Taiwan’s New President Won’t Placate China

Welcome to Foreign Policy’s China Brief.

Welcome to Foreign Policy’s China Brief.

The highlights this week: Taiwan elects a new president with a reputation as an independence advocate, China sends a large delegation to the World Economic Forum in Davos, Switzerland, and China mediates a cease-fire along its border with Myanmar.

Lai Ching-te won Taiwan’s presidential election on Saturday with 40 percent of the vote, nearly 7 percentage points ahead of his closest rival, Hou Yu-ih of the Kuomintang (KMT). Lai, currently the vice president of Taiwan, was helped by a split opposition. The KMT and the relatively new Taiwan People’s Party attempted to form a joint ticket in November but failed to agree on a common candidate.

Lai is the first candidate to win Taiwan’s presidency without a majority share of the vote since 2000; his Democratic Progressive Party (DPP) is now the only political party to have won three consecutive terms since the self-ruled island held its first democratic presidential election in 1996. The KMT doesn’t favor reunification with China, but it is more willing to work with Beijing than the DPP.

Within the DPP, Lai has a reputation as a so-called deep green politician for his strong advocacy for an independent Taiwan. Yet he has also said there is no need for Taiwan to declare independence since it is already effectively a sovereign state and that he wants to keep the status quo with China. “We don’t want to become enemies with China. We can become friends,” he said in July.

Lai’s position is unlikely to placate Beijing, which sees the incoming president as a separatist, especially after he picked Taiwan’s former representative to the United States, Hsiao Bi-khim, as his running mate. Yet China’s reaction to Lai’s win is so far muted, restricted to boilerplate language and dismissing the legitimacy of the election. China’s domestic troubles, including an economic slowdown, have limited its desire to rock the boat when it comes to Taiwan.

An election result like this would normally cause some fallout within Chinese officialdom, which dedicates substantial effort to interfering with Taiwanese elections and where the KMT is seen as a more palatable option than the DPP. However, the DPP winning three times in a row means such failure may have become normalized. That doesn’t mean it will change Beijing’s approach; China is likely to blame the outcome on U.S. interference rather than public preferences. It may take some comfort in the KMT’s victories in Taiwan’s parliament.

The biggest shift since Taiwan’s election is that the Pacific island of Nauru has announced it will now recognize China instead of Taiwan—something clearly in the works for some time. It may not be permanent: Nauru switched recognition to Beijing between 2002 and 2005, before again recognizing Taipei. Diplomatic flip-flopping is a way to maximize financial benefits for Nauru: Most recently, the island nation tried to get Taiwan to cough up $83 million to make up for a funding shortfall as Australia winds down its Nauru refugee detention center.

There was good diplomatic news for Taiwan elsewhere, as the Philippines sent unusually effusive congratulations to Lai. China’s aggressive approach at sea has alienated the Philippines and pushed it closer to the United States. Beijing’s furious reaction to the congratulatory message, warning Manila not to “play with fire,” is unlikely to help. It was noticeably stronger than most of the Chinese messages to Western powers about Taiwan’s election result.

One of China’s diplomatic problems is that domestic political dynamics often demand such a hard-line approach to Taiwan that officials are forced into the most extreme messaging. There will no doubt be more harsh words about Lai to come as he takes power—but there may not be any will in Beijing to take risky actions over Taiwan when China’s situation is so delicate.

China at Davos. China sent an unusually large delegation to the World Economic Forum this week and offered some diplomatic boons to Switzerland, the host country. In Davos, Chinese Premier Li Qiang is trying to convince the world’s financial elite that Beijing is open for business. On Tuesday, Li said the country was showing a strong recovery from the COVID-19 pandemic and that the economic growth was above expectations.

However, most analysts and the Chinese public do not share this rosy view. Li’s words don’t seem to be finding much of an audience at Davos either; at the gathering, general skepticism about China has reportedly left attendees far more “bullish” on India’s market. The problem is that the more the Chinese government does to restrict bad news spreading at home, the less convincing its claims seem to outsiders.

For example, with the Chinese stock market in a sharp decline, Beijing has ordered some institutional investors not to sell—but they can’t do anything about the foreign sell-off.

Myanmar border cease-fire. China has mediated a cease-fire between Myanmar’s military and an alliance of rebel groups along the countries’ shared border. As China Brief covered last week, China is working with both sides in Myanmar’s civil war, hoping to both protect its citizens and stay on good terms with any eventual winner.

However, a border cease-fire will likely provide a chance for criminal syndicates to regroup and get back to doing business—perhaps with a new understanding that they should stop kidnapping Chinese citizens. Criminal groups in Myanmar span both sides of the civil war, and many have close ties with organized crime, officials, and army officers in China.

Another neighbor of China’s may be ready to make more trouble: Experts on North Korea are increasingly worried about new signaling from Pyongyang, including the abandonment of the idea of reunification in favor of depicting Seoul as its main enemy.

AI stock panic. A recent South China Morning Post report that the Chinese military was working with technology company Baidu’s large language models prompted a sell-off of Baidu’s stock, which dropped by 11.5 percent during Hong Kong trading hours on Monday. Investors feared that Baidu’s association with the People’s Liberation Army (PLA) could make it a target for U.S. sanctions.

However, the initial report appears to have been inaccurate; it seems the PLA-related work simply involved military researchers using a publicly available model. Although China is behind on artificial intelligence, it is certainly not behind on the kind of speculation that has driven the conversation around the technology elsewhere.

Chip imports drop. Chinese imports of chips fell by 15 percent last year, thanks to both U.S. sanctions and weak economic growth. But China’s military and government are still acquiring some advanced Nvidia chips through third-party suppliers; it is possible that these suppliers are being set up by China directly, but more likely they are taking advantage of a business opportunity.

Chipmakers have lobbied hard against the U.S. measures—largely to no avail, especially since the Biden administration has continued updating the rules to include new chips built to evade restrictions.

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