It is tempting, from the vantage point of the United States, to view Taiwanese politics solely through the lens of cross-strait relations with mainland China. The tension between the island polity and its much larger sibling to across the narrow ocean, is, after all, one of Asia’s critical inheritances from history—one that has enmeshed the United States in regional geopolitics. “Free China,” although not so free until the 1990s, served as an “unsinkable aircraft carrier” for American geostrategic positioning in its decades-long battle with global communism from the end of World War Two onward.[1] Although that political landscape has shifted ceaselessly following the rapprochement with Red China beginning in the 1970s, Taiwan has remained, with some fluctuation, a key ally of American policy makers and erstwhile Cold Warriors in the Pacific.[2] Taiwan remains a thorn in People’s Republic of China even as the Republic of China has evolved into an important and successful democratic partner for the United States and its allies.

But to grant overwhelming centrality to cross-strait relations is to slip into solipsism. Relations with the mainland—and thus with the United States—undoubtedly remain an important factor in Taiwan’s domestic politics, and the heft of the cross-strait relationship has a gravitational pull that affects many of the Taiwan’s internal political issues, especially economic ones. Still, in order to gain a full picture of Taiwanese politics and Taiwanese elections like the recent re-election of President Tsai Ing-wen and her Democratic People’s Party (DPP) over the more conservative and China-friendly Kuomintang (KMT), it’s important to grapple with the other local issues at stake in Taiwan’s flourishing democracy and to understand just what drives Taiwan’s citizens when they turn up to the polls or out into the streets. While these issues interact with mainland and greater Pacific Asian international relations, at heart they are Taiwan’s own issues. And they will continue to play an outsized role in the future of Asia’s political geography.

Some of these issues are economic: Although Taiwan grew at more 3 percent through most of 2018,[3] its growth rate has since dropped, and Taiwanese remain dissatisfied in the face of aging population pressure and greater technological competition with mainland and other foreign companies, as well as with the quality-of-life consequences of recent attempts to improve domestic competitiveness.[4] Others are societal: Taiwanese have been divided by social issues, of which same-sex equality, indigenous rights, and a restart of Taiwan’s nuclear power program are salient and representative.[5] Although the probable death knell of any “one-country, two-systems” unification sounded by the mass protests in Hong Kong throughout 2019 played a major role in incumbent Tsai’s re-election earlier this year, as the impact of the repression in Hong Kong recedes, domestic issues will affect Taiwanese politics and thus ultimately Taiwan’s orientation toward the PRC.[6] In turn, they will reverberate across Pacific Asia to the shores of the United States.

Economic Issues

With its greater than 3 percent growth in the first quarter of 2018, it looked as if Taiwan may finally have begun to shake the slump that had dragged its economy into negative growth through 2016 and 2017.[7] That growth dropped back below 2 percent in 2019, but it is expected to remain at or above 3 percent for much of 2020, still a far cry from the 5-10 percent growth it experienced in the decades before the 2008 economic crisis.[8] Although better growth should ease some of the pressure on Taiwan’s leaders, dissatisfaction with Taiwan’s economic situation remains high. Two factors, one internal and one external, will continue to put downward pressure on Taiwan’s economy, namely increasing competition from mainland Chinese companies (some of them backed by Taiwanese money) and a rapidly aging population.

President Tsai, first elected in 2016, has attempted to diversify Taiwan’s international relations in order to reduce its reliance on Chinese connections for economic growth. To that end, her DPP has tried to tighten relations with the United States, but more significantly, Tsai’s government has worked to strengthen diplomatic and economic ties to South and Southeast Asia as part of her New Southbound Policy. That strategy has been accelerated because of the China-USA trade war that has put clamps on global supply chains targeted by American President Donald Trump’s tariffs.[9] The New Southbound Policy is more than merely supply-chain and trade diversification; it also aims to strengthen cultural ties with Asia’s southern region to boost tourism and academic exchange to add fuel to Taiwan’s domestic economy.[10]

These internationalist economic changes are taking place against a background of domestic financial crisis. Taiwan’s rapidly aging population means a burgeoning retired population and an extreme financial burden on Taiwan’s government, especially if Taiwan’s low economic growth cannot be brought to an end.[11] To cope with the rising deficit required to maintain its pension program, Tsai has promised to take on a reform of the financial system. Those efforts began with two major reforms in 2016, first the introduction of amendments to Labor Standards Act aimed at making seven Taiwanese industries more competitive in the global market and boosting growth.[12] The Labor Standards reforms reduced the amount of mandatory time off and increased the amount of allowable overtime work.[13]  Those amendments have been accompanied by a set of reforms to the pension system, including reduction of pensions for Taiwan’s military, civil servants, and public school teachers.[14] Although the reductions were coupled with an increase in the monthly minimum wage by 10 percent and civil servant pay by 3 percent, despite significant public support, both reforms efforts have been deeply unpopular in some quarters, leading to mass protests, some of which turned violent.[15] It remains to be seen what effect the reforms will have on Taiwan’s economic situation, but these twin issues—competitiveness and a near-bankrupt pension system—will continue to be significant in Taiwanese politics as the population grows older.

Social Issues

Tsai was first elected upon a upswell of social activism that has continued to pressure her government to enact sweeping social reforms.[16] Although not fully onboard with many of the activist demands, Tsai’s DPP found itself in a de facto alliance with activist organizations in order to defeat the opposition nationalist Kuomintang party in 2016.[17] Tsai has made progress on some of these issues, but they are a deeply divisive in Taiwanese society, and she’s been met with anger from both activists, who say her administration has moved too tentatively on social reforms. Conservatives, meanwhile, vigorously oppose many of the changes she has promised in her campaigns.

