May 19, 2017 9:30 pm JST

Relations with Beijing bedevil Taiwan's Tsai one year on

The president's critics are more focused on a weak economy and stalled reforms

DEBBY WU, Nikkei staff writer

Taiwan President Tsai Ing-wen © Reuters

TAIPEI -- Since Tsai Ing-wen took office as Taiwan's president a year ago, cross-strait ties have been strained.

Although there appears little risk of imminent conflict, there is a deep rift between the two sides. This is due mainly to Tsai's repeated refusal to accede to Beijing's demand that she recognize the "1992 Consensus," a contentious principle that China interprets as Taiwan's consent to eventual unification with the mainland.

Tsai has urged China to reconsider its handling of relations with the island and adopt a new approach, but to little avail.

"Mainland China should reconsider cross-strait relations, and what kind of goodwill they should express according to new situations," Tsai told the China-friendly, Chinese language United Daily News in early May in an interview.

"If [Chinese] decision makers-cannot get rid of the long-standing way of thinking within their bureaucracy, then there will be insufficient flexibility and goodwill [on their side] for dealing with cross-strait relations," she said.

Squeezing tighter

Over the past year, democratic, self-governing Taiwan has seen a sharp drop in tourists from the mainland, once an important source of income. Cross-strait trade also fell in 2016.

The number of Chinese tourists plunged 50.2%, year-on-year, to 610,524 in the January-April period, according to Taiwanese government estimates.

Bilateral trade fell 0.65% on the year to $117.89 billion in 2016, according to official Taiwanese statistics. Chinese authorities say cross-strait trade dropped 4.5% to $179.6 billion in 2016. But China remains Taiwan's largest trading partner.

Politically, China continues to limit Taiwan's diplomatic space and squash Taiwanese officials' efforts to participate in international events. In December, the West African island nation of Sao Tome and Principe cut ties with Taipei to forge official relations with Beijing, leaving Taiwan with just 21 diplomatic allies.

Earlier this month, Taiwanese officials were notified they will not receive an invitation to attend the United Nations-affiliated World Health Assembly as an observer in late May despite having taken part for the last eight years. China's official Taiwan Affairs Office blamed Tsai's Democratic Progressive Party for keeping the island out of the WHA in Geneva this year.

Taipei also accuses China of violating the rights of its citizens. A large number of Taiwanese arrested overseas for alleged phone scams have been deported to China and detained there over the past year. And Taiwanese democracy advocate Lee Ming-cheh has been detained in China since late March, shortly after he arrived in the southern city of Zhuhai.

Tsai appeared to have achieved a coup when she succeeded in phoning Donald Trump, then U.S. president-elect, in December. Their brief conversation was the highest-level contact between Taiwan and the U.S. since Washington switched diplomatic relations from Taipei to Beijing in 1979.

But U.S.-Taiwan relations returned to their previous informal status soon after Trump formed personal ties with Chinese President Xi Jinping and the two leaders agreed to work together to resolve the North Korean nuclear and missile issue.

Domestic discontent

Taiwan's diplomatic setbacks have not hurt the economy, thanks in large part to Apple's soon-to-be released iPhone 8 as many local companies supply parts for the handset or help assemble the product.

Gross domestic product in January to March grew 2.56%, year-on-year, expanding for a fourth consecutive quarter.

Apple is a key growth driver for a number of big Taiwanese companies, including Taiwan Semiconductor Manufacturing Co., and Hon Hai Precision Industry, the island's two largest companies by market capitalization. Taiwan's benchmark Taiex also closed above 10,000 for the first time in 17 years on May 11.

Yet this relative economic strength has not cheered even Tsai's supporters, who feel let down by low wages and a lack of progress on domestic reforms. Vincent Kuo, 46, voted for Tsai last year. He, like many voters, was worried that the Nationalist Party government of Ma Ying-jeou, the previous president, was steering the island into China's orbit.

But now Kuo seethes with frustration toward the Tsai administration, mainly over its handling of the economy. He now says he does not care much about the island's relations with China or the U.S.

"I am really worried about my children's future," Kuo said. "If the government does not solve our problems, then I fear my children will only be able to find low-paying jobs," Kuo said. The Taipei businessman has two young girls, one in elementary school and the other in kindergarten.

The average monthly wage in February was 37,470 New Taiwan dollars ($1,240), up 1.95%, year-over-year. But that is not much more than Taiwanese workers earned in 1999, according to government statistics.

"Tsai has not brought any change to our politics, as she claimed she would. The new infrastructure development program she is offering is even worse than the pork-barrel bills the main opposition Nationalist Party used to come up with when it was still in power," he said.

Kuo was referring to a Keynesian stimulus bill that aims to boost Taiwan's economy with government spending of 880 billion New Taiwan dollars over eight years. The proposal is derided by critics, who say the funds will benefit people and groups with close ties to the government, a charge officials deny.

Many voters are unhappy that half the additional spending is to go to railways around the island, which is slightly larger than Belgium. A recent poll conducted by DPP-friendly Taiwan Style Foundation shows that while 54% of voters surveyed still support Tsai, only 41.3% are happy with her performance while 52.9% are dissatisfied. The margin of error was 2.75%.

When the foundation carried out a similar survey in April, the slow pace of reform was the main reason cited by those Tsai's supporters who nevertheless are dissatisfied with her performance.

With DPP in control of parliament, Tsai's inability to push through bills allowing same-sex marriages and slashing pensions for civil servants has also drawn sharp criticism. The roadblocks underscore the difficulties the president faces in fulfilling campaign promises to support marriage equality and pension reform.

Tsai is acutely aware that her gravest challenges have to do with domestic issues, rather than relations with China or other countries: She mostly focused on criticism of her social reform program in low-key remarks on her anniversary in office.

"Reform is about a group of people, a country moving forward together. Everyone should walk shoulder to shoulder. It should not be that the government and some others walk ahead while others lag far behind," Tsai told a group of Chinese language journalists visiting from overseas on Friday.

Prominent student activist Lin Fei-fan said the failure of the government to push through key social policies shows that Tsai lacks clear political convictions. Lin was a leader of the anti-China Sunflower Movement in 2014.

"Over the past year Tsai has been wavering on reforms. She promised many things during her campaign, but now she is dithering on marriage equality, pension reforms," and other issues," Lin said.

"On many things, she is just copying the previous government, including the new infrastructure program," he said.

Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 182,446M
Shares: 25,930.4M
Asia300

Hon Hai Precision Industry Co., Ltd.

Taiwan

Market(Ticker): TAI(2317)
Sector:
Industry:
Electronic Technology
Computer Peripherals
Market cap(USD): 65,520.5M
Shares: 17,328.7M

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