As 2024 dawned, Chinese President Xi Jinping reiterated in his New Year Address that Taiwan must unify with China. In her New Year Address, Taiwan President Tsai Ing-wen, with the election of her successor only 14 days away, repeated her offer to meet China on the basis of equality, mutual respect, and without preconditions, echoing themes dating back to her first inaugural address in 2016. On Jan. 14, Tsai’s chosen successor, Vice President Lai Ching-te, won an unprecedented third successive term for the Democratic Progressive Party, promising to uphold the independence of the Republic of China, but the party lost its majority in the legislature. A month later, two Chinese fishermen operating illegally near Kinmen Island died when their boat capsized as they were pursued by the Taiwan Coast Guard. Five days later, a Chinese Coast Guard vessel boarded and inspected a Taiwanese tour boat near Kinmen. Tensions grew but they did not boil over.

On Jan. 30, China unilaterally moved its M503 civil aviation flight route closer to the median line of the Taiwan Strait. Premier Li Qiang included the obligatory call for Taiwan reunification in his Work Report to China’s National People’s Congress (NPC). Some analysts found that and other NPC references to Taiwan more strident than in recent years, but any change in tone was subtle. In apparent retaliation for Lai’s electoral victory, China persuaded Nauru to switch diplomatic ties from Taiwan to China even as Taiwan continued to strengthen unofficial relations with larger powers. These Taiwan efforts were supported by US President Biden, who used a trilateral meeting with Japan and the Philippines to call for cross-Strait stability. Taiwan’s continuing negotiation with the US of a 21st Century Trade Initiative and TSMC’s decision to expand new facilities under construction in Arizona exemplified Taiwan’s continuing diversification of economic linkages away from China. President-elect Lai will be inaugurated on May 20; his inaugural speech and China’s response could portend the future course of cross-Strait relations.

Figure 1 Taiwan President-elect Lai Ching-te holds a press conference, following the victory in the presidential elections, in Taipei, Taiwan January 13, 2024. Photo: Reuters/Ann Wang

A New Year of Continuity

As 2024 began, all eyes were focused on the upcoming Taiwan elections and the risks they might pose for relations between China and Taiwan. In their New Year’s addresses, leaders on both sides seemed to downplay those risks.

On New Year’s Eve, Chinese President Xi Jinping assured his audience  that the Chinese people “have continued to forge ahead” despite “winds and rains.” On Taiwan he said simply that “China will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation.” The next day, Taiwan President Tsai Ing-wen reminded the Taiwan people of what her eight years in office had accomplished. On cross-Strait relations, she expressed the “hope that the two sides will soon resume healthy and orderly exchanges…by way of peace, parity, democracy, and dialogue, to jointly seek a long-term, stable way forward for our peaceful coexistence.”

Taiwan Votes for Identity and Caution

On Jan. 13 Taiwanese voters went to the polls in the kind of democratic and transparent election that has been the norm since Taiwan’s first popular election for president in 1996. For the first time, they extended a party’s hold on the presidency for a third term, electing Democratic Progressive Party (DPP) Candidate Lai Ching-te, who has been vice president under Tsai for the past four years. 

In a three-way race, Lai won with 40% of the vote. The Nationalist Party (Kuomintang or KMT) candidate Hou Yu-ih, the popular mayor of New Taipei City, came in second with 33% of the vote. His defeat was a bitter disappointment to the KMT, which had expected voters would turn against the DPP after Tsai’s two terms as president. Both Lai and Hou’s vote totals were reduced by the presence in the race of Ko Wen-je of the Taiwan People’s Party (TPP), who won 26% of the vote. Voters signaled some unease with the DPP by ending its control of the national legislature, the Legislative Yuan (LY), after eight years. KMT and KMT-allied independents won 54 of the 113 seats, three more than the DPP, and the TPP won eight seats, which gave this third party the ability to control the outcome on crucial but contentious issues such as the budget, especially the military budget. China’s Taiwan Affairs Office (TAO) dismissed the DPP victory, saying that its failure to win a majority of the votes for president or of seats in the LY meant that Taiwanese voters did not accept the cross-Strait policy of the new president. 

