TAIPEITaiwan's legislative elections must be counted as an impressive victory for
President Chen Shui-bian and his Democratic Progressive Party, and should
further awaken Beijing to the realities of Taiwan's democratic politics. The DPP
has easily achieved its goal of becoming the largest party in Parliament.
It is not an unalloyed triumph. Creating
a coalition with a working majority in the legislature, strong enough to push
through economic reforms, remains a huge task. The bigger than expected fall in
the vote for the once almighty Kuomintang may open the way for a new alignment
on the right. As in the presidential election last year, the KMT renegade James
Soong and his People First Party polled strongly, which helped the DPP into
first place but increased Mr. Soong's chances of rejoining the KMT and
presenting a strong challenge to Mr. Chen in the 2004. Still, it was a strong
endorsement of the president, given that Taiwan is in its worst recession. GDP
fell by 4 percent in the third quarter, unemployment is at an unprecedented 5.3
percent and stock prices are down by half since Mr. Chen was elected. The result
is a tacit endorsement of Mr. Chen's middle-of-the-road policy toward the
mainland. He backed away from the DPP's earlier independence talk and has taken
small steps to liberalize cross-straits investment, trade and tourism.
However, he has not entirely swallowed
the received wisdom of the business community, local and foreign, that Taiwan
must put commerce before politics and improve relations with the mainland.
Despite the economy, the DPP had
sentiment going for it. The recession was seen as the result of the global
electronics slump. The government was not blamed for the exodus of companies to
Indeed, DPP support in its heartland in
the south, where unemployment is highest, was firm. Voters there resent local
business interests which desert Taiwan for cheap mainland labor, and saw the DPP
as more likely to protect them.
The issue of identification with Taiwan
remains at the heart of politics. Recent surveys suggest a sharpening of the
divide on mainland issues and an increase in those who want changes in policy
only if they are directly beneficial for Taiwan's economy and do not involve
The success of former President Lee
Teng-hui's recently formed Taiwan Solidarity Union, which won several seats,
underlined the continuing appeal of local identity.
The DPP and TSU showings could now create
a bandwagon effect by enhancing the likelihood of President Chen being
re-elected. That prospect would cause rethinking in Beijing, which has been
hoping that he would be a one-term president.
Beijing may still pin its 2004 hopes on
the mainland-born populist Mr. Soong, but he knows that there are few votes in
being overeager to improve cross-straits relations.
Mainland policy, even toward Mr. Chen,
has become more flexible, with younger officials recognizing that threats are
counterproductive. There may be an opportunity for cross-straits progress
between now and next year's Communist Party Congress.
But at best only slow progress is likely,
despite both sides joining WTO. Whoever is in power in Taipei, formal links will
be possible only when Beijing defines its One China principle in a way
acceptable to Taiwan's majority. Domestically, there is hope that getting the
election out of the way will improve government. After a poor start, Mr. Chen's
administration has recognized the need for rapid reforms to liberalize the
domestic service economy, attract foreign investment, resolve bad bank debts and
ease entry of mainland and foreign professionals.
There is a huge agenda if Taiwan is to
avoid the Japanese experience of an economy with a successful export sector but
crippled by an inefficient domestic one. Reform implementation has been weak due
to political haggling, a shortage of DPP managerial experience and obstruction
by a KMT-dominated civil service.
A stronger Chen administration should
break some domestic logjams and make it easier to take a pragmatic stance on
relations with the mainland. On balance, the election result is positive.