Presented by Ross Darrell Feingold – Senior Advisor, DC International Advisory

The political environment:

President Tsai Ing-Wen faces a challenging political environment and has to deal with labor law and pension reforms that need to balance various special interests. Concerning personnel and policy developments, public is losing patience with transitional, because of the justice rather than the economy focus.

The industry focus was five: Green energy, Asian Silicon Valley, Biotechnology, Smart machinery, National Defence Industries; and is now six, with an emphasis on digital communication.

As for external defense, the Trump administration is preparing a new weapons package for Taiwan that will include “more and better defensive arms”, despite China’s disapproval. Moreover, Taiwan is taking steps to boost its own naval capabilities, announcing the launch of a domestic submarine-building program.

Next year’s elections will see voters choose the mayors and city councilors in the special municipalities; mayors and councilors in other cities; Aboriginal district representatives and councilors; county commissioners and councilors; township mayors and councilors; and borough and village wardens. Next year’s local polls would be key to determining if the KMT could regain its footing. The party needs to win leadership in at least two of the six special municipalities in next year’s elections to counter the Democratic Progressive Party’s (DPP) political monopoly. In the 2014 elections, the KMT won just one special municipality — New Taipei City — and five cities and counties. If the KMT fails to achieve these goals, its path would only become more tumultuous.

About cross-straits relations: Communication channels remain closed, as China is unlikely to change views amid party congress, furthermore new Hong Kong chief executive Carrie Lam is unlikely to improve relations with Taiwan.

Taiwan – US Relations

The Trump-Xi summit was more about stabilizing the critical U.S.-China relationship and burnishing his foreign policy credentials than achieving a breakthrough. Though the two leaders did not say they talked about the problem of Taiwan, which is the core interest of the People’s Republic of China, they certainly agreed to deal with it at their next meeting.

Possible outcomes for Taiwan are both negative and positive for Taiwan. Taiwan must understand personnel in the Trump Administration and Congress as well as potential US policies that impact Taiwan: trade agreement review, currency manipulation, destination-based cash flow tax.

Taiwan – Foreign Relations

Tsai’s push for new regional partners called the “New Southbound Policy,” is similar but more strategic than the policies of Lee and Chen. Like its forerunners, Tsai’s policy seeks to lessen the mainland’s dominance of Taiwan’s trade, but it is more comprehensive and emphasizes building an extensive network of cultural and interpersonal relationships throughout the region.

China’s efforts to isolate Taiwan in Asia is perceivable through different projects:

  • Alibaba is investing in Malaysia: Ties between Malaysia and Beijing have blossomed in recent months with a surge of investments from China. Chinese e-commerce giant Alibaba Group Holding Limited plans to set up a regional distribution hub in Malaysia to cater to its fast-growing business in the region. Ma, whose Alibaba owns Chinese online shopping business Taobao, would help steer Malaysia’s e-economy development with the implementation of online payment and banking.
  • Philippines (infrastructure investment)
  • Singapore: Joint Council for Bilateral Cooperation, Queensland military training.
  • AIIB : about 25 African, European and South American countries are set to join the China-led Asian Infrastructure Investment Bank this year, reinforcing Beijing’s determination to push a global agenda even as US president Donald Trump rails against the ills of economic globalization. Taiwan said it would not join the Beijing-led Asian Infrastructure Investment Bank (AIIB) because the condition it was set violates the island’s dignity and the principle of equality.
  • One Belt, One Road. Read article below: http://www.tandfonline.com/doi/pdf/10.1080/24761028.2016.11869096?needAccess=true
  • South Korea: Internal politics, DPRK divert attention from Taiwan and Asean.