With President Tsai Ing-wen (蔡英文) winning re-election and her Democratic Progressive Party (DPP) securing a decisive victory in Saturday’s elections, the DPP government is poised to continue fleshing out its policies over the next four years. However, the obstacles ahead involve not only Taiwan’s thorny relations with Beijing, but also domestic issues and a challenging global economy.
Tsai’s landslide victory came as Taiwanese manufacturers are shifting production back from China to avoid an increase in US tariffs, and as 5G development accelerates, boosting the nation’s electronics exports.
In November, the Directorate-General of Budget, Accounting and Statistics (DGBAS) estimated that the economy rose 2.99 percent year-on-year in the third quarter last year and the momentum was likely to expand further in the subsequent quarter, which is forecast to boost GDP growth to 2.64 percent last year and 2.72 percent this year.
As the economy has grown, the average wage has increased steadily. After adjustments for consumer inflation, the real average wage, including bonuses and compensation, for January to November last year rose 1.49 percent year-on-year to NT$53,375 per month, the latest DGBAS data showed. Meanwhile, the average unemployment rate for the first 11 months of last year remained stable at 3.74 percent from a year earlier.
Despite the positive economic data, there is no denying that opposing Beijing’s “one country, two systems” framework and supporting Hong Kong’s pro-democracy protests over the territory’s extradition law have played a major role in helping Tsai and the DPP gain full control of the administrative and legislative branches. That could also explain why Tsai and the DPP garnered better-than-expected vote totals after their dramatic decline in the 2018 nine-in-one local elections.
During her first term, Tsai promoted the New Southbound Policy to reduce the nation’s economic reliance on China and introduced the “5 plus 2” innovative industries plan to transform Taiwan’s economic and industrial structure. Her administration has worked tirelessly to reform the pension system, amend labor rules and raise the minimum wage, as well as support for the LGBT community, reduce income taxes and subsidize childcare and long-term care services, all of which have won support from young people.
However, unemployment remained high at 12.55 percent among people aged 20 to 24, while housing prices remained formidable and the widening wealth gap has yet to show any sign of easing. To carry through the New Southbound Policy and the “5 plus 2” innovative industries policy requires more work, as they have not yet become the major engines to drive the next stage of economic and industrial development. Furthermore, the challenges facing Taiwan also include changes in external situations, as the global economy remains unsettled amid US-China trade tensions.
Although a preliminary agreement between Washington and Beijing appears to be on the horizon, their row has changed from a tariff dispute to a technology standoff — or even an ideological battle between political systems — which means Taiwan is engaged in what could be one of the most complicated situations in decades, and Tsai, in her second term, must address the issue thoughtfully and carefully.
Meanwhile, the development of Taiwan’s export-oriented economy relies on participation in regional trade blocs to avoid becoming marginalized in the global economy. Tsai’s administration needs to step up the pace in signing free-trade pacts or bilateral trade deals with various nations in the next four years. After all, allowing a majority of people to get a larger slice of the expanding economic pie and standing firm against threats from China are equally important.
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