First among them is same-sex marriage equality. During her 2016 election, Tsai became the first Taiwan presidential candidate to support same-sex marriage equality.[18] A May 2017 ruling by Taiwan’s Constitutional Court that existing laws banning same-sex equality were unconstitutional demanded a marriage equality law. Tsai’s subsequent proposed constitutional change to enshrine marriage equality, however, was pilloried from all sides.[19] The social activists who helped bring her into office decried the proposal as too slow and too conservative, while conservatives in the polity resisted the move as too radical. As the deadline for a new law approached in 2019, the DPP expedited legislation to legalize marriage equality, and Taiwan became the first Asian administration to legalize same-sex marriage. [20] Although the law’s passage won praise from activists, the fight over it demonstrates the deep fault lines through Taiwanese society regarding social issues, fault lines that will not disappear in the years ahead as activists push for new, progressive frontiers and conservatives resist.

Another such issue will be transitional justice for Taiwan’s indigenous peoples, who have suffered inequity at the hands of successive administrations including imperial Japan and the KMT-aligned mainlanders fleeing the communist consolidation of the mainland. Tsai’s DPP has made transitional justice a key theme of its political alignment. In 2016, it passed legislation to deal with KMT party assets built upon indigenous property, and in August of that year Tsai became the first Taiwanese president to offer an apology for the historical treatment of the islands’ indigenous peoples. [21] Still, like marriage equality, many social activists believe Tsai’s administration is less than interested in material progress, and some of the largest protests against her administration have come from activist quarters that supported her 2016 election.[22] Land reform to compensate indigenous communities is likely to continue to be a hot and dividing issue between activists, governments, and the conservatives in the KMT.

Finally, in response to blackouts in 2017, Tsai’s administration restarted nuclear reactors after promising on the campaign trail to phase out nuclear power.[23] Anti-nuclear activism has been a key component of Taiwan’s social activism since Japan’s Fukushima disaster.[24] And so, while the go-ahead to restart won support from Taiwan’s business community, it outraged activists.[25] With climate change looming and energy solutions limited, the fight over nuclear will grow in importance in Taiwanese politics. It illustrates the fissures not just between progressives and conservatives, but environmentalists and the business community.

Conclusion

Despite Tsai Ing-wen’s 2020 electoral victory and its repudiation of China’s heavy-handed tactics in its ethnic borderlands, Taiwanese politics do not revolve solely around cross-strait relations. Taiwan’s economic and financial situation, while tightly tied up with mainland businesses, comes with its own set of difficult domestic problems that will be central challenges—and campaign issues—for Tsai, her successor and her competitors. Economics are further complicated by energy and environmental issues such as nuclear power development that divide society along environmental- and business-biased lines. Those spheres are further fractured by divisive social faults—faults that divide progressives from conservatives, young from old, and put pressure on politicians and governments, DPP and KMT alike. Although the PRC-ROC situation dominates United States foreign policy thinking when it comes to Taiwan, these inward-facing issues will continue play an important role in Taiwanese politics. They will play a part in determining the fate of relations across the strait.

[1] Robert Green, “The Unsinkable Aircraft Carrier,” The Taiwan Review (May 1, 2005).
[2] Shelly Rigger, Why Taiwan Matters.
[3] Republic of China, Bureau of National Statistics.
[4] Pengqiao Lu, “Taiwan’s Biggest Problems are at Home (Not Across the Strait)”, The Diplomat (November 17, 2016).
[5] Sheryn Lee, “Taiwanese Democracy Powers On,” The East Asia Forum (December 25, 2018).
[6] The Economist Explains, “What’s at Stake in the Taiwan Election,” The Economist (January 10, 2020).
[7] Republic of China, Bureau of National Statistics.
[8] Republic of China, Bureau of National Statistics.
[9] Paul Huang, “‘New Southbound Policy’ Insulates Taiwan from US-China Trade War,” The Epoch Times (July 15, 2018).
[10] Dafydd Fell, “History: Taiwan,” Europa World Online (London: Routledge, 2020).
[11] Chien-Tsun Chen, “Taiwan’s Pension Crisis,” Economic and Political Weekly (Vol. LIII, No. 50: December 22, 2018).
[12] Lee, “Taiwanese Democracy Powers On.”
[13] Keoni Everington, “Changes to Taiwan’s labor law go into effect today,” Taiwan News (March 01, 2018).
[14] Agence France-Presse “Taiwan Passes Bill to Cut Veterans Pensions that Sparked Violent Protests,” The South China Morning Post (June 21, 2018).
[15] Lee, “Taiwanese Democracy Powers On.”
[16] Fell, “History: Taiwan.”
[17] Ibid.
[18] Ibid.
[19] Ben Wescott and Angus Watson, “‘A great divide’: Inside the battle to stop same-sex marriage in Taiwan,” CNN (November 24, 2018).
[20] Julia Hollingsworth, “Taiwan legalizes same-sex marriage in historic first for Asia,” CNN (May 17, 2019).
[21] Fell, “History: Taiwan.”
[22] Thomas Reuters Foundation, “Taiwan’s indigenous people take land rights fight to the heart of the capital,” South China Morning Post (June 11, 2018).
[23] “In the Dark: A massive blackout prompts questions about Taiwan’s energy policy,” The Economist (August 17, 2017).
[24] Lee, “Taiwanese Democracy Powers On.”
[25] Ibid.