Beijing's dilemma: What to do with President-elect William Lai

Taiwan's January 13 presidential and legislative elections garnered much global attention as they have significant implications for cross-Taiwan Strait relations and US-China relations. Now that the dust has settled, here are some takeaways.

First of all, Taiwan's 2024 elections are unique in which all parties involved could claim some victory. The ruling Democratic Progressive Party (DPP) and its candidate Lai Ching-te (William Lai) are certainly the biggest winners as Lai defeated his rivals from the Chinese Nationalist Party (KMT) and Taiwan People's Party (TPP) and as the DPP will extend its rule beyond the standard eight years since direct elections started in Taiwan in 1996. However, Lai only received 40% of the votes, meaning 60% of the voters did not pick him. In addition, the DPP lost its majority in the Legislative Yuan. This is definitely not a landslide or overwhelming victory for the DPP or Lai.

Both the KMT and the TPP can claim small victories since the KMT reemerged as the largest party in the legislature by increasing its seats to 52, more than DPP's 51, and the TPP as a new party received eight seats, becoming the third largest party that will be wooed by the two larger parties in order to form a majority in the Legislative Yuan.

Even Washington and Beijing could be viewed as winners. Washington is believed to favour a party that can stand up to China but does not push too hard in case it triggers a Taiwan Strait crisis. The DPP's Tsai Ing-wen is held as a model by Washington for handling cross-strait relations and for strengthening US-Taiwan ties. But Washington has doubts about Lai and remains concerned that he may drag the US into a direct conflict with China due to his self-label as a "pragmatic worker of Taiwan independence". Still, for Washington, the DPP and Lai are preferable since the KMT in general is perceived to be pro-China and the TPP's Ko Wen-je is somewhat unpredictable.

Beijing can probably take some solace in the fact that 60% Taiwanese voters wanted to unseat the DPP. The failure of the KMT and the TPP to form a joint ticket gave Lai the opportunity to win. Beijing's assertion that Lai does not represent the mainstream views in Taiwan has some truth in it. Beijing is certainly not pleased with the election results but may not be surprised by them either.

Second, due to the "first past the post" electoral system and a highly divided Taiwanese society, the DPP is likely to stay in power for a long time to come. DPP candidates can easily defeat challengers simply by appealing to the party's primary support base which stands at about 40% of eligible voters.

On the other hand, the maximum support base for the KMT is below 35% now. Other parties will get even smaller shares. So Taiwanese politics may have entered a period during which the DPP can stay in power even though its performance is lacklustre and as many as 60% of the voters do not support it.

Polls before the elections unmistakably pointed to a Lai victory. Still, some in Beijing and within the KMT held hope that the KMT might be able to pull through this time, because the KMT was united more than ever, with all the factions rallying around the party and its candidate Hou Yu-ih. The KMT was never so close to snatching the presidency since Ma Ying-jeou was in power from 2008 to 2016. In the end, Hou only received 33.49% of the votes. The 2024 elections dashed the hope that the KMT may return to power any time soon.

However, even if the KMT or the TPP had won the presidential election, they would not have pleased Beijing since they only support maintaining the cross-strait status quo, not unification with China. All three political parties favour having a robust relationship with the US and strengthening Taiwan's military preparedness. Beijing's "one country, two systems" offer is unattractive to these parties. Whoever is in power in Taipei is unlikely to work with Beijing to push for unification.

Third, Beijing faces a dilemma now: it has to respond and send some kind of warning to the incoming Lai administration; on the other hand, if it overacts, its relations with Washington will suffer and cross-strait relations will further deteriorate. That explains why its reactions have been moderate so far. Like a swan that appears calm above the water but paddles recklessly underneath, Beijing is probably anxiously searching for proper actions.

Beijing has labelled Lai a separatist, so it is unlikely to talk to him now. However, shunning him will not solve the problem. Beijing will certainly not bend its "one China" principle to talk to Lai who believes the two sides are not subordinate to each other, yet without direct communication, the gap between the two sides will continue to grow, and Taiwan will be slipping further away from China. But if Beijing decides to punish Lai, this may end up also hurting those 60% of the voters who voted against him, thus creating more anti-China sentiment among the Taiwanese public. Beijing is stuck in a "damned if you do, damned if you don't" situation.

The cross-strait relationship has entered a period of uncertainty. It is hard to predict what exactly Beijing will do next, but it is clear that Lai's election has posed a serious challenge for the Chinese government. Even before the election, Beijing already hinted it might end the preferential trade and tariff policies under the Economic Cooperation Framework Agreement (ECFA) reached when Ma was in power. Two days after the election, the South Pacific country of Nauru switched diplomatic recognition from Taipei to Beijing. Depending on its calculations, Beijing may resort to a combination of economic, military, and diplomatic measures against Taiwan.

Fourth, despite Beijing's claim that Taiwan's elections are China's local elections, most outside observers are highly impressed by the smooth process and peaceful power transfers as Taiwan emerges as a resilient democracy when democracies elsewhere are experiencing backsliding, including in the US. Democracy has become a faith and civic culture in Taiwan. The more Taiwan holds such elections, the more the international community will see the differences between the two sides of the Taiwan Strait.

It is unwise for Beijing to deride Taiwan's free elections or vilify its leaders, especially when Beijing's own political reforms have stagnated or even regressed. The PRC continues to see the Taiwan issue as an extension of the unfinished Chinese Civil War of the 1940s, yet the DPP government has worked hard to internationalise the Taiwan issue, highlighting its democracy and freedom and its critical role in the global economy. Beijing's narrative that Taiwan is purely a Chinese domestic affair will face increasing scrutiny and challenges from Taiwan and elsewhere as more and more people become sympathetic with Taiwan and appreciate Taiwan's positive global contributions.

Finally, US-China cooperation remains the key to peace, stability and prosperity across the Taiwan Strait. Beijing and Washington have been working together to improve bilateral relations and manage the Taiwan challenge lately. US officials' reiteration of Washington's longstanding "one China" policy, its opposition to unilateral change to the status quo, and President Biden's expression of not supporting Taiwan independence right after the Taiwan election are helpful to stabilising the Taiwan Strait. Washington expects no surprises from either Beijing or Taipei. As long as Washington continues to deter Beijing and rein in Taipei, the delicate status quo can be maintained.

What will be really concerning is the result of the November 2024 US election. A Biden victory would ensure relative stability across the Taiwan Strait. Trump's return to the White House may introduce a new dose of uncertainty to the triangular Washington-Beijing-Taipei relationship. If his first term is any indication, Trump himself may not care much about Taiwan, but he is likely to be surrounded by anti-China fanatics who may goad Taipei to cross Beijing's red line such as moving to change Taiwan's official name or the Republic of China Constitution. If that happens, a crisis will engulf the Taiwan Strait that has the real possibility of bringing China and the US into direct military conflict.

Related: Will William Lai's win spark war in the Taiwan Strait? | Taiwanese commentator: How William Lai can be a good Taiwan president | William Lai's biggest challenge will be Xi Jinping and Ko Wen-je