The DPP’s victory in the presidential and general elections last January rode on a wave of dissatisfaction with the poor economic performances of recent years, even though growth is expected to rebound in the short term thanks to the recovery in the global electronics cycle and the stabilisation of Chinese growth. The election results also reflect the people’s resistance to an overly close alignment with China. Yet tensions with its neighbouring giant could make it harder for the government to negotiate trade agreements with new partners, and even risks slowing the development of very high value-added sectors, at a time when Taiwan must deal with its decelerating growth potential and reduce its dependence on Chinese demand.
- High stakes for the new government
For the first time in its history, the Democratic Progressive Party (DPP) won both the presidency and parliamentary control during the general elections of January 2016. The DPP’s clear-cut victory and the major setback for the Kuomintang (KMT), the party in power from 2008 to 2016, reflects the Taiwanese population’s resistance to an overly close alignment with China (a pillar of the previous government’s platform) as well as far-reaching divisions within the KMT. The election also rode on a wave of dissatisfaction with the poor economic performances and rising social inequality of recent years.
The new president, Tsai Ing-wen, was inaugurated in May 2016. With an absolute majority in Parliament (68 out of 113 seats), the new government should benefit from comfortable manoeuvring room to pursue its economic policies and introduce structural reforms, at least during an initial honeymoon period. The stakes – and the people’s expectations – are very high, not only concerning economic and political issues, but also on societal questions like nuclear power and justice. In the short term, a top priority is to reform the pension system, the viability of which is threatened by a rapidly ageing population. The authorities also plan to define a “new development model” for Taiwan to diversify its economic ties with trading partners other than China, and above all, to foster a sustainable increase in its long-term growth potential (see next section).
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by Christine PELTIER