What did the election results mean? Polls suggested dissatisfaction with the DPP’s handling of domestic issues over the past eight years, but these issues seemed to have little influence on the outcome, perhaps because all three parties advocated continuation of Taiwan’s strong social safety net, arguing only over who could best correct current weaknesses. The decisive issue was how the candidates and parties approach China. All three insisted on the independence and sovereignty of the Republic of China (ROC). The difference lay with which candidate offered voters the clearest, most persuasive picture of the way forward. Lai had said throughout the campaign that he would continue the status quo of an independent ROC. This catchy formulation gave a nod to the independence wing of the DPP, reassured the US, and used enough one-China language to enable China not to invoke the Anti-Secession Law passed in 2005. KMT candidate Hou offered an approach to China that sounded little different. He said that “the Republic of China is a sovereign state” and that he would deal with China based on “deterrence, dialogue, and de-escalation.” Hou’s approach to cross-Strait issues was weakened by fissures within the KMT. In an interview with Deutsch Welle, former president and KMT elder Ma Ying-jeou said that “as far as cross-Strait relations [go], you have to” trust Chinese leader Xi Jinping, adding that he does not think Xi is pushing for reunification. Hou’s vice-presidential running mate, Jaw Shaw-kong, was quick to distance Hou from Ma’s approach, but the damage was done. Centrist voters feared that a KMT administration would follow the approach of its elder statesman; deep blue KMT voters concluded that Hou would not follow Ma’s direction. TPP candidate Ko promised he would establish pragmatic nonideological relations with China without explaining how he would overcome China’s ideological insistence that Taiwan accept the 1992 Consensus on one China.

Although Lai will not be inaugurated until May 20, the LY began its work on Feb. 1 by electing Han Kuo-yu as speaker. Han had been the KMT’s 2020 presidential candidate and was elected to the LY on the KMT party list. Because Han ran for president in 2020 advocating China-friendly positions, some wonder if he will try to obstruct DPP initiatives, especially regarding expanding defense expenditures.

China’s Role in the Election and Afterwards

In past Taiwan presidential elections, China has sought to undermine the DPP, inadvertently assisting it. For example, in 2000 Chinese Premier Zhu Rongji warned against electing Chen Shui-bian. On Jan. 1, 2019, Xi Jinping warned that the reunification of China and Taiwan was key to often-proclaimed China’s rejuvenation. Both statements boomeranged. In this year’s campaign, there were no such overt Chinese interventions. Instead, China covertly deployed an array of disinformation on social media to undermine Lai’s candidacy. Targets ranged from Taiwan’s mishandling of egg imports to Lai’s real estate holdings, but perhaps the most dramatic was a series of excerpts on social media quoting an alleged “Tsai Ing-wen’s Secret History” by a supposed Taiwanese author but rife with mainland Chinese expressions. The KMT insisted that the DPP was trying to censure legitimate political speech by calling out this disinformation. In the end, China’s 2024 efforts to skew Taiwan’s election failed as they had in the past.

Two days after the election, the Pacific Islands nation of Nauru announced that it was switching its diplomatic ties from Taiwan to China. Nauru’s government explained that the decision was “a significant first step in moving forward with Nauru’s development,” which suggested that China had once again deployed economic incentives to persuade a Taiwan diplomatic partner to embarrass Taiwan’s government by defecting. This brings to 10 the number of Taiwan diplomatic partners that have switched relations to China since Tsai and the DPP took power in 2016. At the same time, Taiwan strengthened its unofficial ties with neighbors. Philippine President Ferdinand Marcos Jr. congratulated Lai Ching-te on his election and then joined President Biden and Japanese Prime Minister Kishida Fumio in calling jointly for cross-Strait stability. Taiwan Foreign Minister Joseph Wu subsequently called the trilateral statement a “great deterrent” against Chinese threats. 

