January 13, 2020 / 1:42 AM / 11 days ago

Breakingviews - Taiwan's revival is Tsai’s to squander

Incumbent Taiwan President Tsai Ing-wen and Vice President-elect William Lai wave to their supporters after their election victory at a rally, outside the Democratic Progressive Party (DPP) headquarters in Taipei, Taiwan January 11, 2020. REUTERS/Tyrone Siu

HONG KONG (Reuters Breakingviews) - It’s time for President Tsai Ing-wen to step up. Taiwan’s independence-leaning leader has coasted into a second term, winning a record 8.2 million votes on Saturday on anti-Beijing sentiment and a strong $580 billion economy. Unfortunately, Tsai can take credit for neither. 

She campaigned on a growing threat from Beijing, which sees the self-ruled island as a part of China. Capitalising on months of anti-government turmoil in Hong Kong, the incumbent leader and her Democratic Progressive Party repeatedly rejected “one country two systems”, a formula which China implemented in the former British colony and proposes as a mechanism to reunify with Taiwan. Indeed, “Hong Kong today, Taiwan tomorrow” became Tsai’s rallying cry.

It helped too that Han Kuo-yu, the opposition candidate from the China-friendly Kuomintang party, was inexperienced and divisive. His high-profile visit to Hong Kong and China in March fuelled suspicion that Han was getting direction from Beijing.

Tsai’s position was also strengthened by trade and rising domestic investment. U.S.-China trade tensions have already seen some of the island’s manufacturers reshore production from mainland China to skirt tariffs. Merchandise export receipts ticked up 4% in December from a year ago, the second consecutive month of expansion. Moreover, a 66% surge in capital goods imports in the same month suggest investment growth for 2020 will be healthy, notes research firm Oxford Economics.

Tsai has called for dialogue with China but warned that Taiwan will not give in to “threats and intimidation.” However, her top priority will be sustaining economic momentum. Economic policy has been Tsai’s weak spot; as recently as in 2018, the DPP suffered a humiliating defeat in local elections largely due to frustration at the administration’s economic reform efforts. Saturday’s simultaneous legislative elections also saw the DPP lose seven seats, though it has clung on to a majority.

Taiwan’s inadequate infrastructure has long deterred foreign and domestic capital. Delivering bold policies to ease shortages of workers, electricity, land, for instance, will be crucial. Tsai’s track record is a worry, but a renewed mandate and a strong economy give her another chance to get it right. 

Breakingviews

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