Analysis

KMT’s Defeat Triggers Worries For Cross-Strait Business

The ruling party Kuomintang’s (KMT) dramatic loss during Taiwan’s municipal elections –including the mayoral race in the capital Taipei —  on Nov. 29 worried Taiwanese businessmen who are working in China or dealing business with Chinese counterparts now that the rival party Democratic Progressive Party (DPP) remains relatively conservative when it comes to cross-strait relations.

During the elections for the nation’s mayors, city councilors, wardens, the KMT lost most of the important seats, including Keelung mayor, Taipei mayor, Taoyuan mayor, and Taichung mayor while New Taipei City Mayor Eric Chu (朱立倫) is the only KMT candidate who won his re-election.

While city mayors do not deal with cross-strait policy, the weekend’s political upheaval shows that voters will likely give the China-friendly KMT a cold shoulder during the next national election.

“More than more people began to hate businessmen who are involved in cross-strait business activities ever since the political tug of war between President Ma Ying-jeou (馬英九) and Legislative Speaker Wang Jin-pyng (王金平) last year,” said Yeh Hui-teh (葉惠德), chairman for Shanghai Taiwanese Businessmen Association. “People’s hatred against businessmen continued to increase, as the Sunflower Movement and the food crisis took place in the past few months.”

Yeh said that KMT’s incompetent performances gave DPP to come back during this elections, which will create more obstacles in terms of cross-strait business. Kuo Shan-hui (郭山輝), chairman of the Taiwanese business association, an association of Taiwanese businessmen in China, however, said that the Chinese authorities will have different logic for this and begin to communicate with the DPP differently.

“Nothing will be easy for the future, if China and the DPP do not have any mutual trust,” Kuo said.

What kind of change?

General Chamber of Commerce chairman Lai Cheng-i (賴正鎰) described the result of the elections as “people’s anger toward the government’s failing to re-initiate the economy while most people’s paychecks are not increasing but the inflation continues.”

Lai said that most businessmen do not care whether the KMT or the DPP wins but they do care whether the winner knows how to commission the right officials and do the right things.

“We are worried that a party and its members would continue to oppose certain policies for no reasons once the party becomes an opposite party from a ruling one,” Lai said.

Bank of America Merrill Lynch’s Asia research viewed the KMT’s loss is likely to trigger slower equity inflow into Taiwan in the near term, which will be bad for equity.

Alan Romberg, director for the Stimson Center’s East Asia Program, did not believe that Beijing’s attitude toward Taipei will change because of the elections. He said that peace and continuous development on the cross-strait relations will remain the priority for Beijing for now, while the Chinese government will continue to figure out new resolutions to communicate with the DPP in the future. But, a party-to-party communication between China and the DPP will not happen as long as the DPP does not accept the “one China” strategy, Romberg said.

Bonnie Glaser, a senior adviser for Asia in the Freeman Chair in China Studies of the Center for Strategic and International Studies, said that the U.S. government may encourage DPP Chairwoman Tsai Ing-wen (蔡英文) to find out more solutions to make friends with China when she visits the United States next February because a regular and steady cross-strait relation will be the best priority for the U.S. government.