Figure 2 Taiwan’s Foreign Minister Joseph Wu speaks to Nikkei Asia during an interview in Taipei on April 30. Photo: Lauly Li

An Accident Provokes Tension, then Restraint

On Feb. 14, an unregistered Chinese fishing boat sank in a prohibited area within the Taiwanese controlled waters around Kinmen island while being pursued by the Taiwan Coast Guard. Two of the four fishermen on board died. When the two survivors returned to China, they claimed that their boat had been rammed by the Taiwan Coast Guard vessel, which Taiwan denied. China’s Taiwan Affairs Office (TAO) insisted that Taiwan-controlled waters or prohibited areas cannot exist because Taiwan is part of China. It demanded that the Taiwan Coast Guard sailors involved be punished. China’s Coast Guard announced that it would carry out regular patrols in the waters between Kinmen and the nearby Chinese city of Xiamen. Five days later, the Chinese Coast Guard boarded a Taiwanese tourist boat in Taiwanese waters near Kinmen, inspecting the boat and its 34 crew and passengers.

Figure 3 The Taiwan Affairs Office in Beijing, responsible for managing relations across the strait, has endorsed the decision to increase coastguard patrols in order to safeguard the lives and property of fishermen. Photo: China Coast Guard

The death of the Chinese fishermen, so soon after Taiwan’s elections, was opportune from China’s perspective. It enabled China to blame the “malicious” incompetence of Taiwan’s DPP government for the deaths as well as other problems between the two sides and then to intimidate Taiwan by increasing its military and law enforcement into areas controlled by Taiwan. These actions reinforced and expanded the impact of China’s gray zone coercion through combat aircraft, naval vessels, and balloon incursions across the median line of the Taiwan Strait as well as balloon and civilian drone flights over or near Kinmen and other Taiwanese controlled islands.

For a time, the confrontations off Kinmen appeared to be the prelude to another round of escalating tensions across the Taiwan Strait. When China rescued two Taiwan fishermen from their disabled boat a few days later, it delayed the return of one fisherman, reportedly because he was a Taiwanese soldier using a false ID. The sense of cross-Strait confrontation was exacerbated when China unilaterally moved M503, a major north-south commercial air route, closer to the median line of the Taiwan Strait. Taiwan said the Chinese move “blatantly contradicts a consensus reached between both sides of the Taiwan Strait in 2015.” 

Despite such incidents, the two sides have continued their pre-existing cooperation in handling search and rescue for Chinese and Taiwanese fishermen along the Chinese coast. Shortly after the Kinmen incident, Taiwan was preparing to formally open an enlarged wharf on the South China Sea island of Taiping or Itu Aba, which it controls. Although some, including former President Ma, urged President Tsai to preside at the ceremonial opening of the wharf on Taiping Island, the Foreign Ministry and National Security Bureau (NSB) said they were opposed. The NSB explained that there was a risk of interference with the president’s plane. Both sides were clearly trying to avoid anything that might exacerbate tensions in the transition period between Lai’s election and inauguration.

Annual Chinese Meetings Repeat Familiar Themes

On March 5, Premier Li Qiang presented his Government Work Report to the annual plenary meeting of the National People’s Congress (NPC). Li addressed Taiwan in familiar terms:

We will implement our Party’s overall policy for the new era on resolving the Taiwan question, stay committed to the one-China principle and the 1992 Consensus, and resolutely oppose separatist activities aimed at “Taiwan independence” and external interference. We will promote the peaceful development of cross-Strait relations… 

While Li spoke of “the peaceful development of cross-Strait relations,” analysts were quick to wonder why he omitted “peaceful unification.” However, other official statements during the two meetings, the NPC, and the Chinese People’s Political Consultative Conference (CPPCC), made it clear that peaceful reunification was still central to China’s approach to Taiwan.

During the CPPCC President Xi called on the Revolutionary Committee of the Chinese Kuomintang to: 

unite all patriotic forces at home and abroad, on and off the island, continue to expand the forces against “independence” and promote reunification, and jointly advance the process of peaceful reunification of the motherland. (translation courtesy of March 7 Sinocism)

At the conclusion of the NPC, Director of the Chinese Communist Party (CCP) Central Foreign Affairs Commission and Foreign Minister Wang Yi captured the two conflicting messages from Chinese leaders: “Our policy is quite clear—we will continue to strive for peaceful reunification with the greatest sincerity…Whoever in the world connive[s] at and support[s] ‘Taiwan independence’ will get burned for playing with fire and taste the bitter fruit of their own doing.”

What do the KMT Visits to China Mean? 

