The Global Impact of Taiwan's Election

The election outcome is unlikely to change the status quo for the Taiwan Strait, U.S.-China relations, or global markets which have seemed to price in geopolitical risk.

Over the weekend, Taiwanese voters didn't just choose their next president and legislature, they also helped set the course for U.S.-China relations over the next four years. Voters chose between a ruling party determined to maintain Taiwan's independence and an opposition that sees closer ties with China as Taiwan's only viable path.

What's at stake

China's leadership considers Taiwan declaring independence as a "red line" that must not be crossed. China views eventual control of the self-governed island as vital to its national security, and frequently conducts military exercises into the Taiwan Strait. The U.S. officially acknowledges the People's Republic of China's claim to Taiwan but remains a staunch supporter of the status-quo (a self-governed, fully democratic society, with its own economy, currency, military, and elected officials). U.S. Defense Secretary Blinken defused tensions last year by explicitly saying that the U.S. does not support independence, paving the way for a meeting with Chinese President Xi and President Biden in November. Yet, President Biden has repeatedly said the U.S. would come to the defense of Taiwan if attacked, seemingly abandoning the U.S.'s long-maintained "strategic ambiguity" on Taiwan, and has stepped up military exercises with allies across the Indo-Pacific. It is possible that Taiwan's next president could upset the balance in tensions between these two superpowers.

Domestically, the election was seen differently. Surveys have shown it wasn't the relationship with China, rather domestic economic issues that were the main concern of Taiwanese voters, including wage growth, inflation, housing affordability and energy security. In 2023, wages trailed the pace of inflation and the cost of housing ranks among the world's most expensive relative to income. While the presidential candidates have made similar pledges addressing most these issues, there are some key differences. One being the future of Taiwan's nuclear power plants. According to comments made during the 2nd presidential candidates' debate, the Democratic Progressive Party (DPP) pledged to close them down and the Kuomintang (KMT) proposed to delay those closures in favor of a slower energy transition.

The outcome

The winner of the Presidential election, the ruling pro-independence DPP, did not see a decisive victory, winning 40% of the vote. The conservative KMT—which has eventual reunification with China in its charter—came in second with a 33.5% share of the vote. The relatively new Taiwan People's Party (TPP), which has a more pragmatic view of Taiwan-China relations, came in third at 26.5%.

Presidential vote outcome