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On January 13th, the voters of Taiwan elected Lai Ching-te of the Democratic Progressive Party [ [link removed] ] (DPP) as their next president of the island nation. Lai successfully defeated Hou Yu-ih of the Nationalist Party (also known as the Kuomintang or KMT) and Ko Wen-je of the upstart Taiwan’s People Party (TPP). The DPP won with 40.1% of the vote, compared to 33.5% for the KMT and 26.5% for the TPP [ [link removed] ].
In late October last year, I wrote a piece about the Taiwan election (pasted above). In it, I laid out what various outcomes might imply and suggested that a Lai victory would lead to greater tensions with Beijing, including a possible escalation that led to armed conflict. I also noted at the time that a Hou victory would potentially de-escalate tensions as the prospects of peaceful reunification would increase with Beijing-friendly leaders in Taipei and that a Ko win would be a statement that the voters wanted to improve relations with Beijing and focus on economics and domestic issues.
The other development I noted in October was the possibility of the TPP and KMT forming a coalition that combined forces to increase their chances of winning. Such an attempt was indeed made but quickly collapsed [ [link removed] ], leading to a splintering of the opposition support [ [link removed] ].
The one aspect of the election that I did not previously explore was the “down-ballot” impact of the election outcome. And from that perspective, the ruling DPP lost its majority in the legislature, a development which will make it necessary to work with others. Lai’s party lost 10 seats while the KMT gained 14 and the TPP picked up 3. No party has a majority.
The implications of this divided government are many. To begin, Lai’s governing agenda is now at risk of dilution as he must develop a useful relationship with folks in the TPP or the KMT in order to accomplish his goals. One of the most contentious domains in which Lai will face challenges is defense spending. And given Taiwan procures much of its armaments from the United States, this may in fact de-escalate tensions with Beijing.
Despite the muddled message voters sent to Beijing, President-elect Lai used the unprecedented third consecutive victory for his Democratic Progressive Party to announce “This is a night that belongs to Taiwan. We managed to keep Taiwan on the map of the world [ [link removed] ]…We are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy [ [link removed] ].”
US Secretary of State Anthony Blinken agreed, congratulating the citizens of Taiwan for “demonstrating the strength of their robust democratic system and electoral process [ [link removed] ].” (Incidentally, when asked for a reaction to the election, President Joe Biden simply replied with “We do not support independence [ [link removed] ].”) British foreign minister David Cameron joined the chorus of support for democracy, saying “The elections today are testament to Taiwan’s vibrant democracy [ [link removed] ]” while former UK Prime Minister Liz Truss added “We must do all we can to ensure Taiwan is able to defend itself [ [link removed] ].”
Unsurprisingly, Russia’s Foreign Ministry Spokeswoman Maria Zakharova simply stated that Moscow continues to view Taiwan as an integral part of China. She even went on to cite a 2021 statement of cooperation between Moscow and Beijing:
The Russian side reaffirms that the principled stand on the Taiwan issue as expounded in the political documents signed and adopted by the heads of state of the two countries from 1992 to 2000 remain unchanged. The Russian side acknowledges that there is only one China, that the People's Republic of China is the sole legal government representing the whole of China and that Taiwan is an inalienable part of China. The Russian side opposes any form of Taiwan's independence. [ [link removed] ]
On the surface, the election looks like it may be a recipe for heightened tensions and possible escalation of China’s saber-rattling at Taipei. It’s worth remembering that, according to Time, “in 2023, China sent 1,709 warplanes through Taiwan’s air defense identification zone, on top of waging trade embargo, disinformation campaigns, and other coercive measures [ [link removed] ].” The election outcome was also described as “a blunt rejection: a spurning of China’s strong-arm tactics—including diplomatic, economic, and military coercion—that had sought to squeeze the self-ruled island of 23 million in the run-up to the vote. [ [link removed] ]”
It’s not shocking, then, that some analysts are now expecting intensified military drills, new tariffs or trade restrictions on Taiwanese companies, heightened cyber attacks on Taiwanese infrastructure, etc. And while all of that is possible (maybe even likely), I can’t help but think about Bejing’s reaction to the election. China’s Taiwan Affairs Office spokesperson Chen Binhua noted the election would not change the nature of cross-strait relations [ [link removed] ], noting the results showed the Democratic Progressive Party “does not represent the mainstream view on the island.” [ [link removed] ]
The underlying data supports this view. As noted in an article titled “Taiwan’s election isn’t a disaster for Xi Jinping [ [link removed] ],” the math (40% for DPP, 70% turnout) seems to suggest that “a majority of Taiwan voters disagree with the DPP’s China-skeptic approach but just couldn’t agree on the best pro-rapprochement alternative [ [link removed] ].”
So What?
Despite all the headlines, the message Taiwanese voters sent to Beijing was mixed. Perhaps they are seeking a democratic Taipei that de-escalates tensions and maintains the status quo. Perhaps the divided legislature is a call for political gridlock, one in which the proverbial boat is not rocked. Or perhaps the opposite, namely that Beijing successfully intimidated voters to vote against the DPP and now has a narrative whereby they can dismiss any policy emerging from Taipei as “non-representative” of the people’s will.
China may interpret this election as a “non-negative” for Beijing. After all, almost 60% of the votes cast were for better relations with the mainland and a frustration with the incumbents led to significant shifts in the legislature. Going forward, it’s worth watching Beijing. Will it continue its “stick-oriented” approach of ice-cold relations and aggressive military pressure towards Taipei, focusing on traditional displays of hard power? Or might CCP leadership move towards a “carrot-oriented” approach with increased educational, cultural, tourist, or business exchanges to show the benefits of closer ties with Beijing, adopting a “soft power” influence strategy?
The United States and our democratic allies need to understand that the status quo does not mean all is well across the Taiwan Strait. Beijing has referred to Mr. Lai as a “destroyer of peace” and views his democratic proclivities with suspicion. Further, the Chinese economic slowdown may be weighing heavily on leaders in Beijing, whetting their appetite to execute plans to reintegrate Taiwan immediately as a means to distract a restive domestic population eager for wins. And of course, Xi and his colleagues are closely watching the US presidential election and a change in the White House might worry Beijing.
We need to make sure that the status quo doesn’t create complacency. While headlines may suggest that Taiwan’s democracy and independence are alive and well, the mixed messages under the surface point to a potentially different story. And just as baby steps towards integration and beliefs about one country with two systems dampened resistance within Hong Kong, Beijing’s increasing focus on popular opinion in Taiwan may ultimately reveal China’s aggressive tendencies.
About Vikram
VIKRAM MANSHARAMANI is an entrepreneur, consultant, scholar, neighbor, husband, father, volunteer, and professional generalist who thinks in multiple-dimensions and looks beyond the short-term. Self-taught to think around corners and connect original dots, he spends his time speaking with global leaders in business, government, academia, and journalism. LinkedIn has twice listed him as its #1 Top Voice in Money & Finance, and Worth profiled him as one of the 100 Most Powerful People in Global Finance. Vikram earned a PhD From MIT, has taught at Yale and Harvard, and is the author of two books, Think for Yourself: Restoring Common Sense in an Age of Experts and Artificial Intelligence [ [link removed] ] and Boombustology: Spotting Financial Bubbles Before They Burst [ [link removed] ]. Vikram lives in Lincoln, New Hampshire with his wife and two children, where they can usually be found hiking or skiing.

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