Why the Taiwan election matters

All eyes will be on Taiwan when the self-governing island of 23 million people goes to the polls on 13 January.

Whoever is elected president on Saturday will shape relations with both Beijing and Washington – Taiwan is a key flashpoint in their tussle for power in this region.

And it will also have crucial implications for the island’s neighbours as well as allies like Japan who are wary of Beijing’s aggressive moves in the South China Sea.

China is among the top concerns for most voters, given that its People’s Liberation Army has dialled up pressure on the island over the past year with a record number of incursions.

Beijing has long claimed the island, but ties have especially soured in recent years under President Tsai Ing-wen and her Democratic Progressive Party (DPP).

Her careful but unwavering defence of the island’s sovereign status led to China suspending formal communications with Taiwan – Beijing said it was because of Taiwan’s refusal to accept the One China principle, which is the belief that Taiwan is an inalienable part of China and will be unified with it one day.

Things got worse in 2022, when then US House Speaker Nancy Pelosi’s visit to Taipei infuriated Beijing – it staged elaborate military drills in the Taiwan Strait that resembled a near-blockade of the island. Later that year, the US said Xi Jinping had sped up the timeline for unification.

During this time, Taiwan has grown close to the US, including securing billions of dollars in new weapons from Washington.

The DPP’s vice-president William Lai, who has been pegged as the frontrunner in the presidential race, is deeply disliked by Beijing. It sees him as an advocate for Taiwan independence, based on his younger, more vocal days, but he now rejects that description.

If the DPP wins an unprecedented third straight term, Beijing could up the ante on military pressure in the Taiwan Strait. It could also cut internet cables or supply routes to outlying Taiwanese islands.

Mr Xi and his foreign minister Wang Yi have repeatedly warned that the Chinese military is prepared to take Taiwan by force if necessary. But many experts believe that the prospect of a full-blown war is low, at least for now, given how much it would cost China when its own economy is struggling.

Any escalation between China and Taiwan runs the risk of turning into something bigger and more dangerous – the US has a big naval presence in the region, and bases from Australia in the south to Japan in the north.

Washington is yet to clarify exactly what form its support will take in the event of a Chinese attack – and it’s unclear if Japan, which hosts the largest concentration of US troops in the region, will itself fight.

Washington hopes the possibility of its involvement will deter Chinese aggression. And many analysts say Beijing also wants to avoid conflict, pointing to its refrain of “peaceful unification”.

Managing these many possibilities and alliances – and crucially the US relationship, which could very well change if Donald Trump wins the presidency – will fall to Taiwan’s next president.

The US has said a win for the opposition – Kuomintang (KMT) – could increase Chinese sway over Taiwan. But analysts say a Lai presidency also worries Washington.

If it happens, a war in Taiwan would be devastating – both in its human toll and as a blow to the island’s democracy.

It would also devastate the global economy. Close to half of the world’s container ships pass through the Taiwan Strait every year, making it a critical hub for international trade.

Taiwan also makes most of the semiconductors that power modern life, from cars to refrigerators to phones. Any disruption to this would paralyse the global supply chain. Sanctions against China would only aggravate the damage to the global economy.

According to several estimates, a complete disruption of China’s trade would reduce world trade in added value by $2.6tn, or 3% of the world’s gross domestic product.

Mending ties with China, Taiwan’s biggest threat but also its biggest trade partner, is a top agenda for whoever governs the island. Cost of living and jobs are major domestic issues on the ballot.

Analysts expect a divided government, where the executive and legislative will be controlled by different parties. Despite the possibility of political gridlock, some are hopeful that a more experienced DPP and a less powerful KMT could strike the right balance between spurring the economy and keeping peace with China.