. Similarly, the geographical distribution of the vote for Tsai remained fundamentally the same, with only minor variations at county level. Han Kuo-yu obtained instead 5,522,119 votes, amounting to 38.6%. Perennial fringe candidate James Soong Chu-yu 宋楚瑜, representing the People First Party (親民黨, PFP), came a distant third, with a 4.26% share.146 The DPP coupled Tsai Ing-wen’s personal triumph with a success in the election for the 10th LY, a result crucial for the prospects of Tsai’s second term in office. The election was contested with a mixed system, assigning 73 seats to district legislators elected with a first-past-the-post system, 34 seats to legislators-at-large with a party-list proportional system, and six seats to indigenous constituencies, elected with single non-transferable system.147

The DPP won a parliamentary majority obtaining 61 of 113 seats in the LY. Even though its share in the nominal vote increased from 44.59% to 45.6%, the party elected only 46 district legislators, three fewer than in 2016. With 33.98% of the total vote for the legislators-at-large, a 10.08% decrease compared to 2016, the ruling party lost another five seats. This result was partially balanced by the two seats won in the aboriginal constituency, one more than in the previous election. In contrast with Han Kuo-yu’s performance in the presidential election, and thus confirming his weakness as a candidate, the KMT obtained instead 38 seats in the LY, three more than in 2016. It elected 22 districts legislators, compared to the 20 of the previous legislature, accounting for 40.57% of the total share (a +1.68% swing from the previous elections). It also elected the same number of legislators-at-large of the DPP, 13 (two more than in 2016), with an almost identical share of the vote, 33.36%, itself a notable 6.45% increase from the previous election, but lost one of its previously held aboriginal seats. Ko Wen-je’s TPP entered the LY for the first time with five seats, all legislators at-large, thanks to a 11.22% share of the total vote among the party-lists. The pan-Green New Power Party (時代力量) obtained three seats, also all legislators at-large. Even though the NPP obtained 7.75% of the total vote in the proportional system (a 1.64% increase), it lost in total two seats compared to the previous election. Another pan-Green, pro-independence party, the Taiwan Statebuilding Party (台灣基進黨, TSP), which contested the LY elections for the first time, elected instead a district legislator, but failed to elect legislators-at-large with 3.16% of the total vote. Pan-Blue junior parties PFP and Non-Partisan Solidarity Union exited the LY, having failed to elect representatives. Five candidates obtained their seats running as independents, with three of them expected to caucus within the pan-Green camp.148 Overall, these results appear to guarantee a relatively wide majority to Tsai for the next four years, barring unexpected intra-party fractures. However, it is worth noting the solid performance of many TPP and NPP candidates in those electoral districts won by the two major parties. While the TPP and the NPP have very different profiles, they both drew their voters from constituencies which have been generally considered close to the DPP, signalling the emergence of centrifugal dynamics outside the perimeter of the pan-Blue camp.149

While Tsai’s approval rating had started to climb in August 2019, virtually all national polls, except for few pollsters in the pan-Green camp, pointed towards a KMT majority until mid-November.150 Commentators argued that a backlash against the inclusion of many fringe deep-blue figures in the KMT party-list, also released in November, may explain that month’s approval rating shift from the Blue to the Green camp.151 In fact, the swing in the polls coincided exactly with the most violent phase of the Hong Kong protests, as a series of pitched battles between police and protesters occurred at a number of university campuses.152 The swing in Tsai’s approval rate suggests, once again, the renewed centrality of cross-Strait relations in Taiwanese national politics, in stark contrast with the political climate that emerged in the aftermath of the 2018 local elections.

To conclude, it could be argued that a series of events and processes exogenous to Taiwanese politics, such as China’s apparent miscalculation of the reception of Xi’s January message, the flaring up of the protests in Hong Kong, and the unfolding of the Sino-American trade war and its positive spillovers for the Taiwanese economy, all converged to snatch an expected victory from the KMT. Such a reading, however, would underestimate the Tsai administration’s willingness and ability to strengthen relations with Washington at a critical juncture in the power politics of the Asia-Pacific, and to shape an economic agenda aiming to reduce dependence on China, choices made since the beginning of her mandate in 2016. Above all, this reading would underestimate the consistency and coherence of the cross-Strait policy that the Tsai administration has built, on the assumption of increasing Chinese assertiveness under Xi Jinping’s leadership.

ISSN 2385-2526