Elections in Taiwan and Their Geopolitical Implications

In recent days, Taiwan concluded its presidential election, with Vice President Lai Ching-Te emerging as the winner, securing another four years for the Democratic Progressive Party (DPP). Notably, this marks the first time in Taiwan’s electoral history that a ruling party has clinched a presidential election for a third term. Lai’s inauguration is scheduled for May 20th, 2024.

The elections witnessed a high turnout of around 70%, and it’s worth mentioning that Lai’s 40% share of the presidential vote was lower than his predecessor Tsai Ing-wen’s 57% in the 2020 election. Additionally, the DPP lost its absolute majority in the Legislative Assembly, decreasing its share from 54% in 2020 to 45.1%. Both opposition parties increased their share of seats: the Kuomintang (KMT) from 33.6% to 46%, and the Taiwan People’s Party (TPP) from 4.4% to 7.1%. Consequently, no party holds a majority position. Historically, the KMT has been considered more open to the idea of closer relations with mainland China.

It’s important to note that this scenario aligns with market expectations and, generally, is not anticipated to alter the current course of events in the region. While the outcome is considered unlikely to significantly impact Taiwan’s economic growth in 2024, there will be a continuity of policies implemented by previous DPP-led governments. Regarding relations with mainland China, Lai expressed his interest in maintaining “healthy and orderly” exchanges, reiterating his openness to talks based on more equitable terms.

In conclusion, the positive outcome of this event may bring some calm to the geopolitical sphere in Asia and the world in the short term. However, it’s challenging to rule out the possibility of continued tension in relations with mainland China in the coming years, especially given the close interaction between Taiwan and the United States in the evolving economic landscape, heavily influenced by the semiconductor supercycle and Artificial Intelligence (AI) development.

Global semiconductor wafer capacity installed by region (market share).

In electronics, a wafer refers to a thin, circular slice of semiconductor material from which microchips/semiconductors are produced.

Source:  UBS

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