Opportunities arise amid challenges in cross-Straits economy and trade

Editor's note: Liu Kuangyu is an associate research fellow with the Institute of Taiwan Studies under the Chinese Academy of Social Sciences. The article reflects the author's views and not necessarily those of CGTN. The article has been translated from Chinese and edited for brevity and clarity.

As Taiwan region's leadership and legislature elections concluded, newly elected Lai Ching-te faces a new political landscape where he failed to secure a large majority. The Democratic Progressive Party also lost its parliamentary majority. His increasingly radical secessionist route is bound to cast a shadow over cross-Straits economic and trade cooperation.

Lai, an advocate for radical separatism and populism, is more hostile toward cross-Straits economic and trade cooperation than his predecessor. He consistently views interactions with the mainland as obstacles and potholes towards "Taiwan independence," branding market opportunities in the Chinese mainland as shackles and nightmares for Taiwan region's autonomy.

Before the elections, Lai declared that "neither trade in services, nor trade in goods, nor ECFA (Economic Cooperation Framework Agreement) is the path Taiwan will take," stigmatizing peaceful cross-Straits cooperation as "backtracking." Despite the intense warnings coming from industry players inside and outside of the island region and the public, Lai seems to persist in his own way, laying the groundwork for drastic actions and stirring up trouble:

Firstly, he takes a more passive and confrontational approach to issues such as the ECFA and trade barriers. He stubbornly refuses to return to the common political basis for both sides of the Taiwan Straits and disregards warnings from the mainland to set things right and its well-intentioned advice to mend his ways. Instead, he sabotages the positive momentum and order of cross-Straits economic and trade cooperation, dismantling the foundation of peace and unification between both sides.

Secondly, he introduces more economic, trade and technological policies to set up obstructions and cut off ties, aligning more closely with the "small yard and high fence" strategy of the U.S. and the West and their high-tech export controls against Chinese mainland. In the name of "de-risking," he intensifies the chaos in key supply chains across the Taiwan Straits and even the region, escalating it into a reshuffling of the entire industrial chains.

Thirdly, he refuses to rectify his radical separatist policy, concocting a "new two states theory" to intensify tensions in the Taiwan Straits. This plays into the hands of the U.S. and the West, accelerating the relocation of supply chains and capital away from the Taiwan Straits, causing a deteriorating business environment for cross-Straits economic and trade cooperation, disrupting the shared market between the two sides, and weakening the economic strength of the Chinese nation.

However, the Chinese mainland's strong dominance over cross-Straits relations and its control over "Taiwan independence" forces, as well as greater vigilance and opposition from both Taiwan region and the international community, might act as a brake on Lai's risky behavior. 

On the one end, Chinese modernization continues to present vast opportunities, and the mainland's economic resilience, growth model and exploration of a new path of integrated development inject new energy into cross-Straits economic and trade cooperation. On the other end, the U.S. and the West have reaffirmed that they "do not support the Taiwan independence," which acts as a restraint. 

Therefore, opposition parties in Taiwan region that favor cross-Straits cooperation may have a chance to leverage their advantages in the legislature to collectively counterbalance Lai's obstinacy. Faced with internal and external pressures, Lai may have less room for maneuvering than his adventurous impulses suggest.