On April 1, Ma Ying-jeou traveled to China with a group of students as he had done in March 2023. Once again, he visited the home of Sun Yat-sen, the revolutionary founder of the KMT, and then met with TAO Director Song Tao. He visited a temple honoring the Yellow Emperor, the mythical founder of China. Both events underscored his commitment to the KMT aspiration of seeing Taiwan and China reunify. Ma traveled to Beijing to meet with Chinese President Xi Jinping, whom he last met in November 2015. Xi told Ma that “[e]xternal interference cannot stop the historical trend of reunion of the country and family.” According to China Daily, Ma said the 1992 Consensus and opposing “Taiwan independence” constitute the common political foundation for the peaceful development of cross-Strait relations.  In addition to Ma’s high-profile visit, KMT Vice Chairman Andrew Hsia made his seventh trip to China in the past 12 months at the end of February. Hsia explained that he was traveling to help Taiwanese businesses in China resolve difficulties with the Chinese government. He also met, as had Ma, with TAO Director Song Tao. At the end of April, the KMT caucus leader in the Legislative Yuan, Fu Kun-chi, traveled to Beijing, and returned home with a promise from Beijing to ease restrictions on Taiwan food products. He said on his return to Taipei that Taiwan’s youth should not have to shed blood to defend the DPP.

Figure 4 Fu Kun-chi (center front), the legislative caucus leader of the main opposition Kuomintang, returns from the mainland. Photo: CNA

Ma’s meeting with Xi in the wake of DPP candidate Lai’s electoral victory, and Hsia and Fu’s which followed, are the most recent in a series of such visits dating back to 2005, when then-President Jiang Zemin met KMT Chairman Lien Chan after he had been defeated by Chen Shui-bian. In each case, China has sought to question the legitimacy of the DPP president whom Taiwanese voters have elected and elevate the KMT as the voice of patriotic Taiwanese eager to be part of China. This reflects the Communist Party’s United Front strategy that seeks to ally with one part of Taiwan’s political parties to sow dissension. Ma’s repeated emphasis on the KMT and his own vision of Taiwan becoming part of a united China reveals instead how far out of step they are with the overwhelming majority of Taiwanese, who want to remain separate from China. The trips of Hsia and Fu suggest that this dangerous dance with China may well remain a central element of the KMT’s agenda.

Lai Assembles a Continuity Team

In his victory speech to the international media and his supporters on the evening of Jan. 14,  President-elect Lai promised continuity and stability:

“It is my important responsibility, as president, to maintain peace and stability in the Taiwan Strait…I will act in accordance with the constitutional order of the Republic of China, in a manner that is balanced and that maintains the cross-Strait status quo,”

Since then, he has been assembling a team of foreign policy, security, and cross-Strait officials that exemplify that promise of continuity. Director of President Tsai’s National Security Council Wellington Koo will become minister of defense. Tsai’s Foreign Minister Joseph Wu will return to his assignment under the first Tsai administration as secretary general of the National Security Council. Current Presidential Secretary General Lin Chia-lung will succeed Wu as Foreign Minister. Chiu Chui-cheng, a former vice-minister of the Mainland Affairs Council (MAC) known for his non-hawkish stand, is tipped to return the MAC as its minister. Standing behind this national security team, Lai’s Vice President Hsiao Bi-khim is particularly reassuring to Washington after serving there as Taiwan’s de-facto ambassador from 2020 until she returned to Taipei to join Lai’s campaign.

Biden Administration Seeks to Reassure; Beijing Does Not 

Immediately after the election, and cognizant of Beijing’s misgivings about Lai, the Biden administration sought to reassure Beijing. When asked about the outcome of Taiwan’s election by reporters on the White House lawn on Jan. 13, Biden stated simply: “we do not support Taiwan independence.” The White House dispatched a small delegation of former high-ranking US government officials to reassure Taipei, a move not without precedent. Former Deputy Secretary of State James Steinberg and former National Security Advisor Steven Hadley met with Tsai, president-elect Lai, and as well as KMT and TPP figures on Jan. 15. The optics of the Steinberg-Hadley visit, signifying enduring US support for Taiwan’s democracy during a political transition, was its substance. The following week, the US Navy destroyer John Finn sailed through the Taiwan Strait and made a subsequent transit on March 5.

