In 2000, the pro-independence Democratic Progressive (DPP) won the presidential election in Taiwan for the first time, over its divided opponents. In an interview in May that year, Singapore’s statesman Lee Kuan Yew said: “A word of caution: There is a point beyond which no Chinese leader can survive if Taiwan is seen to be drifting away under his watch.”

Last Saturday, the DPP again won (its 3rd consecutive) presidential election in Taiwan over a divided opposition. China has made it very clear that it does not like the DPP’s incoming leader Lai Ching-te, and has been calling for its armed forces to be ready for war. The US continues to send arms to Taiwan. And the Economist has labelled Taiwan “the most dangerous on earth”.

But what does Taiwan’s recent election mean for investors and businesses in the region?

Tune into this latest episode where we delve into Taiwan’s transition to democracy, the impact of the recent elections on the geopolitical dynamics between Taiwan, China and the U.S, and lastly, the implications for investors and businesses navigating this complex landscape.

Listen to the full podcast here:

Also available on Apple Podcast.

Featured materials: 

The most dangerous place on Earth, The Economist

Keith Zhai, veteran journalist on China, media and 2024, The Impulso podcast

The Generalissimo: Chiang Kai-shek and the Struggle for Modern China, Jay taylor


The Generalissimo: Chiang Kai-shek and the Struggle for Modern China, Jay taylor


[AI-generated transcript] 

[00:00:00] Sabrina 

Welcome back to the Impulso Podcast. Today, Jianggan and I are not going to be talking about e commerce or fintech, but something which is of great geopolitical significance for this region. So, today’s podcast is going to be about Taiwan’s recent election. And, in 2021, the Economist actually labelled Taiwan as the most dangerous place on earth.

And, just last Saturday, the most dangerous place on earth held its elections. And, Lai, Lai Ching Teh lai Ching Teh won, with 40 percent of the votes, putting the incumbent Democratic Progressive Party in power for the next four years. But, despite him winning the presidential election, the DPP actually lost the parliament majority, making the kuomintang, the biggest in the parliament. So, why are we talking about the Taiwan election? 


[00:00:48] Jianggan 

I think it is quite important for this region and ever since, I mean, especially since the war in Ukraine and people I started realizing that even in 2020s, now we’re living in, right, I mean, in an area where things have evolved a lot, you can still see conflicts happening in places you don’t expect things to happen.

So over the last few years you have a lot of rhetorics suggesting or saying that, okay, there might be a war. And I think the U. S. Military was like doing some predictions saying that China might attack Taiwan, I don’t know, 20 25, 20 26, 20 27. So different timelines being thrown out. And of course a majority of the, I mean global consumer good supply chain is concentrated in China and Taiwan produces like a vast majority of some of the most advanced. Semiconductors in the world. So if there’s a conflict, the consequences will be dire and for us in Southeast Asia it will directly impact the economy at a very large scale. So this is something that of course people like us would not want to see it happen. So it’s critically important to understand the dynamics there.

As investors, as entrepreneurs, as business executives, so that you can make the necessary planning I mean, if something’s going to happen or whether something’s going to happen.

[00:02:02] Sabrina

So this is actually like Taiwan’s eighth election, right? And you’ve mentioned that you’ve actually been following Taiwan’s first ever election since 1996. So maybe you can share a little bit more 


[00:02:13] Jianggan

Oh my god, I mean, I was revealing my age, right? So I think 1996 was the first direct election of the president in Taiwan. And before that, they had the elections, whatever, whatever, but I think before that the government functioned pretty much like a, dictatorship.

So I do remember before the election, 1996, things were very tense. I think I think the China side, they were shooting missiles into the Taiwan Strait and I think the U. S. actually sent two aircraft carriers to the strait As deterrence. So it was actually very tense and of course, China was trying to alter the results of election by intimidation, but it didn’t work.

And then fast forward to today, I mean, Taiwan has gone through like six, seven more elections. Yeah. So I think the power has been transferred a couple of times. So as, a democracy, it’s, it’s functional, it’s vibrant. Some of the topics they discuss are, I mean, in my opinion, a bit trivial, but that’s what democracy is, right? When people talk about things they want to talk about. 

