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Taiwanese Elections Could Serve as Major Regional Infliction Point

On 13 January 2024, the Taiwanese are set to elect their President and Parliament for the next four years. The three-way race between the incumbent Democratic Progressive Party (DPP), the Kuomintang (KMT), and Taiwan People’s Party (TPP) is tight with a weak mandate possible. Following the election of President Tsai Ing-wen (DPP) to her first term in 2016, Beijing cut ties and ramped up military intimidation of Taiwan. This election and Beijing’s response to it will largely dictate the tone and tenor of Taiwan Strait tensions and Sino-American relations for the foreseeable future.

While all three candidates – William Lai (DPP), Hou You-yi (KMT), and Ko Wen-je (TPP) – pledge to support the status quo of maintaining Taiwan’s autonomy from China, Beijing views the candidates quite differently. Hou and Ko favor more cross-Strait interaction and economic interdependence, positions that Beijing is likely to reciprocate with less bellicosity and more carrots, while Beijing is antagonistic to the DPP and sees Lai as a “troublemaker” who in 2017 dubbed himself “a pragmatic worker for Taiwanese independence” (a position he has since walked back). With a very difficult path to a parliamentary majority, there is a strong possibility of a divided government ahead — with more cross-Strait turbulence on the horizon.

Recent Events

18 August 2023 – U.S., Republic of Korea, and Taiwan meet in first standalone summit between the three states at Camp David. A big step on way to solidifying an as-of-yet informal anti-Chinese alliance.

19 August 2023 – PLA launches drills around Taiwan following William Lai’s stopover in the U.S.

30 August 2023 – President Biden authorizes weapons transfers to Taiwan under Foreign Military Financing, a program normally used for sovereign states.

23 September 2023 – China announces cross strait integrated development demonstrations zone to promote integrating Taiwan’s outlying islands to the mainland.

07 December 2023 – Taiwan Ministry of Defense (MoD) starts to publicly release information on Chinese surveillance ballons entering Taiwan’s Air Defense Identification Zone. To date, Taiwan has tracked 23 spy balloons over its territory.

22 December 2023 – The 2024 National Defense Authorization Act (NDAA) is signed by President Biden. The 2024 NDAA includes provisions to expedite the fulfillment of previously pledged arms sales to Taiwan.

Following the Taiwanese elections, Global Guardian recommends that clients conduct table-top exercises and scenario planning as the election results may have an outsized impact on topline macroeconomic concerns.


China’s policy towards Taiwanese “reunification” has been premised as a carrot and stick approach; whereby, Beijing rewards alignment with economic incentives, more collegial rhetoric and punished non-alignment with economic sanctions, military intimidation, and more bellicose rhetoric. During the last KMT administration (2008-2016), Beijing’s Taiwan strategy was undergirded on buying its way to reunification via investments in property and coaxing legislators into laying the legal groundwork for eventual unification legislation. In this period, Taiwan established direct air and sea links to China and opened Taiwan to Chinese tourists and college students. Conversely, when the DPP rose to power in 2016, relations soured, and Beijing has wielded many sticks, including import bans and tariffs, halting formal bilateral communication, and military action designed to intimidate and signal its ability to blockade the island of Formosa (Taiwan’s main island).

In August 2022, China executed its most extensive live-fire exercises near Taiwan in almost 30 years, showcasing its ability to create a de facto blockade around Taiwan, disturbing maritime and air routes in Taiwan's bustling shipping lanes. Simultaneously, Chinese air and naval intrusions into Taiwan's informal air defense zone have occurred daily since late 2020 and have been increasing in scope and scale ever since.

Looking Forward

The composition of the future Taiwanese government will orient Beijing next moves: carrots or sticks. Depending on the outcome, Tomb Sweeping Day (04 April 2024), and the 20 May 2024 Taiwanese Presidential inauguration speech could serve as flashpoints in the near-term.

  • Together, a Lai victory with a DPP parliamentary majority would increase cross-Strait tensions, leaving Beijing few carrots to deploy and many more sticks to compel “reunification.”
  • A divided Taiwanese government (president without a parliamentary majority) could lead China to carry out both overt and covert destabilization operations to undermine Taiwan’s democratic system and harm the DPP’s image.
  • A Pan-Blue (KMT-TPP) victory could dampen regional tensions and see more bi-lateral engagement.

Key Takeaways

The 13 January 2024 National Election will be close, and the winner will play a determining role in the trajectory of cross-Strait relations, and in-turn, Sino-American relations. In the near-term, we expect China to leverage its carrots and sticks that include but are not limited to economic pressure/relief, increase/decrease of air and sea intrusions, cyberattacks on the government and key infrastructure, live fire drills simulating a blockade; and creeping expropriation of the Matsu and Kinmen islands via local politics and incremental expressions of force.

View the Taiwan Shock Index


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