Two weeks later in Bangkok, US National Security Advisor Jake Sullivan had extended discussions about Taiwan with PRC foreign affairs chief Wang Yi, according to Sullivan. The US national security advisor reaffirmed the US commitment to a one-China policy, but also expressed concern about aggressive PLA activity around Taiwan. With groundwork laid by Sullivan and Wang, Biden and Xi spoke by phone on April 2. According to the PRC readout, Biden underscored his pledge of not supporting Taiwan independence. Biden also stressed to Xi the importance of peace and stability in the Taiwan Strait, according to the US readout.

US Secretary of State Antony Blinken conveyed the same message in standard language to both Foreign Minister Wang Yi and President Xi during his April 24-26 trip to China. The State Department said:

The Secretary underscored the importance of maintaining peace and stability across the Taiwan Strait and reiterated there has been no change to the US one China policy, which is guided by the Taiwan Relations Act, the three Joint Communiques, and the Six Assurances.

However, in the run-up to these meetings, the Chinese side used bellicose language to blame the US for increasing cross-Strait tensions and to warn that China may have no choice but to respond:

The biggest threat to peace and stability across the Taiwan Strait is the “Taiwan independence” separatist activities and external encouragement and support for them; China is not going to sit on its hands.

We have become inured to this language, but, combined with China’s handling of the Kinmen fishing boat incident and continuing People’s Liberation Air Force and Navy gray-zone pressure on Taiwan, it may foreshadow China’s willingness to take additional destabilizing measures in the near term.

Washington Writes a Check for Taiwan’s Defense

In mid-February, the US Senate approved a package of military aid for Ukraine, Israel, and Taiwan. Whereas the Biden administration’s initial request to Congress lacks a budget item exclusively for Taiwan, the Senate’s legislation includes $1.9 billion to backfill weapons provided to Taiwan from US stockpiles through September 2025. This pre-payment of presidential drawdown authority ensures that Taiwan will obtain weapons more quickly and free of charge compared with the arms sales process. In addition, the supplemental sets aside $2 billion in cash for US allies and partners in the Indo-Pacific, including Taiwan, to purchase US military equipment through Foreign Military Financing.

The supplemental hit a roadblock in the GOP-controlled House of Representatives, where a small yet powerful group of isolationist Republicans stood opposed to the US taxpayer arming Ukraine. House Speaker Mike Johnson ultimately broke the impasse in mid-April by splitting the Senate’s bill into three smaller bills requiring a separate vote for each. The funding bill for the Indo-Pacific and Taiwan, amounting to $8.1 billion, received the highest “yes” vote count and the least number of “no” votes compared with the Ukraine and Israel bills. President Biden signed the entire supplemental into law on April 24, with the upshot being Taiwan’s elevation within US national security priorities.

Beyond the supplemental, the Biden administration is looking to other ways to secure defense dollars for Taiwan in fiscal year 2025. The Department of State has asked Congress for $100 million in Foreign Military Financing for Taiwan in its 2025 budget request. Before now, a budget item to support Taiwan’s military had never been listed separately in the agency’s budget. The Pentagon, in its 2025 budget request for the Pacific Deterrence Initiative, has asked for $500 million to replace weapons provided to Taiwan from DoD stockpiles. As the supplemental’s $1.9 billion fund for Taiwan remains active through the end of FY2025, Congress may feel it has already acted upon the Pentagon’s request.

…And Wrestles with US Arms Sales Delays

But funding was not the only issue for the US. In February, the Biden administration approved a $75 million upgrade package for a data communications system in use by Taiwan’s military. With this new arms sale notification, the backlog of US deliveries for asymmetric weapons to Taiwan ticked upward to $6.1 billion, according to the Cato Institute’s tracker. The overall backlog, including traditional platforms such as fighter jets and tanks, stands at over $19 billion.

The Pentagon released its first-ever National Defense Industrial Strategy in January that aims to fix manufacturing delays and supply chain bottlenecks afflicting US arms suppliers. As the US is its sole foreign weapons provider, Taiwan has an outsized stake in the success of this strategy. Congress, too, is exploring creative ways to get weapons to Taiwan more quickly. Mike Gallagher and Raja Krishnamoorthi, the chair and ranking member of the House Select Committee on the CCP respectively, floated the idea of co-producing weapons with Taiwan during a late February visit to Taiwan. Under such a scheme, a key concern is Taiwan’s ability to prevent leaks of US IP to the PRC. According to a Politico scoop, a bipartisan group of US lawmakers is planning to introduce a provision on US-Taiwan co-production into the 2025 NDAA.