 So I think that political dynamics. In the island has changed quite a bit since 1990s I think you can read a lot about the background of why Taiwan came to what it is today, right? In Kuomintang, as you mentioned, a lost civil war to the communists in China in 1949, they fled to Taiwan with 2 million other people.

So they ruled Taiwan until 2000. When the power was transferred to DPP for the first time, and eight years later, Kuomintang took the power back, ruled for another eight years, then DPP took over again for another eight years. So this is the first time that somebody has won a third consecutive election. So of course the, the guy who is elected Lai Ching-te, or William Lai, I think he has English name.

 He has historically said that he was pro Taiwan independence and and of course, that is something that the government in China can’t accept. So that’s also the reason why people are so nervous about this election. I’ve been reading some of the news reports since the election.

I mean, it was, it was very interesting, like the first like 24 hours and all the international news outlets are saying that, oh, Taiwan defied China and voted for democracy. And these reports are completely ignoring the facts that, okay, first there were only 40 percent of the votes, versus like 58 percent in the previous election. And second, they lost the parliamentary control. I mean, the parliamentary elections happened at the same time. So clearly many people are not happy about their performance for local issues, economy, etc. But but Taiwan’s election functions differently compared to lots of countries. You just need to win the most votes compared to your com sorry, more votes compared to your competitors to win, you don’t have to get a simple, super majority. So they got 40% and I think it’s the two opposition parties got collectively about 60%. But I mean, these two parties tried to unite before the election but because of different political agenda, they couldn’t. So that’s the outcome that we are seeing today. So yeah, so this is this was has been evolving.

[00:05:24] Sabrina

So this is how the parties evolved, right? But have you seen the elections evolved based on Taiwanese people’s perspective or like the demographic of people who have shown up to vote?

Cause I think I’ve seen a few news articles. They said that over the past few years, the percentage of people who have shown up to vote has increased.


[00:05:40] Jianggan

This time it actually lower than last time, I think it’s like, this is lower than the previous year, the previous election, I think last is 74, 75%, 71%, if I remember correctly.

, but I think the political landscape so if you’ve been observing for the last two and a half decades, you would see that it’s been solidified. I mean, no matter what happens DPP would have their core supporters, which is about like 36, 37%, and the Kuomintang would have their core supporters, which are, I don’t know, 30, 31%, mostly like old, and many of them actually originally from the mainland China, and that they want unification.


[00:06:16] Jianggan

And the vast majority of the young people, they are not happy with either. Right. I mean, what they are facing is, is economy, which is I think heavily sort of sided towards the large companies and young people can’t get job advancements, can’t get a good salary. The housing prices are very expensive and manufacturing jobs are outsourced to China and now to Southeast Asia.

So there’s lots of grievances amongst the young people and I think that triggered a few movements over the last 10 years. And that’s also, I think the reason why the third force this time, the Taiwan People’s Party, Taiwan’s People’s Party run by the former mayor of Taiwan Professor Koh, or Dr. Koh has won like 26 percent of the votes. I think many young people voted for them because they were not happy with the DPP or Kuomintang. But precisely as you pointed out, right Sabrina, so even Mr. Koh, I don’t see a clear political agenda or a clear plan from him. I mean, I’m not there to vote, but he has been complaining a lot about the issues. , about the two parties, which have been like, you know, rotating holding power, but I don’t think he has a clear plan of, I mean, if he’s elected, how is he going to fix the economy? How is he going to get Taiwan more competitive compared to South Korea? Because it has fallen much behind South Korea. 


[00:07:31] Sabrina

But based on what I’ve read, but you know, as we discussed in our podcast with Keith, a lot of what you read could be biased, right? 


[00:07:37] Jianggan

Propaganda. I mean, in a war, everything is propaganda. And any political battle is, It’s war without a military fight, but as you read in Art of War by Sun Tzu.


[00:07:46] Sabrina

And a lot of what I read focuses on Taiwan’s relationship with China or the US. I haven’t read any articles where they actually explain what are these parties plans for Taiwan itself based on its housing crisis, its economy issues, et cetera. So to me, that was really interesting because it’s very different from the elections that I’ve seen

[00:08:05] Jianggan

there was, I can’t remember who said that, I think it was Deng Xiaoping, right, the prime leader of China in 1970s and 1980s who started the reform and open up. And he pointed out that the issue of Taiwan is fundamentally an issue between US and China. In which sadly, I think whatever Taiwan thinks has very little say in the, you know, basically this play between sort of large superpowers.

