Peer reviewed analysis from world leading experts

Taiwan’s Tsai expectations

Reading Time: 5 mins
Taiwan's President Tsai Ing-wen leaves the Lopez Presidential Palace in Asuncion, Paraguay, 28 June 2016 (Photo: Reuters/Jorge Adorno)

In Brief

In 2016, the tone in Taiwan was set by the results of the 16 January elections. The Democratic Progressive Party (DPP) led by Tsai Ing-wen won an historic election victory with a dominating landslide focused on socio-economic policies. But President Tsai is stuck between a rock and a hard place.


  • A
  • A
  • A


  • A
  • A
  • A

On the one hand, she has pledged to reverse long-term and systemic trends in Taiwan’s demography and economy. On the other, she is faced with one of the toughest foreign policy challenges in the Asia Pacific: how to manage cross-Strait relations with a support base that is reluctant to pursue closer ties with China and increasingly identifies as solely Taiwanese.

Tsai’s reforms target the social safety net and the nearly bankrupt pension system. She also seeks to increase minimum wages, tackle rising housing costs, and jump start innovation to transform Taiwan’s industries. As the new President has written, ‘in 2016, the people of Taiwan entrusted [the DPP] with the twin tasks of reform and renewal. We want to make Taiwan an Asian tiger once again’.

But Tsai’s reforms must pass through a difficult bureaucracy, which has resulted in her disapproval rating rising from 8.8 to 42.6 per cent since her inauguration in May. There is mounting discontent that despite holding majorities in both the legislature and the executive, Tsai’s cabinet is unable to manage the DPP caucus and parliamentary squabbling to introduce bills and reforms.

There are three key issues Tsai has pledged to target.

First, Taiwan faces a significant demography problem of a declining population. The 2016 population growth rate was a mere 0.2 per cent, compared to a mortality rate of 7.3 per cent and a net migration rate of 0.9 migrants per 1000 people.

Like much of East Asia, Taiwan is undergoing an economic and social transformation of declining fertility and delayed marriages due to structural impediments that make it difficult for women to continue as working mothers. Statistics from the Ministry of Interior reveal Taiwan’s ‘2 Low, 4 High’ problem: salaries and social benefits for having children are too low, but work hours, the cost of educating children, the cost of housing and the hidden costs of having a family (for example,  clothing and insurance) are too high.

Second, Tsai faces a difficult fiscal policy setting. After three quarters of negative GDP growth, by mid-2016 there was much concern that Taiwan would not meet its annual goal of 1 per cent growth.

It was only the increased demands for Taiwan’s electrical goods and machinery which raised GDP growth for the first time in July 2016. Pushed by the Kuomintang’s (KMT) policies, Taiwanese investments in China are now approximately 71 per cent of Taiwan’s total foreign investments. But many of former president Ma Ying-jeou’s economic policies mainly paid dividends only to big businesses without increasing overall economic performance or the standard of living.

Taiwan’s ability to operate on the international stage has also been curtailed by China’s successful attempts to prevent official recognition of Taiwan. Taiwan has had limited options to join trading regimes and enter into formal economic cooperation. Consequently, Tsai may face difficulty in her aim to diversify Taiwan’s relationships through her ‘Go South’ policy, which focuses on investment and trade with South and Southeast Asian countries.

Third, Tsai’s cross-Strait policy will be faced with more limitations than that of her predecessor Ma Ying-jeou and the now-opposition KMT. Compared to the DPP, the KMT is open about accepting the ‘1992 Consensus’ as a basis for relations with mainland China. Tsai’s inauguration speech did not explicitly recognise the ‘1992 Consensus’, but she acknowledged that in 1992 a historic meeting took place. Predictably, mainland China’s Taiwan Affairs Office expressed its dissatisfaction with Tsai for not guaranteeing the ‘peaceful and stable growth of cross-Strait relations’.

More importantly, Tsai reaffirmed her campaign pledge to maintain the cross-Strait status quo but reiterated that this is dependent on the democratic will of the Taiwanese people. One stand out policy — legalising same-sex marriage — has become a statement on identifying Taiwan as a separate entity to China. Lesbian, gay, bisexual and transgender rights have now become a badge of the island’s progressiveness and consolidated democracy, as Taiwan would be the first Asian nation to legalise same-sex marriage should the bill pass.

The result of the November 2016 US presidential election of Donald Trump has added further complexity to cross-Strait relations. On 2 December 2016, Trump called Tsai (or she called Trump depending on whether you believe Trump’s Twitter), breaking with decades of diplomatic practice and presumably becoming the first US President or President-elect to speak with a Taiwanese leader since the severing of diplomatic ties in 1979. Trump adds volatility to a relationship in which US predictability on its attitude towards reunification has been key to ensuring the cross-Strait status quo.

The Taiwanese electorate in 2016 has placed high expectations on Tsai to manage such monumental challenges: overcoming entrenched cultural and bureaucratic hurdles to pass necessary social and economic reform, and maintaining cross-Strait stability with an unpredictable US President-elect who is determined to ‘stand up to China’.

Sheryn Lee is an Associate Lecturer in the Department of Security Studies and Criminology, Macquarie University.

Comments are closed.

Support Quality Analysis

The East Asia Forum office is based in Australia and EAF acknowledges the First Peoples of this land — in Canberra the Ngunnawal and Ngambri people — and recognises their continuous connection to culture, community and Country.

Article printed from East Asia Forum (

Copyright ©2024 East Asia Forum. All rights reserved.