Figure 5 Taiwan’s President Tsai Ing-wen (right) meets with Rep. Mike Gallagher, the Republican chair of the House Select Committee on the Chinese Communist Party (center) and Raja Krishnamoorthi (left) in Taipei, Taiwan, Thursday, Feb. 22, 2024. Photo: Taiwan Presidential Office via AP

The Blossoming US-Taiwan Commercial Relationship 

The United States edged past China as Taiwan’s top export market in the first quarter of 2024.  As recently as 2021, China bought double what the United States imported from Taiwan, making a potential flip this year even more striking. Taiwan’s exports of highly advanced chips for US data centers have soared dramatically in recent months on the AI boom. Meanwhile, Taiwan is barred from supplying AI chips to China due to US export controls. Taiwan’s traditional exports to China fell sharply in 2023 by over 15% and have yet to rebound in 2024. 

In February, US Trade Representative Katherine Tai and John Deng, Taiwan’s minister without portfolio in charge of the Office of Trade Negotiations, agreed to press forward on unfinished areas of the US-Taiwan Initiative on 21st Century Trade, even during Taiwan’s presidential interregnum. A large US delegation arrived in Taipei in late April for a formal negotiating round. In Congressional testimony two weeks prior, Tai called negotiations with Taiwan a “high priority” for her agency in 2024. USTR also released summaries of US proposals on agriculture, labor, and the environment just before Tai’s appearance before Congress. Changes to Taiwan’s longstanding regulations and removal of nontariff barriers, especially on more sensitive issues like agriculture and labor, could arouse political controversy in Taiwan. Any new trade agreement with the United States will require the approval of the Legislative Yuan, where the DPP no longer holds a majority.

On April 8, TSMC announced it would increase its investment from the original commitment of $40 billion to $65 billion at its Arizona site to produce cutting-edge microchips at the 2-nm level beginning in 2028. The Commerce Department on the same day announced a $6.6 billion cash subsidy for the Taiwanese chipmaker. This sizeable award, accounting for one-sixth of the $39 billion fund established under the 2022 CHIPS and Science Act, gives the US government a major stake in TSMC’s Arizona enterprise, now spanning three fabs and totaling $65 billion. Even with this expanded investment, TSMC’s much larger fabs in Taiwan are expected to play a dominant role in supplying the US market for the foreseeable future.

Looking Ahead—Will Rough Seas Buffet “Steady as She Goes”? 

On May 1, China’s Law on Guarding State Secrets went into effect. Taiwan’s MAC has warned Taiwanese to reconsider traveling to China because of a risk that they may be detained. Is this a hiccup or a way for China to open another gray zone front, this time pressuring Taiwan students and businessmen in China?

Lai Ching-te will be inaugurated as president of the Republic of China on May 20. Lai’s inauguration address will likely reiterate his commitment to the constitutional order of the Republic of China, although he will not make any acknowledgment of the ROC’s origins as the government of all China. He will promise to defend the cross-Strait status quo without provoking China. He will express his openness to dialogue with Beijing based on equality and mutual respect, but he will not make anything more than the most oblique reference to the 1992 Consensus, which Beijing insists on as the prerequisite to any cross-Strait talks. 

Beijing will almost inevitably reject Lai’s inaugural olive branch, should he offer one. Will they do so with the disdain they exhibited toward President Tsai’s 2016 speech, saying it merited an “incomplete grade?” Will Beijing look for additional opportunities—such as the Kinmen incident, or perhaps the attendance of senior Congressional or unofficial US visitors to Lai’s inauguration—for gray zone coercion? Or will China keep such intimidation to a minimum to avoid disrupting relations with the US, particularly in a US election year?

The DPP’s loss of control of the LY means that Lai will face political challenges that Tsai did not, particularly in implementing defense reforms and increasing the defense budget. The KMT, with the implicit cooperation of the Chinese Communist Party, may look for further opportunities to imply that Lai and the DPP are not the true voice of Taiwan.