The point is that think many people outside China probably do not understand why the government sort of makes Taiwan issues so fundamental that they don’t want to compromise, any inch. with Taiwan. So I think, I think to understand that you have to look a lot into the history of China.

But regardless, I think there’s lots of written material that you can read and a lot of like videos on YouTube you can watch. But the consequence is that no Chinese leader can afford to lose Taiwan during their term. So same for Xi Jinping, I think Lee Kuan Yew actually pointed that out at a forum in year 2000, when Taiwan had their second election. He said no translator would afford to be seen. To lose Taiwan during their term because they will forever be labeled as the person who lost Taiwan in the history historical records. So I think, I think as far as the U. S. is concerned, Taiwan is something that they can leverage to deter China. And to prevent China become a true like Pacific power. So, but of course it doesn’t have the incentive to alter the status quo, right? If Taiwan becomes independent and they know that China will be forced to act and a war will be inevitable and nobody wants that situation. So it was weird that this is an area where China and the U. S., at least with the current administration, they can find things to work together. 

I’m not sure if you can follow in the news. In the week before Taiwan’s election I think the head of external relationships of the Communist Party of China met with the U. S. Secretary of State, Antony Blinken, in the U. S. The Commerce Minister of China had a call with the Commerce Minister of the U. S. I think the public security and the defense officials in China actually held separate meetings. So it’s pretty obvious, right? I mean, the two sides are coordinating the response to the election.

And you see that an hour and a half after the election results were announced, China issued a statement saying that, oh. The majority of people in Taiwan have rejected the DPP and 60 percent didn’t vote for them. So a statement that many see as as attempt to deescalate and the, and the Biden reaffirmed saying that, okay, we support one China policy. It’s also a sort of gesture to deescalate. 


[00:10:39] Sabrina

I think that’s a very good explanation of probably why the economists labeled Taiwan as the most dangerous place on earth, so of course, like you mentioned the U S has came out and offered their congratulations to the DPP. And of course, China has also issued their statements. And both countries probably currently at this point want to maintain a status quo. Nobody wants to start a war. So what does this mean for investors or businesses in the region? What can we look forward to in 2024 with this new president? And what do you think are some of the risks that investors and businesses would face? 

[00:11:10] Jianggan

Well, I think a couple of things. The first is that I don’t know. Some news reports are saying that Taiwan’s election results angered China, whatever. But knowing how the Communist Party works in issues of such great significance, they had plans a long time ago about different scenarios. And the statements were probably drafted like ages ago, depending on the different results. And they probably expected so Lai to win. So it came as no surprise to anyone. But what is for sure is that they would refuse to have a dialogue with Lai. So which means that you will not see the cross trade relations improve over the next four years.

So I think during, during President Ma’s reign between 2008 and 2016 that was, I mean, what was Kuomintang government in Taiwan. That was a great rapprochement. So you had. China opening up lots of imports for Taiwan products and especially the products of SMEs and farmers. You have China opening up the individual tourism to Taiwan. And actually that was that was a period of you know, back in early like 2000s, the US had this narrative that if China opens up more, they will become more like us, right? Because people will see that, okay, how liberal democratic system works. And I mean, from 2008 onwards, that’s how many people got.

And I spoke with lots of people who went to Taiwan back then, and I was based in Hong Kong, so I actually went to Taiwan quite a lot, and I met lots of friends there great friends. So the people who traveled there from mainland China back then, they had two different impressions. Some of them were saying that, I really like the freedom, I mean, people there are really nice, these sort of positive impressions. And the other narrative, which was completely opposite is saying that, Oh shit, I thought the infrastructure in Taiwan would be better than this. I mean, the city looks old, like 1970s, 1980s kind of feel. And why are they debating about trivial things in parliament? I mean, you see fights and stuff. And you see at that time, I mean, that group of people were the people who are benefiting from China’s emerging rise, right? So, they want things to move fast. They want economy to go. And so they had a different perspective, but now you will see that there has not been meaningful exchange. amongst two sides in eight years. So there was probably lots of misunderstanding which are accumulating. Oh yeah before 2016, you can buy things from Taobao in Taiwan. Yeah. You can’t. You can’t. Because it made no sense for Alibaba to operate. It’s a large Chinese company, right? So that’s why they chose their focus on Southeast Asia. That’s why they bought Lazada and stuff. And you see the consequences, right? 

