Dramatic Week in Taiwan Leaves Pro-US Candidate as Frontrunner

(Bloomberg) -- After a week of dramatic twists and turns, Taiwan’s most pro-US candidate has a clearer path to victory in next year’s presidential election, in an outcome likely to frustrate Beijing.

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While the ruling Democratic Progressive Party’s candidate, Vice President Lai Ching-te, has been ahead in polls all year, a much-hyped alliance between the main opposition camps had threatened to wipe out his lead.

That unity ticket imploded when the Kuomintang’s Hou Yu-ih and the Taiwan People’s Party’s Ko Wen-je had a spectacular public falling out at a Thursday press conference. Both men filed rival bids on Friday, effectively splitting the Beijing-friendly vote hours before the deadline.

The collapse of the joint ticket is set to disappoint Chinese President Xi Jinping, whose government has blasted Lai over his stance on cross-strait relations. A government in Taipei more open to restarting talks with Beijing would minimize Xi’s need to further ratchet up pressure on Taiwan and exacerbate an already sensitive flashpoint in China’s relationship with the US.

US President Joe Biden’s government already has strong links to Taiwan’s ruling party led by Tsai Ing-wen, and has pledged $480 million to bolster the island’s military capabilities in the face of Beijing’s increased military aggression. Another DPP government would likely be a smooth transition for his administration — especially with Hsiao Bi-khim, the island’s former envoy to the US, named as Lai’s running mate.

“This definitely releases some pressure off of Washington’s shoulders as Lai’s attitude has always been US-friendly,” said Chu Chao-hsiang, professor at the Graduate Institute of Political Science, National Taiwan Normal University. “Beijing will now increase its pressure on the Lai campaign and make sure Lai doesn’t say or do anything to test its red lines.”

China earlier this year called Lai a “troublemaker” seeking Taiwan independence, saying his comments on maintaining the peaceful status quo were a lie and that he brings the risk of war to the island.

Dramatic Week

Just one week ago, it looked like Taiwan’s ruling party, which rejects China’s claim to sovereignty over the island, may lose its bid to retain the presidency in elections in January. That would have opened the door for Xi to forge stronger ties with Taiwan, which is separated from China by only 100 miles (160 kilometers) of ocean.

But a series of extraordinary events this week saw that alliance implode in public fashion. After months of on-and-off negotiations over who would lead a joint ticket between the KMT and TPP, the two camps convened at a luxury hotel in Taipei on Thursday, where they traded insults on live television for 90 minutes.

Former Taiwanese President Ma Ying-jeou, of the KMT, sat on stage silently throughout the mud-slinging, physically refusing to take the microphone. Foxconn Technology Group founder Terry Gou — who dropped out of the presidential race on Friday after consistently polling in fourth place — said Ma hadn’t been invited to the event.

That unprecedented display of acrimony will likely be remembered as one of the most chaotic moments in Taiwan’s political history. The unflattering performances could now hurt Hou and Ko’s prospects with voters, said Niu Tse-hsun, a professor at the Chinese Culture University, who likened their unity talks to a “soap opera.”

“In my heart I understand very well that during this period, everyone expected” a unity ticket, Hou wrote in a Facebook post on Friday. “But since, in the face of public opinion and in pursuit of sincerity, we’re unable to get that kind of result, the KMT is duty-bound to continue its political mission without hesitation!”

Market reaction to the failed alliance was muted. The Taiwan dollar slipped 0.3% against the US dollar on Friday amid broad dollar gains against Asian currencies. The currency had jumped after Xi last week said Beijing has no plans for invasion of Taiwan.

While the KMT supports dialogue with Beijing under the premise the island is part of China, Taiwan’s ruling party insists talks can only go ahead as equals, a notion Xi cannot accept. That deals a blow to the Communist Party which has made closer ties with Taiwan all the way up to unification a priority.

Those tensions between the DPP and the Communist Party were on display in August 2022, when Tsai’s government welcomed then US House Speaker Nancy Pelosi in Taipei. That caused ties between the world’s largest economies to crater, as Beijing responded with unprecedented military drills around the island and froze military talks with Washington.

Both the US and China have reasons to keep tensions from spiraling again in Taiwan. Xi is trying to stabilize Beijing’s geopolitical ties and boost his nation’s slowing growth. Investors have cited geopolitical turbulence as a barrier to investing in the world’s second-largest economy.

Biden is facing an election year in 2024, and will want to reduce instability and avoid any “escalation of tensions around Taiwan,” according to Huang Kwei-bo, a professor at the National Chengchi University.

“Washington now will keep a close watch on whether Lai can successfully convince both internal and external parities that he’s capable of keeping cross-strait relations stable,” he added.

--With assistance from Jennifer Creery and Adrian Kennedy.

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