In today’s special edition, we analyse the outcome of Taiwan’s elections and try to predict what will change – and what will not. Enjoy!

What’s next after Taiwan’s elections: “Prudence” is the keyword

Taiwan’s Vice President, William Lai, has led the Democratic Progressive Party (DPP) to a historic third term in power, the first time in the island’s history since the first presidential election in 1996, winning last Saturday’s elections. With almost all the votes counted, Lai won slightly more than 40 per cent.

Hou Yu-ih from the more China-friendly Kuomintang (KMT) won 33.5 per cent of ballots cast.

Mainland Beijing considers Lai’s party a derivative of the Taiwanese independence movement and too close to the United States. Fully cognizant of the speculation that his triumph might escalate tensions with President Xi Jinping, Lai extended a conciliatory gesture during his victory speech. He carefully and cautiously advocated for “engagement and collaboration with China” founded on “dignity and equality.” Lai committed to “substituting confrontation with dialogue.”

However, such openness to dialogue has not stopped Chinese authorities from trying to talk Taiwanese voters out of electing its nemesis-in-chief into power.

The solitary positive development for Beijing in the outcomes is that the DPP has forfeited its majority in the parliament, and the KMT is competing to control the speakership. This significantly complicates President Lai’s ability to navigate legislation through an adversarial parliament, constraining his capacity for confrontational policies with China.

In such a scenario, instability is expected to rise over the next four months until Lai is formally inaugurated on May 20.

Why is an island of only 395 km such a reason for international tensions?

Due to Beijing’s classification as a renegade region without sovereignty, Taiwan lacks formal diplomatic ties with major powers. Nonetheless, it holds substantial economic influence, being the first producer of approximately 90 per cent of the world’s most advanced semiconductors.

Semiconductors are crucial components in electronic devices and technology, both for civil and military purposes. From our phones, TVs, and solar panels to the most advanced radar and control systems, satellites, and UAVs, semiconductors constitute the “brains” of most significant technological developments worldwide.

However, reasonability seems to have prevailed at first in an already complicated geopolitical scenario. At the international press conference last week, Lai said he had no plan to declare independence if elected to the presidency.

At the same time, U.S. President Joe Biden, commenting on the outcome of the elections, delivered a straightforward message on Saturday: “We do not endorse the independence of Taiwan.” The Biden administration has made it clear that although it does not support Taiwanese independence, it advocates for dialogue between Taipei and Beijing, emphasising the expectation that differences will be peacefully resolved without coercion.

Notwithstanding first reactions, it seems fair to preconise the extent of the potential escalation remains uncertain, although Taiwanese officials and foreign diplomats express the belief that the situation may not reach the level of tension observed in the aftermath of the 2022 visit by then-U.S. House Speaker Nancy Pelosi to the island.

In the days leading up to the election, Taiwan reported the deployment of several spy balloons by China for surveillance, as disclosed by the Taiwanese defence ministry. On the economic front, China increased pressure by signalling a potential reintroduction of tariffs on select Taiwanese products. Additionally, instances of disinformation and electoral manipulation have been exposed by Taiwanese authorities.

Collectively, these developments constitute what Taipei characterises as hybrid warfare, which now faces the risk of further escalation due to Beijing’s dissatisfaction with the newly elected president.

Taipei’s diplomatic relations will not be easy. China has been peeling off Taiwan’s allies in recent years as it ramps up military, economic and diplomatic pressure on the island it considers a breakaway territory.

Today’s first retaliation is the announcement by the government of Nauru, a tiny Pacific Island of 13,000 people, to cut diplomatic relations with Taiwan.

Taiwan now has official diplomatic relations with 12 nations, mainly around the Caribbean. That cuts the number of friends that can take up issues for the self-run island in international forums like the United Nations, where it lacks a seat.

Nonetheless, it is reasonable to envisage that the U.S., Japan and Europe are expected to take precedence in Lai’s diplomatic outreach, while relations with China will continue to be pessimistic or sceptical both for Taiwan and the West.

But despite an arguably more constant dialogue and attempts to strengthen diplomatic channels, the West will not budge unless China decides to intervene militarily to reannex the island, something Xi Jinping has already predicted it wants to happen before 2027.

The European Parliament spoke out in December, calling for negotiations on a ‘formal’ trade and investment agreement with Taiwan. The Commission, while recognising Taiwan’s strategic role in the supply chain, was much more cautious. The French president, Emmanuel Macron, after a trip to Beijing last April had clearly indicated his preference: on Taiwan, Europe must not ‘get dragged into crises that are not our own’.

To date, that seems to be the Western mantra on the matter.