So I think you don’t expect things to improve. And as far as war is concerned, I think Let me look at it from two sides, right? First, on the Chinese side, I think I mentioned this before. Xi Jinping thinks that his army is not ready, if there is a invasion, so that’s why he has been calling for the army to be ready. But the more he calls for that, the more you know that he’s not ready. So he probably doesn’t want a war unless he’s forced to. And he has probably come to the conclusion that, okay, if the Taiwanese sort of public sentiment drifts away from pro unification to pro independence, he probably has come to the conclusion that it doesn’t matter, right?

I mean. I don’t know, two generations ago, everybody in Vietnam hated the U. S. Now they’re good friends. Like, I mean, can you name like anybody in Southeast Asia who actually hates Japan because of the war? No. So people really like Japan. Yeah. So people’s sentiment changed. So they probably have come to the conclusion that, okay, if people really don’t like us, but give it like 10 years, 15 years, we look at long term, if that’s our macro agenda, we can probably make it happen.

So, he can probably be a little bit patient I think when he says that he can’t be left indefinitely, the issue of unification, I think that’s also setting the expectations. I mean, it probably doesn’t mean that he will act over the next, I mean, two or three years. That’s the Chinese side.

I think on the U. S. side that’s very funny, I mean, the narratives you see from the U. S., right? First, they’re saying that, okay, the Chinese economy is not doing well, and that they’re not going to overtake us anytime soon. At the same time, if you read the reports from the US military, they kept like, you know, , Emphasizing that China’s military was going really fast, it could be a big menace, it could be a big threat. We put these two things together. You start to feel that they’re crafting a narrative that, so China will not overtake us. Economically, so we don’t have to worry. And the China’s ministry is really sort of strong. So let’s not fight a war because it can get us like into trouble.

Don’t poke the bear. Yeah. So, you see that from the US side, I mean, they are managing the situation. Of course the two are competing on multiple fronts, but neither one’s war. Now, the tricky part is that if Trump comes. Into power end of this year or early next year, what would happen?

I don’t think that he would do a war because that would be against the interest of most people around him and probably his own economic interest. But exactly how he would react to situations like this it’s unpredictable. So I, I think people, people in China and other places would probably start making different plans of if Trump says this, this is what we should do. If Trump says that, it’s something that we really don’t want to see, but we have a plan to react to it. The problem is that we have two large powers doing this kind of competition. They naturally do not trust each other. So on the one hand, I the US probably believes that China will not fight a war. But he can’t fully put place the trust on it. I mean, who knows if one day, I mean every rational calculation would say that Putin, would launch, not launched the war in Ukraine, but he did. So he can’t place on your trust on this. So that’s why they would keep selling arms to Taiwan to make sure that, at at least there’s some deterrent, so that if China wants to, to do a war, you will think twice.

So that’s that’s the situation there. I think Lai is also, I mean, he is pro independence, but I think he’s probably rational as well. So he will probably, say something annoying to Beijing, but I think, I don’t think he will cross the line. So this is a situation we’ll face over the next four years. And it’s not pleasant, but there are risks most likely the risks will not turn into a disaster, but I mean, as we say, right, I mean, big power politics, sometimes you have miscalculations. 


[00:17:29] Sabrina

You just never know. Everyone is kind of in a limbo now..


[00:17:32] Jianggan

What you can do is to plan for the different scenarios, right? I mean, the normal scenario, which is likely, what you should do. The unlikely scenario, what you should do and how much you should prepare for it. 


[00:17:43] Sabrina

So I think that’s all for the content. That’s all?


[00:17:46] Jianggan

Yeah. I do think that I will strongly encourage anybody who has not been to Taiwan to actually visit Taiwan. Great place, great people, great food. I think infrastructure could be improved upon, but everything else is great. We should do immersion there sometime. 

[00:18:01] Sabrina: We could. I’ve never been to Taiwan. So thank you for tuning in to another episode of the Impulso Podcast. We hope you enjoyed today’s episode even though the topic is a little different from what we normally cover. Do like our podcast Spotify, Apple Podcasts, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech, new retail, and the broader digital economy.Bye bye. 


[00:18:21] Jianggan

And politics. 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].