Taiwan’s new leader faces threat from China and voters left behind by chip boom

Taiwan’s incoming president, Lai Ching-te, will begin his first term on Monday under pressure to increase social spending and address growing economic inequality, while meeting U.S. demands to bolster defenses against a declining China. more assertive.

Every Taiwanese leader since the start of free and direct presidential elections in 1996 has taken office with a message aimed at Beijing, which claims the island as its own and threatens to annex it by force if necessary.

But in the context of rising tensions in the Taiwan Strait, the demands on Lai to balance Taiwan’s security risks with guarantees to safeguard its independence are greater than those of most of his predecessors.

“There have been extensive exchanges about his inaugural address with Washington, and the United States has been communicating some guidelines,” said a person familiar with the discussions.

Washington is keen to ensure that Lai sticks to the China policy line of his predecessor Tsai Ing-wen, who won widespread international support for her cautious handling of often turbulent cross-Strait relations, several Party people said. Lai’s Democratic Progressive Party (DPP). .

A U.S. official said the American Institute in Taiwan, Washington’s quasi-embassy in Taipei, has been in contact with Taiwan officials about Lai’s inauguration speech and to underscore longstanding U.S. policy on issues across the Narrow.

“In this next term, we are not looking to alter or change things. . . The ‘status quo’ has been our synonym,” the official said.

Lai’s government aims to raise Taiwan’s defense budget from 2.5% of GDP this year to 3%, but also faces the need to increase spending on social programs. © Sam Yeh/AFP/Getty Images

Lai will seek to reassure the United States with a commitment to decisively strengthen Taiwan’s defenses, including increasing military budgets, revamping its military force structure, and focusing on cost-effective, mobile weapons systems and stronger civil defense.

But he is also keenly aware of the need to address burning economic concerns among many Taiwanese, especially young people. While Lai’s government aims to increase the defense budget from 2.5 percent of GDP this year to 3 percent, members of his team said his top priority would be domestic reform.

Decades of economic policy have focused on supporting Taiwan’s world-leading high-tech industries, such as chip manufacturing, leaving other parts of the economy behind. This has led to growing inequality, with 68 percent of the population below the average income, a senior PDP official said.

“We need to explain to the United States the importance of social solidarity for the sake of our national unity,” the official said.

Lai will likely struggle to build that unity from day one. He was elected with just 40 percent of the vote in a three-way race in January and lacks a PDP majority in the legislature.

He has committed to prioritizing policies with cross-party support. But hopes for a consensus diminished on Friday after parliament descended into fights over opposition proposals to expand its power through bills that would allow the legislature to find government officials guilty of contempt, a criminal charge punishable by imprisonment. The PPD described such legal changes as unconstitutional.

Taiwan lawmakers argue an exchange of blows during a parliamentary session in Taipei on Friday.
Taiwan’s parliament descended into scenes of chaos on Friday, dampening hopes of cooperation between the incoming Lai administration and the opposition KMT. © Ann Wang/Reuters

Lai’s policies include a reform of the underfunded national health insurance, an expansion of subsidized child care and care for the elderly. Beyond social spending, she will also seek to change economic policy from incentives for certain industries to creating more jobs in the service sector and stimulating domestic consumption.

“To give these people a sense of well-being and security, we must focus on social investment and build a more universal social security system,” the PDP official said. “There will not be much opposition from the opposition; “They may even want to outspend us in that regard.”

Lai has recruited several private sector executives to his Cabinet, most prominent among them JW Kuo, a businessman and chairman of semiconductor industry supplier Topco, a departure from Tsai’s preference for academics.

But in the sensitive areas of Chinese policy, national security and defense, the incoming president has retained almost all of Tsai’s team. His Foreign Minister Joseph Wu will head Lai’s National Security Council, while NSC chief Wellington Koo will become defense minister.

This continuity of personnel will offer stability, DPP officials hope, as China has stepped up military maneuvers near Taiwan’s waters and airspace in recent weeks.

The new president intends to express in his inaugural speech his willingness to dialogue, in line with Tsai’s practice, in a sign of goodwill towards Beijing, which has denounced him as a “dangerous separatist.”

Night street scene in Taipei
Decades of support for Taiwan’s high-tech sector have left other parts of the economy behind, resulting in growing inequality. © Annice Lyn/Getty Images

But Lai is also expected to reaffirm the principles outlined by Tsai that Taiwan is committed to its democratic system, that the Republic of China (its official name) and the People’s Republic of China should not be subordinate to each other and that Taiwan will resist the annexation or to the annexation. usurpation of its sovereignty. Taiwan’s future must be decided according to the will of its people, Lai will add.

Despite maintaining Tsai’s national security staff and focus on China, some observers believe Lai’s tenure could look very different in practice. He has shown a penchant for political battle throughout his 28-year career in politics, in stark contrast to Tsai, a controlled and soft-spoken former trade policy official.

“As we confront the challenges we face, we will also have to find our own voice,” a senior member of the incoming administration said, adding that Lai would “lay out his vision in his own words.”

As mayor of Tainan Municipality, Lai’s insistence on abolishing slush funds for city councilors sparked a revolt in the local legislature.

On a visit to Shanghai in 2014, he told Chinese academics that Taiwan independence was not an idea that originated with the DPP but a long-standing aspiration of the Taiwanese people, and that only if Beijing understood could the two sides find common ground. common: an unprecedented candor on the part of other visiting Taiwanese politicians.

In 2017, when Tsai was then prime minister, he described himself as a “pragmatic worker for Taiwan independence.”

“Lai’s brain is not Tsai’s brain,” said one person who has known the incoming president for many years.

Additional reporting by Demetri Sebastopulo in Washington

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