Taiwan’s Prospects for the New Year 2023: Another turbulent year ahead

Written by Gerrit van der Wees.

Image credit: 11.03 總統接見「對華政策跨國議會聯盟」(IPAC)訪團 by 總統府/ Flickr, license: CC BY 2.0.

As 2022 has come to a close, we look back to an eventful and turbulent year for Taiwan. So, what are the prospects for the new year 2023? Will it be as turbulent, or can we foresee changes, and in which direction? Below we lay out our expectations for the Year of the Rabbit.

Taiwan weathered the storms in 2022

First, one can say that Taiwan has weathered the storms of the past year rather successfully: in the earth-shaking invasion by Russia into Ukraine, President Tsai Ing-wen immediately condemned the invasion, positioned Taiwan in strong support of Ukraine, and watched carefully what military lessons were there to be learned.

The second storm was the outrageous Chinese overreaction to the visit by House Speaker Nancy Pelosi in early August. The PLA conducted threatening military exercises and numerous incursions by fighter jets, bombers, and navy ships across the Taiwan Strait median line and into Taiwan’s ADIZ zone. Taiwan – and the United States – kept their cool but made sure that the PLA did not enter Taiwan’s territorial waters or airspace.

The incursions continued off and on in waves, with Beijing trying to use them to show its discontent about parliamentary visits to Taiwan and – on 25 December 2022 – about the passage by the Biden administration of the National Defense Authorization Act, which included several Taiwan-related provisions it did not like. The Christmas Day show of force included seventy-one military aircraft, forty-seven of which crossed the median line or entered into the ADIZ zone. No sign of “peace on Earth” from the Chinese side.

The third tactic Beijing used to isolate Taiwan was diplomatic and economic threats and intimidations against countries that wanted to strengthen their informal relations with Taiwan. Certainly, this had the opposite effect in Europe, with many countries – particularly in Central and Eastern Europe – reassessing their economic ties with Beijing and building new relations with Taiwan.

In this context, Taiwan was also very effective in using “parliamentary diplomacy”: virtually every week, a delegation from one country or another expressed support for Taiwan. Particularly important in this regard was the IPAC (Inter-Parliamentary Alliance on China) delegation in early November 2022, which was headed by Euro parliamentarian Reinhard Buetikofer, and consisted of parliamentarians from eight countries, including Belgium, Britain, the Czech Republic, Germany, Kosovo, the Netherlands, Ukraine and the European Parliament.

What will happen in 2023?

While it is always difficult to predict the future, one can confidently expect that the PRC regime will try to continue its threats and intimidations and that Taiwan will find ingenious ways to push back. But the main question is, of course: will Beijing intensify the pressure and how can and will Taiwan respond?

China is not what it used to be

One important consideration in this context will be how strong and stable the position of the CCP regime itself will be. And on that point, there are significant indicators that Xi Jinping’s position is not what it used to be. For example, economist Paul Krugman described in a recent article in the NYTimes, titled “China’s future isn’t what it used to be”, that due to the 180-degree turn in its approach to Covid and the increasing de-coupling with the Western economies coming at the same time, China’s economy will experience a significant downturn, which will affect its economic prowess and the political weight its diplomats and military can bring to bear.

A second problem for China is that CCP General Secretary Xi Jinping has not sufficiently distanced himself from Russia’s brutal and unprovoked invasion of Ukraine. While Beijing has been careful not to provide overt military assistance to Moscow, the virtual meeting between Putin and Xi on Friday, 30 December 2022, showed that the two leaders are increasingly leaning on each other for support in the face of mounting crises at home. As the war in Ukraine drags on, in the coming year Mr Putin’s position will likely be further weakened, and China’s close association with Russia will drag it down in the eyes of an international community that shares democratic values and condemns such hostile actions against other countries.

The third problem for China is Mr Xi Jinping himself. After his “election” to an unprecedented third term as Party Secretary at the 20th CCP Party Congress in mid-October, his position looked unassailable. Still, the large-scale and widespread protests of November 2022 against the draconic lockdown measures under his “Zero-Covid” strategy certainly put a major dent in that image. Moreover, the subsequent 180-degree turn to a sudden opening left the largely unvaccinated population vulnerable to a major wave of infections and related deaths. This is happening right now, and the political repercussions will undoubtedly be significant, further reducing the credibility of the CCP regime.

