Taiwan re-elects president

The election had been expected to be tight, but the Central Election Commission said the Nationalist Party's Ma Ying-jeou won about 51.6 percent of the vote versus about 45.6 percent for Tsai Ing-wen of the opposition Democratic Progressive Party (DPP).

"In the next four years, cross-strait relations will be more peaceful, with greater mutual trust and the chance of conflict will be less," Ma, 61, told thousands of his supporters, many clapping, waving red and blue Taiwan flags and cheering in the pouring rain outside the party headquarters in downtown Taipei.

There was no official comment from Beijing, but the Communist Party's official newspaper, the People's Daily, welcomed the outcome.

"This result shows that striving for peace, development and stability has become mainstream public opinion on the island of Taiwan, and this will promote the advance of cross-strait relations," said a commentary on its website (www.people.com.cn)

"In recent years, the peaceful development of cross-strait relations has brought dividends, and many members of Taiwan's public feel this deeply."

U.S. President Barack Obama congratulated Ma on the win. "Cross-strait peace, stability and improved relations, in an environment free from intimidation, are of profound importance to the United States," he said.

China claims Taiwan, a U.S. ally, as a renegade province that must be re-unified eventually with the mainland. U.S. arms sales to the island are a major bugbear for Beijing.

The election outcome would be a relief to China. The opposition DPP's independence-leaning stance has long angered Beijing, even though Tsai had tried to distance herself from that position in the campaign. Analysts had said a DPP win would have put ties with China in limbo, and sharpened Beijing's differences with the United States.

Ma's victory lifted a potential cloud over China's own leadership transition later this year. China's President Hu Jintao, who considers forging detente with Taiwan as a proud part of his legacy, is due to step down as Communist Party chief this year and as president next year as part of the leadership reshuffle.

For the United States as well, the result removes at least one prickly issue from its ties with China as Obama readies for his own re-election bid later this year.

"It's a good result for Ma's China policy, and it is probably also a good result for Beijing's Taiwan policy," said Alex Huang, professor of strategic studies at Taipei's Tamkang University.

"It is also a good result for the United States and for regional stability," he added, noting also that business will benefit from the continuity the same administration will provide.

However, Ma's victory was much reduced from the near 17-point margin he had over the DPP at the last election in 2008.

The Nationalist Party also won a clear majority in parliament, which should give Ma a fillip in pushing through policy. The election commission said the Nationalists won 64 seats in the 113-member legislature, although that is also lower than the 81 seats they had in the outgoing house.

"We will continue to let economic growth flourish, protect cross-strait peace and friendly relations to achieve more concrete results in cooperation in important areas," said Lien Chan, the honorary chairman of the Nationalists.

But in an acknowledgement of the reduced majority, he added: "We need to discuss thoroughly the criticism the voters have handed to us."

Ma's China policy is centred on not declaring independence but also not not moving toward unification. Despite critics saying that his policy of detente could lead to unification with China, he is seen unlikely to allow that.

"There's a majority position that is in support of maintaining the status quo, the numbers of people that want unification or independence are very, very small," said Bonnie Glaser, a leading U.S. scholar on Taiwan issues.

"He (Ma) wants to do what is in the interests of the majority in Taiwan. I think it's extremely unlikely that he'll move away from that position."

China also was more relaxed about this election. Unlike in 1996, when China fired missiles into waters off Taiwan before the island's first direct presidential election, Beijing has learnt to temper any response to avoid antagonising voters into backing the DPP.

Nearly 200,000 Taiwanese returned from overseas for the poll according to local media reports, cramming flights in a last minute rush to cast ballots. In a measure of the easing ties with the mainland, most of them came over from China.

Ma and Tsai are both former law academics with doctorates from Harvard and the London School of Economics respectively. Tsai, the first woman to bid for Taiwan's presidency, appeared unable to press home her charges that Ma had pursued his pro-China policy with little regard to rising costs of living and a widening income gap at home.

"Ma has lost a lot of votes," said former DPP legislator Luo Wenjia. "But the people's dissatisfaction was not enough to make him lose the election."

A third presidential candidate, former Nationalist party member James Soong who now leads a splinter party, trailed far behind with around 2.8 percent of the vote.

Ma's victory is likely to provide a short-term boost to Taiwan stocks and the Taiwan dollar when markets reopen on Monday, analysts said. Economists see stronger ties with China's vast markets as vital for Taiwan's heavily export-dependent economy because of the slowdown elsewhere in the world.

(Additional reporting by Faith Hung, Clare Jim and Argin Chang in Taipei; Chris Buckley in Beijing; Editing by Raju Gopalakrishnan and Brian Rhoads)