BOFIT Weekly Review 2016/03
Taiwan elects government with hard-line stance on mainland China
Taiwan’s presidential election went as expected on Tuesday with Tsai Ing-wen winning the presidency. Tsai is head of the Democratic Progressive Party (DPP), which also rolled to victory in parliamentary elections held at the same time. The election result put Beijing on its toes. In recent years with the Kuomintang party in charge, relations between the mainland and Taiwan improved substantially. The DPP, in contrast, has traditionally pushed for Taiwan’s independence. Tsai immediately sought to defuse tensions after the election by indicating that she will not push for independence, but instead seek to preserve the status quo.
Tsai and the DPP have won the right to preside over Taiwan in tough economic times. GDP contracts, and is still below its level at the onset of the 2008 financial crisis. And it is likely that economic conditions will further deteriorate if tensions between mainland China and Taiwan worsen significantly. Mainland China is a major market for Taiwan’s export-driven economy. About 40 % of Taiwanese goods exports go to China (including Hong Kong), Taiwanese firms have vast investments in mainland China and tourism of mainland Chinese has exploded in recent years, bringing significant amounts of money to the island.