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Taiwan’s New President-Elect Should Prioritize the Economy

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Taiwan’s New President-Elect Should Prioritize the Economy

The greatest obstacle for the soon-to-be president of Taiwan is not the China threat, but rather economic concerns, particularly among young people.

Taiwan’s New President-Elect Should Prioritize the Economy

Lai Ching-te (second from right) and Hsiao Bi-khim (right) wave to supporters at the final campaign rally before Taiwan’s presidential election, Jan. 11, 2024.

Credit: Facebook/ Lai Ching-te

International pundits’ attention has turned to cross-strait relations and potential storm from China since Vice President Lai Ching-te (also known as William Lai) of Taiwan emerged victorious in the 2024 presidential election, leading the ruling Democratic Progressive Party (DPP) to a record-breaking third consecutive term in office. But while foreign analysts focus on geopolitics, all walks of life in Taiwan are concerned about a different issue: how to resolve various imminent economic challenges. Left unaddressed, these economic concerns might lead to public discontent.

Much has changed in Taiwan’s political landscape, as evidenced by this year’s election. The political rise of the Taiwan People’s Party (TPP), a new opposition party with populist tendencies, has garnered attention, despite its failure to win the presidency. This is particularly true given that the DPP’s triumph was relative rather than absolute. A full 60 percent of the electorate opted for a presidential candidate other than Lai – either the TPP’s Ko Wen-je or Hou Yu-ih of the Kuomintang (KMT), Taiwan’s other established political party. On top of that, the DPP lost control of the Legislative Yuan, guaranteeing that Lai will experience a challenging tenure as president.

The tepid support for Lai in the three-party presidential race, and the TPP’s rapid growth, are both symptoms of the domestic issues with which the people of Taiwan are grappling. The sluggish economy, skyrocketing housing prices, stagnating incomes, widening inequality, poor employment environment, and brain drain (young Taiwanese seeking to work overseas) are all major points of contention. The current DPP government has faced criticism for its failure to address these pressing issues, along with accusations of corruption and power abuse. With high public demand for strong measures from the government, the need for meaningful change is paramount.

Taiwan’s economic fragility should be the first and foremost concern of the incoming Lai administration. Some of the most significant drawbacks include a slowdown in GDP growth, fluctuating exports and surpluses, declining industrial production, and Taiwan’s immense economic reliance on semiconductor manufacturing. Most of the criticism leveled against the DPP has been directed toward economic issues, and the incumbent government’s countermeasures in the past few years have elicited condemnation for their weak effectiveness. Some even go so far as to accuse the DPP of poor economic management, including a lack of necessary far-sighted goals, rigorous preparation, and motivating principles.

Indeed, the 2024 presidential and legislative elections showed that the DPP’s support is dwindling, despite Lai’s victory. The incoming administration needs to focus on domestic woes and address policy shortcomings, since economic considerations are at the core of the policy challenges the DPP is encountering. Most Taiwanese have long since become accustomed to the threat from China; their anxieties center on stagnant incomes, rising rents, energy instability, and inequality, which are driving political disenchantment with the government. In fact, income equality was the engine that propelled “Taiwan’s Economic Miracle” in the 1950s–1980s, and today, the key to Taiwan’s sustainable development is finding a happy medium between economic growth and benefits for the Taiwanese.

Amid the fourth industrial revolution, simple economic growth strategies will not cut it anymore. Although the overall performance of the DPP is relatively good, it has problems with governance and distribution, and has been unable to effectively solve the quandary of low wages and high housing prices, thus losing votes from the youth. That being said, the incoming administration should make it a top priority to build a capable economic research team and take proactive measures with a comprehensive plan to steer the industrial transformation.

To further expand Taiwan’s economic maneuverings, the incoming administration need to ramp up financial incentives for Southeast Asian business owners to invest in Taiwan and vice versa, as well as redouble its efforts to promote high-tech collaboration with countries included in the New Southbound Policy, the grand strategy unveiled under the Tsai Ing-wen administration in 2016.

Additionally, the incoming Taiwanese government must attempt to keep the economy growing as the country enters its super-aged era in 2025. The “low fertility trap” is predicted to exacerbate in Taiwan due to rising costs of living, including housing, healthcare, education, and nursing care – all while wages remain relatively low. These days, young Taiwanese see marriage and childbearing as financial burdens that they cannot handle without government subsidies, financial incentives, and social support.

The youth of Taiwan are the island’s guiding light in the fight for democracy and prosperity, and their active participation in politics and the economy will keep this momentum going. Consequently, it is important to listen to the young generation’s opinions. But how can young Taiwanese individuals make a meaningful contribution to society if all their energy is going toward figuring out how to survive on a basic monthly wage of roughly NT$28,000 (US$891)?

Taiwan is becoming more vulnerable because of the potential shortage of young, qualified, and skilled laborers if the government does not offer timely incentives. Young Taiwanese tend to put economic opportunities before political and ideological considerations, which is why they are open to seeking employment abroad (and in China). Because of the perennial economic challenges, such as low earnings and rising housing and rental costs, younger generations in Taiwan, especially Gen Z, may continue to seek opportunities overseas to augment their income.

It is essential that the Lai administration alleviate the burdens young people encounter and give them more opportunities and assurances. The new government should improve the living conditions for young people, broaden social housing policies, urge foreign companies to employ qualified Taiwanese youth, establish standards for salary reviews, empower young people to speak up, and provide couples with economic and social assurances to encourage them to marry and have children.

In general, to gain the support of the public and transform the democratic island of Taiwan into a desirable place to live and work, the new government must humbly engage in constructive dialogues and formulate practical policies to address pressing issues facing the society, the bulk of which are related to the economy. Here, democracy is primarily concerned with liberal progress and ensuring that people’s interests are recognized and fulfilled.

A responsive democracy also requires Taiwan’s new president and the DPP to be willing to collaborate with opposition parties to handle pressing internal issues, such as livelihood and social warfare. Cooperation between the parties, such as promoting sincere talks and policy discussions, is crucial for mending Taiwan’s political rift, since it would likely be arduous for the Lai administration to get its proposed budget plans and measures adopted by the new legislature. The moment has come for Lai to exercise his presidential power to resolve the strife between the legislature and executive; however, he cannot accomplish this goal unless he is prepared to mend fences with the KMT and the TPP.

As soon as it takes office in May, the Lai administration will have to resolve political differences by listening to and considering the many demands of the opposition. No matter how different their domestic agendas are, the DPP, the KMT, and the TPP should join hands to focus on economic development, create long-term plans, and find fundamental solutions to a variety of thorny problems. Not content to merely postpone long-term issues with band-aid solutions, they should instead transform temporary and ineffective strategies into comprehensive programs. For the DPP, this might indicate the first step toward identifying ways to streamline decision-making and government affairs processes.

The ruling DPP needs a fresh wind to fulfill its promises and offer remedies after Lai’s victory. The DPP and the soon-to-be president should move swiftly to plot out a thorough strategy to guide Taiwan’s economic prospects over the next four years. Simply put, the aim of Lai and his team should be to put the needs of the Taiwanese people first, showing that their government is receptive to inclusive and people-oriented policies.