Taiwan investors and businesses welcomed the outcome of Satur-day's elections, saying the ruling party's firmer grip on power may speed up revival of an economy in its worst slump in a quarter century. China's reaction was more guarded.
Taiwan's benchmark stock index posted its biggest one-day gain in almost two months, after the ruling DPP dislodged the opposition KMT as the biggest party in the legislature, putting executive and legislative power under the control of President Chen Shui-bian (
"The election results actually give the DPP a more solid foundation and certainly a clearer mandate to be able to clear up a number of the outstanding tasks which have been on the legislative plate over the past 18 months," said Spencer White, head of research at Merrill Lynch Taiwan Ltd.
The DPP won 87 seats in the 225-seat parliament in Saturday's election, up from 64. The KMT lost almost two-fifths of its seats, garnering only 68.
Still, the work of mending 18 months of political bickering and rebuilding an economy that's driven unemployment to 10 straight record highs won't come easily no matter how the new political numbers stack up.
"The results won't have a significant impact on the economy," said Steven Novak, chief investment officer of ABN Amro Asset Management (Taiwan) Ltd in Taipei. He said the US economy and its appetite for the nation's chip and electronics exports remain the driving factors of the nation's growth.
Chen's performance since he ended the KMT' 50-year lock on the presidency last year has been widely criticized. The stock market lost almost half his value, the economy is headed for its first full-year recession on record, exports are forecast to shrink 17 percent this year and more than a half million people are out of work.
The DPP blamed the KMT for blocking initiatives in the legislature, including a package of additional spending for public works and job creation.
"The Taiwanese people have given the government a second chance to do much better," said Justine Liu (
China has said little about the results. It's been suspicious of Chen from the start, given his party's former support for independence from China and its refusal to recognize Beijing's "one-China" policy.
The DPP's gains may "temporarily cloud" political relations between Taiwan and China, the government-owned China Daily reported, citing a researcher at a leading Chinese government think tank.
While Chen said he won't use his party's victory to alter Taiwan's China policy, he urged China to soften its stance and enter into talks to improve relations.
"China hopefully can accept the choice of the Taiwanese people and seize the window of opportunity," Chen said in a statement.
President Chen has pursued relaxed trade and investment with China. Taiwan abolished a US$50 million limit on individual investments in China and lifted a ban on notebook computer and mobile phone makers setting up plants in China.
Chipmakers are expecting a ban on their China investment to be lifted soon.
Though short of the 113-seat majority needed to pass legislation on its own, Chen's DPP may make up the numbers by forming coalitions with groups such as the Taiwan Solidarity Union (TSU), which won 13 seats, and with unaffiliated election winners.
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