Taiwan: building a resilient society and broadening ties with other countries

For Taiwan, it will be important to continue what it has been doing: 1) building its substantive ties with other free and democratic countries through its parliamentary diplomacy; 2) strengthening its own capacity to defend itself through a variety of means, including asymmetric defence systems, stronger reserves and civil defence, and military cooperation – in particular with the US and Japan; and 3) making itself more indispensable in the world through its role as a reliable partner in supply chains and of course in the manufacture of high-end chips. A few remarks on each of these points.

First, positioning Taiwan as a free and democratic country under threat from a bullying neighbour is a key element in its diplomacy. It has helped other countries to reassess their previous stand-offish “economic and trade ties only” approach and has enabled Taiwan to forge much closer ties than was thought possible even a couple of years ago. Many of the parliamentary delegations from countries such as the US, France, Britain, Germany and particularly Central and East European countries like Lithuania, the Czech Republic and Slovakia proclaim the “shared democratic values” during their visits and emphasize “we stand by you” and “we are on your side.”

Second, while under President Tsai Ing-wen, Taiwan was already transitioning to a much leaner and more flexible military system in the years before 2022, the Russian invasion of Ukraine did prompt some serious rethinking in terms of the types of weapon systems needed, a much better organization of the Reserves and Civil Defense, and much more intensive military cooperation – in particular with the US and Japan.

This process is now in full swing and will continue in 2023. In addition, the recently-passed US National Defense Authorization Act (NDAA) for 2023 included some important clauses on US-Taiwan defence cooperation and coordination, training, and stockpiling, as well as loan guarantees for funding of much-needed weapon systems up to US$ 2 bln. per year.

Third, in many ways, Taiwan has already made itself indispensable as an international economic partner punching far above its weight: with US$ 90.6 bln. In two-way trade, it is the US’ ninth largest trading partner, while for Europe, it is the 12th largest trading partner, with total two-way trade of some sixty-four bln. Euro. But more important than the total volumes of trade are the very specific areas where Taiwan has made itself indispensable, such as key parts of mobile phones and laptops and the often-mentioned high-end chips made by TSMC, which produces some 90% of all high-end chips in the world. This “silicone shield” is important for Taiwan to maintain.

Presidential elections coming up

One more item that needs to be mentioned is that Taiwan has presidential and legislative elections coming up in January 2024, which means that the election campaign will get into full swing by the Summer of 2023. As President Tsai Ing-wen is now reaching the end of her second term, she cannot run again, and the DPP will have to produce a new candidate. In all likelihood, this will be current Vice President William Lai, who is being groomed for the position, but in Taiwan’s rambunctious political system, it cannot be excluded that others will make a run for it in the DPP primaries.

On the Kuomintang side, some observers argue that the party got a significant boost in the local elections, which were held in November 2022, but as I discussed in an earlier essay, those elections did involve local issues, and in the past, the KMT has never been able to translate the local wins into victories at the national level. In addition, the KMT will see significant infighting between current chairman Eric Chu, Taipei County Magistrate Hou Yu-ih, and newly-elected Taipei mayor Chiang Wan-an, which will, in all likelihood, lead to a rather divided party.

Also, as Beijing cannot help itself and will continue to bully, threaten, and intimidate Taiwan on all fronts, this will help the DPP’s rallying call on the existential threat posed by China. At the same time, the KMT still has not been able to shed its image as a “China-friendly” party.

In conclusion, in all probability another turbulent year ahead for Taiwan, but President Tsai Ing-wen’s steady hand, together with a resilient population, and a broadening network of friends in like-minded countries across the globe, will help Taiwan weather the storms ahead.

Gerrit van der Wees is a former Dutch diplomat who teaches the history of Taiwan at George Mason University in Fairfax, Virginia, and US relations with East Asia at the George Washington University Elliott School for International Affairs in Washington, DC.

This article was published as part of a special issue on ‘Farewell 2022 and Welcome 2023’.

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